Governor Spencer Cox said he was looking forward to signing the income tax cut.
The Utah Senate on Thursday gave unanimous final approval to a nearly $200 million tax relief package that would cut the state’s income tax rate from 4.95% to 4.85 % for residents and companies.
SB59, sponsored by State Sen. Dan McCay, R-Riverton, also includes the implementation of the Earned Income Tax Credit for low-income Utahns and an extension of the US Social Security Tax Credit. ‘State.
In January, Senate President Stuart Adams said the legislature was seeking $160 million in tax relief for Utahns, calling 2022 “the year of the tax cut.” After weeks of negotiations, the legislature then included an additional $16 million to establish an earned income tax credit and approximately $15 million to expand the state’s Social Security tax credit, totaling a just over $190 million in tax cuts.
“Today is a good day as we cut taxes again and put more money back into the hands of hard-working Utahns,” Adams said in a statement late Thursday, which added that the Senate president had signed the bill.
“I appreciate the work we’ve done to make sure all of our families are taken care of and that we’re more mindful of some of the unique situations our families find themselves in,” said Senator Kathleen Riebe, D-Cottonwood Heights, after the bill received 28 votes from the Senate.
Under the bill, a family of four, earning an annual income of $72,000 per year, would receive a tax reduction of approximately $100 per year, or $8 per month. The earned income tax credit, which is non-refundable, would result in savings of $194 for more than 81,000 people for the 2022 tax year, according to the bill’s tax note.
The bill does not mention removing a sales tax on food, as several Democratic lawmakers had hoped. But State Sen. Luz Escamilla, D-Salt Lake City, on Wednesday expressed her approval of the creation of an earned income tax credit included in the bill.
On Wednesday, McCay’s tax relief package was approved by the Utah House of Representatives in a 63-12 vote.
Tax cuts will reduce the amount of revenue available to the state to fund public and higher education. Lawmakers have previously said any reduction in revenue will be replaced by future economic growth.
“Our rainy day fund is nearly full, and we’re now in a position where we can take some of that money and return it to taxpayers,” McCay previously said.
Late last year, Governor Spencer Cox proposed a “grocery tax credit,” but lawmakers don’t seem to have an appetite for the idea this year. The governor said in a statement late Thursday that he would sign the income tax cut into Utah law.
“Overall, these tax cuts will return hard-earned money to Utah families and ease current inflationary pressures,” Cox said. “These tax cuts are a tremendous win for Utah families and seniors, and I look forward to signing this bill into law.”