The ‘below-average Joe’ will pay more, and Utah may get an additional $80 million because of the new tax law

Al Hartmann | Tribune file photo Utah Tax Commission Chairman John Valentine gave lawmakers estimates on how much the federal tax bill will affect state taxes.

Utahns will contribute as much as $80 million more to the state budget thanks to recent federal tax changes that also make complex state revamp risky this year, the state’s top tax official told lawmakers Thursday night.

The Legislature could reduce that number by adding some tax breaks, John Valentine, chairman of the Utah Tax Commission, told top lawmakers.

Average filers will see their state taxes rise because Utah’s personal income tax code was tied to the federal code, but most will see a net decrease in combined state and federal taxes, thanks to the massive bill Congress passed last month.

State taxes will rise for middle-income Utahns because some exemptions that helped keep taxes lower were removed from the federal tax code. A married person filing jointly, who has three dependents and $70,000 in adjusted income — the average Utah filer — would see his or her state taxes go up by $233, or a 10 percent tax increase. Taxes for some low-income filers will also rise.

“Absent any changes by the Utah Legislature, below-average Joe would be paying $67 in taxes he didn’t have to pay before,” Valentine said.

Valentine said he’s working with the governor’s office and legislative economists to determine how big of a personal exemption the state could create without losing money, if lawmakers wanted to further lower the amount of money brought in as a result of the federal revamp.

The estimate comes as legislators are deciding whether to make overall tax changes a top priority this session. Gov. Gary Herbert called on lawmakers to prioritize the issue this session, which was echoed by Senate President Wayne Niederhauser.

But the federal changes are making lawmakers hesitant to jump into a tax debate of their own, and Valentine said risk is involved with a revamp.

Top House Republicans expressed concern Thursday about potential significant changes to personal income taxes to bring down those numbers, saying they might want to be cautious before spending money that’s based on estimates of a complicated federal law. House Speaker Greg Hughes, R-Draper, told The Salt Lake Tribune that this may not be the year for a wholesale revamp.

Without further changes, the federal tax law could provide the state between $25 million and $80 million, which Valentine called a conservative estimate.

Valentine advised against significant changes with Utah’s business tax code because forecasts are uncertain about the impact the federal changes will have.

“We have a lot of risk in forecasting, and we may have over- or underforecasted,” Valentine said. “We need to see what changes in behavior occur.”