Will the Utah Legislature cut state income taxes again this year? ‘Stay tuned,’ the state Senate leader advises
A $160 million income tax cut sailed through a Utah legislative committee Wednesday, but a final decision from lawmakers on whether taxpayers will see those rates lowered again this session isn’t coming for a while.
“Our work was not finished last year,” Sen. Chris Wilson, R-Logan, told members of the Senate Revenue and Taxation Committee, about his bill, SB69, which would lower the individual and corporate income tax rate from 4.65% to 4.55%.
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“An income tax cut helps Utah remain competitive and makes our state a more desirable place to live. Lower rates increase incentives to work, save, invest and spend money,” he said, “the fairest way to reduce tax burdens for Utahns and promote upward mobility.”
There were no questions about the bill from committee members. During public testimony, the Utah Education Association’s Jay Blain suggested a fairer approach would be “some direct targeted tax cuts” aimed at helping low-income families and seniors.
That “would be a better way to look at tax policy,” he said, with the money going to Utahns “who could spend the money right here in the state of Utah. We believe that would enhance our economy and be a positive.”
The Utah Taxpayers Association’s Rusty Cannon offered an “amen,” to Wilson’s bill.
“Taxpayers do recognize the substantial effort that this committee and that the body as a whole has taken for taxpayers in recent years. It does add up to a significant amount and this is another modest step,” Cannon said.
The committee voted 7-1 to send his bill to the full Senate, with only Senate Minority Leader Luz Escamilla, D-Salt Lake City, opposed. She cited community funding needs, including for housing and child care, as her reason.
Utah’s Democratic state lawmakers came out against any tax cut at the start of the session. But the Legislature’s Republican supermajority in both the House and the Senate have prioritized another round of tax cuts.
That will, however, depend on updated revenue estimates due in mid-February. While legislative leaders set aside $160 million for more tax cuts last December, collections fell short for the budget year that ended on June 30, 2023.
Wilson told the Deseret News after the hearing he’s confident the money will be there for a tax cut. He said his bill was given the go-ahead by leadership, but is expected to be held if it passes the Senate and House until final budget decisions are made.
“Right now, it’s a placeholder,” Wilson said, noting he filed the bill last May, on the first day lawmakers were able to request legislation for the 2024 Legislature as a way to show Utahns hurt by inflation “that we hear them.”
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Wilson wasn’t as successful with another bill before the Senate committee, SB87, which sought to double the 2.5% tax on rental vehicles to 5%. The increase would have brought an additional $8.7 million for the state’s corridor preservation fund for future transportation projects.
After several rental car company officials and committee members raised concerns about the tax increase, Wilson asked that the bill be held by the committee so he could look for other options to boost the transportation fund.
An income tax cut this session would be on top of more than $1 billion in tax cuts made over the past three years, when states were receiving federal COVID-19 funds. In 2023, a tax cut package included dropping the income tax rate from 4.85% to 4.65%.
Asked about the income tax cut bill earlier, Senate President Stuart Adams, R-Layton, repeated his pledge that lawmakers are “going to measure twice. We’ll cut once. It’s moving, but we’ll make a determination dependent upon our final budget.”
Adams told reporters Wednesday that a decision about a tax cut will be made “with an eye to the future. So we’re cautiously optimistic. But we’re going to make sure we do it right. So the exact amount, we’ll find out later so you’ll have to stay tuned.”
The Senate leader said there’s already plenty of people pushing for another tax cut.
“I think it’s a constituent, caucus, people of Utah issue,” he said. “I’ve heard from a lot of people up here that they’d like to get more money back. My constituents are talking about it and I think our caucus is talking about it. We’re trying to respond to all of it.”
