Utah Gov. Spencer Cox has signed a nearly $200 million tax relief package that will lower the state’s income tax rate from 4.95% to 4.85% for residents and corporations.
The tax cut bill, SB59, sponsored by state Sen. Dan McCay, R-Riverton, also includes the implementation of an Earned Income Tax Credit for low-income Utahns and an expansion to the state’s Social Security tax credit.
The Utah Senate gave unanimous final approval of the tax cut package on Thursday afternoon with 28 votes. Hours after its passage in the Legislature, Cox said he looked forward to signing the bill. He penned his name to the legislation Friday.
“All together, these tax cuts will return hard-earned money to Utah families and alleviate current inflationary pressures,” Cox said on Thursday. “These tax cuts are a tremendous win for Utah families and seniors, and I look forward to signing this bill into law.”
Late last year Cox proposed a “grocery tax credit,” but lawmakers appeared not to have an appetite for the idea this year.
In January, Senate President Stuart Adams said the Legislature was seeking to provide $160 million in tax relief for Utahns, calling 2022 “the year of the tax cut.” After weeks of negotiations, the Legislature later included another $16 million in establishing an Earned Income Tax Credit and about $15 million in expanding the state’s Social Security tax credit, totaling just over $190 million worth of tax cuts.
“Today is a good day because we have reduced taxes once again and put more money back into the hands of hard-working Utahns,” Adams said in a statement Thursday evening, which added that the senate president has signed the bill.
“I appreciate the work we’ve done to make sure that all of our families are taken care of and that we are being more mindful in some of the unique situations that our families are in,” said state Sen. 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 a year, would receive a tax cut of about $100 each year, or $8 a month. The Earned Income Tax Credit, which is nonrefundable, would result in $194 worth of savings for more than 81,000 individuals for tax year 2022, according to the bill’s fiscal note.
The bill did not include removing a sales tax on food, as several Democratic legislators hoped. But state Sen. Luz Escamilla, D-Salt Lake City, on Wednesday expressed approval about 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 on a 63-12 vote.
The tax cuts will reduce the amount of revenue the state has to fund public and higher education. Lawmakers have previously said that any reduction in revenue will be replaced with future economic growth.
“Our rainy day funds are nearly full, and we’re in a position now where we can take some of that money and return it to the taxpayers,” McCay previously said.