For the sixth straight year, Utahns will likely see a cut in the state’s income tax rate, along with a small decrease in the state’s motor fuel tax.
On the income tax side, the Legislature is moving forward Senate Bill 60, sponsored by Riverton Senator Dan McCay, which would lower the state income tax rate from 4.50 percent to 4.45 percent. This legislation represents approximately a $115 million tax cut for Utahns and continues the progress the Legislature has made in reducing the state income tax rate from the 5 percent level where it stood from 2008 to 2018.
Opponents of the income tax change argue that the cut is too small to make a meaningful difference for everyday Utahns, but that view is shortsighted. Over the past six years, Utah has reduced the rate in incremental steps, allowing the state to responsibly adjust to each cut without creating fiscal instability.
A little over a decade ago, Kansas cut its income tax rates but later discovered the reductions were too large to absorb all at once. That led to bond rating downgrades, budget shortfalls, and cuts to government services. Ultimately, Kansas had to raise taxes again to address the problems caused by cutting too much, too quickly.
Utah lawmakers should be applauded for their foresight and discipline in pursuing incremental, methodical tax reductions. This approach allows the state to adjust to lower revenues while giving the economy time to generate additional revenue growth for the state before implementing further cuts.
Utah families are now benefiting from these cumulative tax reductions by roughly $300–$400 per year, depending on filing status and income. That is a meaningful return to taxpayers and a difference that matters for families across the state.
On the motor fuel tax, lawmakers are considering House Bill 575, sponsored by Draper Representative Cal Roberts, which lowers the state gas tax by six cents per gallon beginning July 1 and ending December 31. Because of Utah’s statutory fuel tax formula, the rate will then adjust according to the calculation in state code, which is expected to keep it around the six-cent reduction.
The bill also makes progress in supporting Utah-based fuel producers to increase in-state production, which could help moderate prices at the pump in future years. Importantly, the bill holds funding for local roads harmless from the tax cut.
Should both bills pass, these measures reduce taxes by approximately $155 million. That is a win for Utah taxpayers, and we are grateful to Utah’s lawmakers and Gov. Spencer Cox for their efforts to keep more money in the bank accounts of Utah families and businesses rather than growing the government.