Bill lowering state income tax passes Utah House, heads back to Senate amended

The proposed legislation would drop the state income tax rate by 0.1%, allow Social Security recipients to keep more of their benefits and establish a state Earned Income Tax Credit.

(Leah Hogsten | The Salt Lake Tribune) Sen. Daniel McCay, R-Riverton talks with legislators during the Utah Legislative Session, Jan. 20, 2022.

A bill that would lower the state income tax rate for corporations and residents passed the Utah House on Wednesday in a split decision, with 63 representatives voting in favor and 12 voting against.

SB59, sponsored by Sen. Daniel McCay, R-Riverton, proposes dropping the state income tax rate from 4.95% to 4.85%. According to the bill’s fiscal note, the cut would save more than a million individual Utah taxpayers $129, on average, in tax year 2022.

The bill would also raise the thresholds on the Social Security benefits that recipients can collect before they are required to pay taxes on the income. It would also establish a nonrefundable state earned income tax credit [EITC] aimed at helping low— and moderate-income families.

“I believe that every dollar we spend here in this Legislature is not ours,” said the bill’s floor sponsor, Rep. Casey Snider, R-Paradise. “... In times where we may have excesses or reserves of cash that are beyond that which we can use for the purposes for which the public has sent use here, it is incumbent upon us to return those dollars home.”

The proposed measures would reduce the state’s education fund — for which income tax revenue is earmarked — by an estimated $192.9 million each year, according to the bill’s fiscal note, along with one-time cuts of $11.5 million and $18 million in fiscal years 2022 and 2023.

The state has budgeted nearly $160 million for tax cuts in 2022.

The bill was not without its detractors.

During the House floor debate on Wednesday, Rep. Joel Briscoe, D-Salt Lake City, advocated for an amendment to the bill that would make the EITC refundable, stating that doing so would “target working families at the lowest end of the income levels in our state.”

Rep. Rosemary Lesser, D-Ogden, proposed a different substitute that would remove the sales tax on groceries in lieu of cutting the state income tax.

But both substitutes were voted down during the meeting and the bill ultimately passed in a vote split primarily along party lines. Rep. Judy Weeks Rohner, R-West Valley City, was the lone Republican to vote against the measure.

The legislation is very much a compromise, the bill’s floor sponsor told the rest of the House, saying that even he “doesn’t love every piece of this [bill] uniformly.”

“But what we’ve crafted here is fair, it’s equitable, it extends across all income brackets, and it makes everybody equally unhappy and happy,” Snider said.

Since the bill’s language was amended by a House committee earlier this month, the legislation will now head back to the Senate for their approval.