Utah State Taxes: Everything You Need to Know
It’s important to learn about updated Utah tax laws if you live in the state or are planning a move. The Utah income tax structure was enacted in 1931 but has seen changes since its inception. The most recent changes occurred in 2008 when the Utah State Tax Commission overhauled the state income tax system. Instead of a tax bracket, the state started charging a 5% flat income tax on taxable income.
In 2018, 1,262,652 residents filed tax returns in Utah and paid an average state income tax of $2,907. The tax money collected by the government is used to improve roads, fund correctional facilities, and support the educational system. Personal income taxes aren’t the only type of tax collected by the Utah state government. Review this guide to learn more about the taxes residents are responsible for paying.
Table of Contents
- 1 Utah Personal Income Taxes
- 2 Utah Sales Tax
- 3 Utah Personal and Real Property Taxes
- 4 Utah Inheritance and Estate Taxes
- 5 Other Utah Taxes
Utah Personal Income Taxes
When you earn taxable income, you’re required to pay federal income taxes. In Utah, you’re also required to file a tax return with the state government. You must pay state income taxes if you’re a resident, part-year resident, or nonresident who files a federal tax return. You’re also required to file if you want to receive a tax refund on overpaid income taxes.
If you claim dependents on your federal return, you can also claim them on your state return. In Utah, you qualify for a $579 exemption for each dependent you claim. There are several federal income tax credits available and Utah also offers its own state tax credits, including the following:
Taxpayer Tax Credit
The taxpayer tax credit is 6% of all federal deductions you claimed plus your $579 Utah personal exemption. Depending on your filing status, the credit phases out at a certain income level, which includes the following:
|Filing Status||Phase Out Income Level|
|Married and filing jointly||$29,202|
|Married but filing separately||$14,601|
|Filing as head of household||$21,902|
|Widow or widower||$29,202|
The credit you qualify for is subtracted directly from your state income tax liability.
Qualifying Solar Project Credit
If you installed a solar photovoltaic system on your home this year, you may be eligible for a nonrefundable solar tax credit. The credit is 25% of the system’s installation cost or $1,600, whichever is less. To apply for the solar tax credit, you must complete an application and pay a $15 application fee to the Governor’s Office of Energy Development.
Retirement Income Tax Credit
If you’re paying taxes on your retirement income, you and/or your spouse could qualify for a retirement income tax credit of up to $450. To be eligible, you must have been born on or before December 31, 1952. The credit only applies to the total of your nontaxable interest income, modified adjusted gross income, and any other additions to income you claim.
Low-Income Housing Credit
If you live in a low-income housing project in Utah and you qualified for the federal low-income housing credit, you may also qualify to receive a low-income housing credit on your state tax return. Your housing project manager must assist you in filing for this tax credit and the Utah Housing Corporation determines how much you qualify to receive.
The Utah Educational Savings Plan Credit
With the Utah Educational Savings Plan Credit, also called my529, you may qualify for a nonrefundable tax credit. If you contributed to your my529 college savings plan account but didn’t claim this contribution on your federal tax return, use the account’s tax statement to claim this credit. The amount you contributed determines the credit you qualify to receive.
Utah Sales Tax
If you purchase taxable goods or services in Utah, your transaction includes both a state and local sales tax. The current state sales tax is 4.85% and the local sales tax is 1%. Most counties charge an additional .25% in sales tax. Some locations in Utah charge additional sales tax, such as the following:
- Beaver County: Charges an additional .25% Transportation Infrastructure sales tax;
- Snowville: Charges an additional 1% Town Option sales tax;
- Daggett County: Charges an additional 1% Rural Hospital sales tax.
The sales tax you pay also depends on what you’re purchasing. Tangible goods, such as clothing and electronics, and certain services, such as repairs and admissions, are susceptible to the regular state and local sales tax rate.
However, a 3% sales tax applies to groceries and unprepared food while residential utility bills include a 6% sales tax. Prescription drugs, newspapers, textbooks, and other items are fully exempt from sales tax in the state.
Utah Personal and Real Property Taxes
Personal property is property you own that is movable, which includes anything except land. Real property is property that can’t be moved, such as land and anything attached to it. If you own property in Utah, you may be required to pay property taxes. The rate you pay depends on the location of your property and its value.
A county assessor appraises your real property and the taxable value of your property is 100% of its fair market value. However, if the home is your primary residence, you may qualify for a tax exemption equal to 45% of its fair market value.
In most cases, the only personal property subject to property taxes is what you use for business. You must report taxable personal property to your county assessor each year. The county uses a personal property classification schedule to determine your property’s taxable value. The tax rate you pay varies by location. For example:
- Garland City: 0.003455 tax rate;
- Salt Lake: 0.001933 tax rate;
- Wasatch: 0.001863.
In 2016, the average statewide property tax rate for a primary residential property was 0.72%.
Utah Inheritance and Estate Taxes
An estate tax is a federal tax imposed on the estate of a person after death. An inheritance tax is a tax a person is required to pay after inheriting property from a loved one who passed away. In Utah, there is no inheritance tax. Utah’s estate tax has also been phased out and is no longer imposed on the estates of residents who died in 2005 or later.
Other Utah Taxes
Utah Cigarette Tax
The state imposes a cigarette tax on all tobacco products. It equates to $1.70 for a 20-pack and $2.125 per 25-pack of cigarettes.
Utah Alcohol Tax
The Utah Department of Alcoholic Beverage Control regulates excise taxes on liquor and all revenue is collected by the state. Alcohol can only be sold through approved DABC stores.
Utah Gas Tax
Motor fuel is taxed at $0.311 per gallon but electricity and propane gas are exempt from taxation.
Utah’s tax system includes state income tax, property taxes, and sales taxes. With a better understanding of the state’s tax regulations, you can review how you’re taxed and what you owe at the end of the year.
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This post was updated January 30, 2020. It was originally published January 30, 2020.