SALT LAKE CITY – After years of debate and political turmoil over tax reform, the focus of the Utah Legislature has now shifted to the much less controversial topic of tax relief.
“We’re certainly not looking at any tax increases,” laughs Sen. Chris Wilson of Logan, a newcomer to the Revenue and Taxation Committee in the Senate. “We’re very fortunate that the state of Utah is now better off financially than any other state in the country.
“I’m grateful that we live in Utah where we can afford to consider a $400 million increase for public education, also a tax break and still have other funds to allocate.”
In terms of dollars and cents, being “better off financially” than other states means that Utah has revenue reserves of up to $80 million that could be earmarked for a tax break for state residents.
On the opening day of the current general session, the members of the Senate debated and unanimously passed Senate Bill 11, adjusting tax codes for Utah retirees. That proposal would create a $43 million tax break by removing the tax on the income of military retirees and reducing the tax on Social Security payments.
The bill’s swift passage in the Senate is seen as an indication of the strength of the sentiment for a tax cut throughout the Legislature.
Senate President Stuart Adams, R-Layton, has called cutting taxes one of the top priorities of the general session this year.
On the other side of the Capitol, Rep. Dan Johnson, R-District 4, says his fellow representatives share that motivation because they feel that “ … people want a tax cut.”
“I think that we’ll be able to fund a lot of things and still, as Sen. Wilson said, return some money back to taxpayers.” Johnson explains.
“What I’m interested in is a general tax break, across the board for all Utahns. That could be done perhaps with a reduction of the tax rate. That’s a possibility we need to look at.”
If approved, legislative analysts say that Senate Bill 11 would reduce the tax burden of nearly 67,000 Utahns on fixed incomes by an average of nearly $300 a year. It would also benefit about 18,000 veterans on military pensions to the tune of about $1,300 a year.
But Wilson says that state senators are also hopeful of providing more general tax relief for Utah families.
“We also want to help people who had a tax increase a few years ago as a result of the Trump tax cut,” Wilson added. “There were many people with children who were affected when they could no longer write off those dependents.”
Traditionally, each American taxpayer had been able to claim a personal exemption for themselves and each of their children on their federal income tax. Under the Tax Cut and Jobs Act of 2017, however, personal exemptions were suspended in favor of a nearly doubled standard deduction for all taxpayers.
While that change guaranteed tax relief for most Americans, some large families with many children found themselves financially disadvantaged.
“So that’s the other area of focus right now,” Wilson says. “If you’ve got a family with a lot of kids and got a tax increase a few years ago, we’re working very hard to reduce that and give you some relief on dependents.”
SB 11 now moves to the Utah House for consideration, where it will likely be combined with other tax relief proposals as the 45-day general session of the Legislature continues.