The wealthiest residents stand to gain the most from yet another proposed tax cut, even as state revenue projections fall short of expectations. The Republican-controlled legislature is pushing forward with a plan that would give top earners nearly $2,000 in annual savings, while the average Utah family would see just $31.
On Tuesday morning, the House Revenue and Taxation Committee advanced a revised HB106, sponsored by Rep. Kay Christofferson. The previous version lowered Utah’s corporate and income tax rate by 0.1%, from 4.55 to 4.45%. The new bill cuts the proposed tax reduction in half, to 4.5%.
The 0.05% reduction would cost $118 million next year, including $21 million in one-time costs, and $97 million every year after that.
Lawmakers appear committed to another round of tax cuts, despite disappointing revenue projections released last week that show revenues from corporate and income taxes will be lower than anticipated.
Moe Hickey, Executive Director of Voices for Utah Children, says lawmakers would be better off foregoing tax cuts this year in case Utah’s economic picture continues to darken.
“That’s money that is desperately needed in social services and healthcare and education, and we continue to wonder why our revenues aren’t matching our expectations. The fact that we’re coming in slightly below revenue projections this year is something we should be really concerned about as we look forward,” Hickey said.
During public comment on Tuesday morning, Billy Hesterman of the Utah Taxpayers Association praised the plan to reduce taxes, which he says will make Utah more competitive economically.
“When you look at the states surrounding us, we have two states that have no income tax in Wyoming and Nevada. And then if you look at the rates of others, Arizona’s is 2.5% and Colorado is 4.4%. Moving this to 4.5% and hopefully lower as time goes on we think is the right thing to make sure that we’re in balance with what the other states are doing,” Hesterman said.
According to an analysis from Voices for Utah Children and the nonprofit Institute on Taxation and Economic Policy, 31% of the tax cut would go to the top 1% of income earners in the state with annual salaries of $882,000 or more. Those taxpayers would receive, on average, $1,929 in tax savings.
The next 4% of earners with a median annual salary of $483,000 would see an average tax reduction of about $200 per year.
The tax bill for the average Utah household with an annual income of $81,600 would decline by $31 per year, or about $2.58 per month.
Just 7% of the overall tax cut would go to Utahns in the bottom 40% of income earners. The bottom 20% with an income of $36,000 or less would receive, on average, about $0.42 per month or $5 per year. Fewer than half of those low-income Utahns are even eligible to qualify for the tax cut because they either don’t earn enough to pay taxes or see their tax bill eliminated due to low-income tax credits.
Since 2021, the GOP-controlled Legislature has dropped the state’s corporate and individual income tax rate from 4.95% to the current rate of 4.55%. The approximately $640 million to pay for that reduction comes from future revenues that, under Utah’s Constitution, can only go to public education, higher education and some social services. If this year’s reduction is approved, those future revenues will decline by another $97 million annually.
Will you join other Utahns who've already stepped up to support this effort? Choose between a monthly subscription starting at just $5 or a one-time contribution that fits your budget.
Your investment helps maintain our independence, and dig deeper into the stories that matter to you.
Together, we can ensure Utah has the strong, independent journalism it deserves. Join us today in building a more informed, transparent, and democratic Utah.
