Utah Legislature OKs another round of tax cuts, totaling $1.4 billion in 5 years

Yahoo

06-03-2025

The Capitol in Salt Lake City is pictured on Thursday, Feb. 6, 2025. (Photo by Spenser Heaps for Utah News Dispatch)
The Republican-controlled Utah Legislature has finalized its 2025 tax cut package, marking a fifth consecutive year of repeated slashes that amount to more than $1.4 billion in revenue the state will no longer capture.
The House and Senate late Wednesday gave final legislative approval to two bills that resulted in $127 million more in tax reductions, most of which came from another cut to the state's income tax rate, knocking it down from 4.55% to 4.5%.
With a price tag of $103 million, HB106 carried that rate cut, along with two other smaller cuts aimed at helping Utah parents and encouraging businesses to offer more child care options. They included:
An expansion to the state's child tax credit, allowing parents to claim a nonrefundable child tax credit for children under 1 year old and up to 5 years old.
Enactment of a nonrefundable corporate and individual income tax credit for employer-provided child care.
Another bill will open up Utah's Social Security tax credit to more Utahns — but not totally eliminate the state's tax on Social Security benefits, something Gov. Spencer Cox and Democrats supported.
Utah Gov. Cox unveils $30.6 billion budget proposal, wants to nix Social Security tax
At a cost of about $24 million, SB71 will expand eligibility for the social security tax credit by increasing the income thresholds from $75,000 for households to $90,000.
A full repeal would have benefited an estimated 152,000 Utahns with an average savings of $946 on social security taxes. However, now the bill will only result in an average annual tax savings of $257 for an estimated 88,800 Utahns, according to the bill's fiscal note.
Republicans supported an income tax rate cut and only a partial social security cut as a way to give tax relief to all Utahns rather than just those who receive social security benefits.
'Once again, we are prioritizing caring for seniors on fixed incomes, supporting young families and championing upward mobility for all Utahns,' Senate President Stuart Adams, R-Layton, said in a prepared statement.
'Thanks to Utah's robust economy and our steadfast conservative policies, we're putting money back where it belongs — with the people who earned it,' Adams added. 'By cutting taxes for the fifth year in a row, we're ensuring more of Utahns' hard-earned dollars stay in their pockets, all while maintaining our commitment to essential services and fostering long-term economic growth for future generations.'
House Speaker Mike Schultz, R-Hooper, said Utahns 'work hard for their money, and they deserve to keep more of it.'
'This year, we will build on our long-standing commitment to lowering taxes for all Utahns and supporting families,' he said. 'The cost of living continues to rise; by continuing to reduce the tax burden, we're ensuring that Utah remains a place of opportunity and prosperity for generations to come.'
However, Democrats and advocacy groups including Voices for Utah Children opposed another income tax rate cut as one that would largely benefit the wealthy while chipping away at revenue that could otherwise be used to fund education and social service programs.
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'While the bill includes much-needed efforts to expand access to child care, it irresponsibly ties these critical measures to yet another income tax cut that overwhelmingly benefits the wealthiest Utahns while draining resources from essential services,' Senate Democrats said in a prepared statement issued Wednesday night.
Senate Minority Leader Luz Escamilla, D-Salt Lake City, also balked at combining child tax credits with the income tax rate cut in a single bill, a move that Senate Democrats said 'forces lawmakers to accept harmful fiscal policy in exchange for desperately needed child care support.'
'Combining them with an income tax cut is a coercive and unfair move that mirrors a Washington D.C. style of political tactics,' Escamilla said. 'This is a disservice to Utah's working families.'
Senate Democrats said the move wasn't just 'fiscally irresponsible — it's a direct threat to essential services at a time when our budget cannot sustain another tax cut.'
'The average Utah family will see just $45 in annual savings, hardly enough to make a difference, while the wealthiest benefit the most,' Senate Democrats said. 'Meanwhile, Utah's lower- and middle-income families continue to pay the highest share of their income in taxes.'
According to an analysis posted by the advocacy group Voices for Utah Children, this year's income tax rate cut will save Utah's top 1% earners (or those making more than $882,100 a year) $1,929 annually, while the bottom 20% (or those earning up to $36,000 a year) will save only $13 a year. When factoring the four previous tax cuts, the top 1% has saved $17,361, while the bottom 20% has saved only $106 a year.
Rep. Kay Christofferson, R-Lehi, who sponsored HB106, argued on the House floor last week that Utah's budget has grown as its enjoyed a strong economy and that Utah lawmakers have committed more money to education while also cutting taxes.
'This is just a little bit in a long string of several years now of measured cuts to help reduce the burden on income tax for individuals and businesses,' he said.
But House Minority Whip Jen Dailey Provost, D-Salt Lake City, expressed 'deep concern that we continue to erode our income tax and our education funding.' She said she was more supportive of eliminating the social security tax.
'We need to be very thoughtful about how quickly we cut income tax in the state of Utah, particularly when so many of ours social services and so many vulnerable communities continue to be left behind,' she said.
The House ultimately voted 58-13 to give final legislative passage to HB106, while the Senate voted 23-6. The partial social security tax cut received much broader, bipartisan support, passing unanimously in both bodies.
What's in Utah's $30 billion budget? Here's what lawmakers are prioritizing for 2025
The bills now go to the governor. While he has previously said now is the time for Utah to get rid of its tax on social security benefits, he's also expressed a willingness to support tax cuts in whatever form lawmakers prefer.
Notably, the $127 million tax cut package didn't eat up the entirety of the $165 million in revenue lawmakers previously set aside in December for some form of tax relief. The remaining $38 million will instead be sent back to the state's rainy day funds, 'emphasizing lawmakers' commitment to fiscal prudence and planning ahead,' a Senate press release said.
Meanwhile, many funding requests went unfunded this year. Leftover ongoing income tax revenue could have been used for additional funding increases to education.
Republican legislative leaders did use about $178 million for a 4% increase to the weighted pupil unit (a rate used to calculate how much money each school should receive) — but that amount was the minimum the state was required by law to fund for inflation and enrollment growth. The Utah Education Association wanted at least a 3% increase to the WPU in addition to the statutorily required minimum.
However, lawmakers opted to increase education funding in different ways. They used $50 million for a $1,446 salary increase for teachers, plus $50 million for $1,000 bonuses for educator support staff, which Gov. Spencer Cox and Republican legislative leaders paraded in a news conference last week.
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