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Tool | August 2013

State-by-State Guide to Taxes on Retirees

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Utah

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The Bottom Line
Map of Utah

NOT TAX-FRIENDLY

The Beehive State moved to a 5% flat income tax system in 2008. It is one of the minority of states that taxes Social Security benefits. Utah provides a retirement-income tax credit that may help offset the tax on Social Security for certain income-eligible seniors. The state also offers an exemption to military retirees.

State Sales Tax

4.7% (prescription drugs are exempt). The local option tax rate is 1%, the county option is 0.25%, and the combined tax rate from jurisdictions can reach 8.08%. The rate is 3% on food and food ingredients (a statewide rate that includes 1.25% in local taxes). Municipalities may levy an energy sales tax of up to 6%.

Income Tax Range

Utah has a flat tax of 5%. Taxpayers are exempt from Utah individual income tax if their federal adjusted gross income is less than or equal to the sum of their federal standard deduction (do not include the extra deduction amounts for taxpayers 65 and older or for blindness) plus their federal exemption amount.

Social Security

Social Security benefits are taxed. Benefits may qualify for the retirement-income tax credit described below.

Exemptions for Other Retirement Income

Residents 65 and older may be able to claim a retirement-income tax credit of up to $450 per person ($900 per married couple), subject to income-eligibility limits. Taxpayers younger than 65 can claim a nonrefundable tax credit of up to 6% of eligible retirement income or $288, whichever is less. The credit is phased out at 2.5 cents per dollar of modified AGI over $16,000 for married individuals filing separately, $25,000 for singles and $32,000 for married people filing jointly. Military retirees younger than 65 can exclude up to $4,800 of qualified retirement income from taxes; military retirees 65 and older can exclude up to $7,500.

Property Taxes

Property taxes are assessed and collected locally. Residential property owned by people 65 and older claiming the tax abatement for the poor is assessed at 35% of fair market value. The assessed valuation of a residential property is 55% of its fair market value. The median rate is $1.30 per $1,000. The taxable value of a second home is 100% of fair market value. Median property tax on the state's median home value of $224,700 is $1,351, according to the Tax Foundation.

Tax breaks for seniors: For 2013, homeowners and renters 66 and older (and surviving spouses of any age) who earned $30,688 or less in 2012 can get a "circuit breaker" tax credit that permits an abatement of 50% of the property taxes due, up to $909. For renters, the amount of relief received is also based on the percentage of rent paid. Homeowners and mobile-home owners get an additional credit equal to the tax on 20% of their property's fair market value. Homeowners who qualify for the circuit breaker generally also qualify for an indigent abatement or deferral; those 65 and younger who have a disability or extreme hardship may also qualify.

Inheritance and
Estate Taxes

There is no inheritance tax or estate tax.

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