The Utah Legislature’s Tax Restructuring and Equalization Task Force made their recommendations for comprehensive tax reform public this morning. If their recommendations are passed, Utahns would see upwards of a 10 percent cut in their state income taxes, along with some other income tax savings. Some businesses will be impacted more than others by these proposed changes. The current plan by GOP legislative leaders is to call a special session before year’s end to pass some or all of the task force’s recommendations if a consensus can be reached.
Here are some of the highlights of the task force recommendations:
- Reduce individual and corporate income tax rates by at least 0.25 percent.
- Increase the exemption amount per dependent from $565 to $2,500
- Create an income tax credit for Social Security income
- Restore full sales tax rate on unprepared food bought at grocery stores.
- For low-income Utahns, a $100 per person, per family refundable income tax credit would be adopted.
- Repeal certain sales tax exemptions some of which include the following:
- Construction materials for life science research facility (material converted to real property only)
- Electricity to ski resorts for lifts
- Admissions to college athletic events
- Textbooks purchased by a student (not including a college bookstore; seller sales primarily textbooks)
- Gold, silver, platinum (bars, coins, etc.; not legal tender; content 50%+ gold, silver, or platinum)
- Car wash that does not include cleaning the interior of the vehicle
- Fuel sold to a common carrier railroad and used in a locomotive engine
- Sales tax would be added to a number of services some of which include the following:
- Maintenance and repair of real property (e.g. landscaping, painting, cleaning)
- Software as a Service (excluding custom business software programming)
- Installation of tangible personal property
- Veterinary services (with agriculture exemption)
- Newspaper publishing
- Taxi and limousine service
- Streaming media
- Peer to peer ride sharing (i.e. Uber and Lyft)
- Scenic and sightseeing transportation
- Shipping and handling when part of a taxable sale
- Tour operators
- Portrait photography services
- Photofinishing laboratories
- Sports and recreation instruction
- Motor vehicle towing
- Parking lots and garages
- The state gasoline tax will NOT be increased in this plan. However, they propose removing the existing sales tax exemption on motor and special fuels (gasoline and diesel, does not include aviation fuel)
- In a separate bill to be introduced in an upcoming special session, the current state constitutional earmark that all income taxes go to higher and public education would be eliminated.
- Such a change would have to pass by two-thirds in the House and Senate, and then be approved by a majority vote in the 2020 election.
- The state rental car and truck tax would go from 2.5 percent to 4 percent.
You can review the entire initial draft proposal from the Tax Restructuring and Equalization Task Force at https://le.utah.gov/interim/2019/pdf/00004608.pdf. The Task Force is seeking public comments on their proposals. Every business is unique, and that is why you must ensure your voice is heard on major policy issues like comprehensive tax reform. Tell the Tax Restructuring and Equalization Task Force how their comprehensive tax reform proposal will impact you and your business today by submitting comments at StrongerFutures.utah.gov.
You can also educate your State Legislators about how tax reform will impact your business by calling or emailing them. The Utah legislature has a great tool on its website to find your legislators. Go to the
Utah State Legislative District Map to find your legislator’s contact information today.
