Utah tax chief: Lawmakers should come back into session and deal with tax breaks for people with dependents

Al Hartmann | The Salt Lake Tribune Sen. John Valentine, the major force behind Utah’s liquor laws, speaks to members of the Utah Legislature and other policy makers at the Utah Alcohol Policy Summit Thursday, Sept. 18, 2014, at the Utah Capitol. It was Valentine's last time addressing a legislative body as a state senator. He now heads the state tax commission.

State tax officials are calling for a special session of the Utah Legislature to enact changes that would lessen the impact of increased state income taxes coming as a result of federal tax reform passed by Congress.

The federal reform will lead to some families seeing a bigger state tax bill. Utah Tax Commission Chairman John Valentine said Tuesday that lawmakers should meet in July and reinstate four tax credits that would slightly offset state tax increases headed this way.

Four specific deductions for people with dependents were effectively nullified when Congress passed the massive tax overhaul bill at the end of last year.

So parents who stay at home and take care of their children can no longer file for Utah’s $100-per-child At-Home Parent Tax Credit, Valentine said.

“You won’t get that deduction any longer unless the Legislature makes the changes that we’re proposing,” he said at the annual conference of the Utah Taxpayers Association.

People will lose the credit because Utah’s tax code is tied to the federal tax code, which is also what will lead to increased state taxes for middle-income families.

Parents whose kids donate an organ will no longer be able to claim a tax credit for the procedure.

The $900 tax credit for health-care benefit plans for taxpayers with dependents will also go away unless the Legislature decides to revive it, Valentine said.

“If you’re in that narrow category it means a lot to you,” Valentine said. “If you aren’t in that narrow category, it doesn’t affect you.”

The tax commission hasn’t yet studied the impact those changes would have on the state’s budget, but Valentine said it would be small — likely less than in the millions of dollars. The commission didn’t immediately respond to questions about how many people claimed those deductions in recent years.

If there is a special session, Valentine said, lawmakers should also fix a mistake that was made in a bill passed during the past legislative session that seeks to give business taxpayers some leeway on cash that’s brought from overseas back to the U.S.

Federal law now will give companies eight years to pay the so-called Repatriation Tax, and lawmakers sought to align Utah’s tax law but included the wrong date in the bill — giving them only one year.