The Utah Legislature has approved a $400 million tax cut package, and $208 million will go towards dropping Utah’s income tax rate from 4.85% to 4.65% effective January 1st, 2023.
With this tax reduction, low-income households will see a 22% tax cut, middle-income households will see a 6% tax cut and high-income households will see a 4% tax cut.
Employers who process their own payroll will have new tax tables to use when calculating employee tax deductions. If you use an outsourced payroll provider, they have likely already made the necessary changes in their payroll software. Your employees may have already noticed reduced Utah state tax amounts coming out of their paychecks as a result of the new tax tables. For taxes that were calculated at the higher rate before the law was active, they will likely be refunded when individuals file their 2023 Utah state tax returns at the beginning of 2024.
In addition to the reduction of income taxes, H.B 54 Tax Revisions also made the following changes:
- Expanding social security tax credit eligibility to individuals who earn up to $75,000 a year.
- Providing tax benefits for pregnant women by allowing double dependent exemption for child in the year of their birth.
- Increasing the earned income tax credit (EITC) from 15% to 20% of the federal credit.
Stuart Adams, the Utah State Senator, said, “For the third year in a row, we will return money to the hard-working Utahns who earned it. We will continue to promote long-term investments that help families, individuals and businesses succeed. We will also fund education at record levels and address pressing issues facing our state, including Utah’s water crisis. The foresight of years past has enabled our economy to be the envy of the nation, and we are committed to having the same foresight that has and will continue to produce a strong and stable economy.”
If you have any questions regarding payroll taxes, reach out to us at service@helpside.com.