A Utah tax cut passed this month reduced the state's income tax rate from 4.65% to 4.55%, and the law is retroactive to the beginning of the 2024 tax year. However, for most Utah residents, the tax break is not a cause for celebration. That’s because only the state’s highest 20% of earners are expected to save more than a few dollars per week, according to an analysis from the Institution on Taxation and Economic Policy.
Several state Democrats, including Rep. Brett Garner (D-31), opposed the income tax cut, telling reporters that Utah is not addressing “real needs,” such as homelessness and funding for teachers. Garner posted on X, formerly Twitter, that instead, the "richest Utahns get $2k to likely not spend but save."
Utah tax cut for 2024
Income tax revenue was nearly $50 million less than expected during Utah’s 2023 legislative session, and some state lawmakers believe making tax cuts is part of the solution.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
During a conference, Gov. Spencer Cox said, “If we [Utah] want to see income grow, then we should probably tax it less.” And a press release from the Utah Senate refers to the latest income tax cut as an increased incentive to “work, save, invest and spend money.” However, the state’s current tax structure provides little incentive for the average employee.
- Workers with incomes between $33,400 and $60,800 are expected to save an average of $32 in 2024.
- The tax savings increase to an average of $60 per year ($5 per month) for those who earn between $60,800 and $99,200.
- Average tax savings are expected to range from $106 to $174 for workers making between $99,200 and $307,500.
- The highest 1% of earners are projected to save an average of more than $2,500 this year.
So, while it is true that the more you earn, the more you’ll save, Utahns would need a significant jump in earnings to feel much of an impact from the state’s latest income tax cut.
Tax changes for Utah in 2024
There is another income tax change in the works. But rather than cut the tax rate, the approval of SJR10 would lift the restriction on how the state can spend tax revenue. Currently, Utah is required to spend its income tax revenue on public education and certain social services.
Voters will get the final say this November, and if they approve SJR10, Utah will be allowed to use some of that tax revenue for other state needs. Critics of SJR10 worry the bill’s language is not strong enough to ensure proper education funding, but lawmakers have tied an appealing provision to the bill.
- A vote to lift the restriction is a vote to eliminate the state’s portion of the grocery tax.
- So, a vote against the bill would mean voting to keep the 1.75% grocery tax in place.
Utah is one of only thirteen states that still tax groceries, And even if SJR10 becomes law, residents will still pay a 1.25% tax on grocery items because the bill does not address local sales taxes.
Related Content
-
Visa Is the Worst Dow Stock Wednesday. Here's WhyVisa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
-
Another Analyst Moves to the Sidelines on Tesla Stock After EarningsTesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
