Utah lawmakers looking at $15M Social Security tax cut

(Social Security Administration) This is a screen shot of the main page of the Social Security Administration. Utah lawmakers are considering a $15M tax cut for Social Security recipients.

Members of the House Revenue and Taxation Committee voted unanimously Monday for a bill that would offer $15 million in new tax credits to Utah Social Security recipients.

The bill, HB181, would extend benefits to roughly 58,000 retirees with tax credits phasing out for joint filers earning more than $45,000. The current $450 tax credit for retirees earning $30,000 or less would continue, but qualifying Utahns would need to choose which of the two credits to claim on their filings.

“We’re actually taxing the Social Security part twice,” said Rep. Walt Brooks, R-St. George. “We tax it when they make it, and we’re taxing again when they receive it.”

Earlier this year, lawmakers repealed a series of tax reforms that included expansion of the tax credit for Social Security recipients. That broader effort would have cut a combined $160 million in state taxes through a mix of reductions to the income tax and increases to the state sales tax.

Legislative leaders say additional adjustments to the tax code are needed to bolster the sales tax base, which has eroded under shifts in spending habits.

But a comprehensive reform effort is not expected this year as lawmakers have prioritized a shift in the state’s funding model for public education. Concerns over the coronavirus have also added to speculation that an economic downturn is approaching the state and nation, prompting calls for surplus funding to be held in reserve for emergency uses.

On Monday, representatives of AARP and the YWCA spoke in favor of expanding the Social Security tax credit. Danny Harris, advocacy director for AARP Utah, said Utah is one of roughly a dozen states that continues to levy taxes against Social Security income.

“This issue is regularly the top priority for our membership,” Harris said.

HB181 will now move to the full House for consideration.

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