Tax Penalties Amendments

32
59-10-1018
59-10-1019
59-10-1047
0
Tax Penalties Amendments
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Melissa G. Ballard
Senate Sponsor: Heidi Balderree
LONG TITLE
General Description:
This bill addresses tax penalties within the Individual Income Tax Act.
Highlighted Provisions:
This bill:
removes marriage penalties from certain individual income tax credits over a five-year
period, resulting in the income phaseout amounts for filers who have single, head of
household, or married filing separately status, beginning in 2030, to be half of the
amount for filers who have joint filing status; and
makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides retrospective operation.
Utah Code Sections Affected:
AMENDS:
59-10-1018
, as last amended by Laws of Utah 2023, Chapter 459
59-10-1019
, as last amended by Laws of Utah 2022, Chapter 258
59-10-1047
, as last amended by Laws of Utah 2025, Chapter 407
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
59-10-1018
is amended to read:
59-10-1018
. Definitions -- Nonrefundable taxpayer tax credits.
(1)
As used in this section:
(a)
"Head of household filing status" means a head of household, as defined in Section
2(b), Internal Revenue Code, who files a single federal individual income tax return
for the taxable year.
(b)
"Joint filing status" means:
(i)
spouses who file a single return jointly under this chapter for a taxable year; or
(ii)
a surviving spouse, as defined in Section 2(a), Internal Revenue Code, who files a
single federal individual income tax return for the taxable year.
(c)
"Married filing separately status" means a married individual who:
(i)
does not file a single federal individual income tax return jointly with that married
individual's spouse for the taxable year; and
(ii)
files a single federal individual income tax return for the taxable year.
(c)
(d)
"Qualifying dependent" means an individual with respect to whom the claimant
is allowed to claim a tax credit under Section 24, Internal Revenue Code, on the
claimant's federal individual income tax return for the taxable year.
(d)
(e)
"Single filing status" means
:
a single individual who files a single federal
individual income tax return for the taxable year.
(i)
a single individual who files a single federal individual income tax return for the
taxable year; or
(ii)
a married individual who:
(A)
does not file a single federal individual income tax return jointly with that
married individual's spouse for the taxable year; and
(B)
files a single federal individual income tax return for the taxable year.
(e)
(f)
"State or local income tax" means the lesser of:
(i)
the amount of state or local income tax that the claimant:
(A)
pays for the taxable year; and
(B)
reports on the claimant's federal individual income tax return for the taxable
year, regardless of whether the claimant is allowed an itemized deduction on
the claimant's federal individual income tax return for the taxable year for the
full amount of state or local income tax paid; and
(ii)
$10,000.
(f)
(g)
(i)
"Utah itemized deduction" means the amount the claimant deducts as
allowed as an itemized deduction on the claimant's federal individual income tax
return for that taxable year minus any amount of state or local income tax for the
taxable year.
(ii)
"Utah itemized deduction" does not include any amount of qualified business
income that the claimant subtracts as allowed by Section 199A, Internal Revenue
Code, on the claimant's federal income tax return for that taxable year.
(g)
(h)
"Utah personal exemption" means, subject to Subsection
(6)
, $1,750 multiplied
by the number of the claimant's qualifying dependents plus an additional qualifying
dependent in the year of a qualifying dependent's birth.
(2)
Except as provided in Section
59-10-1002.2
, and subject to Subsections
(3)
through (5),
a claimant may claim a nonrefundable tax credit against taxes otherwise due under this
part
chapter
equal to the sum of:
(a)
(i)
for a claimant that deducts the standard deduction on the claimant's federal
individual income tax return for the taxable year, 6% of the amount the claimant
deducts as allowed as the standard deduction on the claimant's federal individual
income tax return for that taxable year; or
(ii)
for a claimant that itemizes deductions on the claimant's federal individual
income tax return for the taxable year, 6% of the amount of the claimant's Utah
itemized deduction; and
(b)
6% of the claimant's Utah personal exemption.
(3)
A claimant may not carry forward or carry back a tax credit under this section.
(4)
The tax credit allowed by Subsection
(2)
shall be reduced by $.013 for each dollar by
which a claimant's state taxable income exceeds:
(a)
for a claimant who has a single filing status
or a married filing separately status
,
$15,095
$18,696
;
(b)
for a claimant who has a head of household filing status
, $22,643
:
(i)
for the taxable year beginning on January 1, 2026, $28,045;
(ii)
for the taxable year beginning on January 1, 2027, 72% of the amount calculated
in accordance with Subsection
(5)(c)
for a claimant who has a joint filing status,
rounded to the nearest whole dollar
;
(iii)
for the taxable year beginning on January 1, 2028, 67% of the amount calculated
in accordance with Subsection
(5)(c)
for a claimant who has a joint filing status,
rounded to the nearest whole dollar;
(iv)
for the taxable year beginning on January 1, 2029, 60% of the amount calculated
in accordance with Subsection
(5)(c)
for a claimant who has a joint filing status,
rounded to the nearest whole dollar; or
(v)

for a taxable year beginning on or after January 1, 2030, 50% of the amount
calculated in accordance with Subsection
(5)(c)
for a claimant who has a joint
filing status, rounded to the nearest whole dollar;
or
(c)
for a claimant who has a joint filing status,
$30,190
$37,392
.
(5)
(a)
For a taxable year beginning on or after January 1,
2022
2027
, the commission
shall increase or decrease annually the
following dollar amounts
dollar amount
listed in Subsection
(4)(a)
by a percentage equal to the percentage difference between
the consumer price index for the preceding calendar year and the consumer price
index for calendar year
2020:
2025.
(i)
the dollar amount listed in Subsection
(4)(a)
; and
(ii)
the dollar amount listed in Subsection
(4)(b)
.
(b)
After the commission increases or decreases the dollar
amounts
amount
listed in
Subsection (4)(a) as required by
Subsection
(5)(a)
, the commission shall round
those
that
dollar
amounts listed in Subsection
(5)(a)
amount
to the nearest whole dollar.
(c)
After the commission rounds the dollar
amounts
amount
as required by Subsection
(5)(b)
, the commission shall increase or decrease the dollar amount listed in
Subsection
(4)(c)
so that the dollar amount listed in Subsection
(4)(c)
is equal to the
product of:
(i)
the dollar amount listed in Subsection
(4)(a)
; and
(ii)
two.
(d)
For purposes of Subsection
(5)(a)
, the commission shall calculate the consumer price
index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
(6)
(a)
For a taxable year beginning on or after January 1, 2022, the commission shall
increase annually the Utah personal exemption amount listed in Subsection
(1)(g)
(1)(h)
by a percentage equal to the percentage by which the consumer price index for
the preceding calendar year exceeds the consumer price index for calendar year 2020.
(b)
After the commission increases the Utah personal exemption amount as described in
Subsection
(6)(a)
, the commission shall round the Utah personal exemption amount
to the nearest whole dollar.
(c)
For purposes of Subsection
(6)(a)
, the commission shall calculate the consumer price
index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
Section 2. Section
59-10-1019
is amended to read:
59-10-1019
. Definitions -- Nonrefundable retirement tax credit.
(1)
As used in this section:
(a)
"Eligible claimant" means a claimant, regardless of whether that claimant is retired,
who was born on or before December 31, 1952.
(b)
"Head of household filing status" means the same as that term is defined in Section
59-10-1018
.
(c)
"Joint filing status" means the same as that term is defined in Section
59-10-1018
.
(d)
"Married filing separately status" means a married individual who:
(i)
does not file a single federal individual income tax return jointly with that married
individual's spouse for the taxable year; and
(ii)
files a single federal individual income tax return for the taxable year.
(e)
"Modified adjusted gross income" means the sum of the following for an eligible
claimant or, if the eligible claimant's return under this chapter is allowed a joint filing
status, the eligible claimant and the eligible claimant's spouse:
(i)
adjusted gross income for the taxable year for which a tax credit is claimed under
this section;
(ii)
any interest income that is not included in adjusted gross income for the taxable
year described in Subsection
(1)(e)(i)
; and
(iii)
any addition to adjusted gross income required by Section
59-10-114
for the
taxable year described in Subsection
(1)(e)(i)
.
(f)
"Single filing status" means a single individual who files a single federal individual
income tax return for the taxable year.
(2)
Except as provided in Section
59-10-1002.2
and Subsections
(3)
and
(4)
, each eligible
claimant may claim a nonrefundable tax credit of $450 against taxes otherwise due
under this
part
chapter
.
(3)
An eligible claimant may not:
(a)
carry forward or carry back the amount of a tax credit under this section that exceeds
the eligible claimant's tax liability for the taxable year; or
(b)
claim a tax credit under this section for a taxable year if a tax credit under Section
59-10-1042
or
59-10-1043
is claimed on the claimant's return for the same taxable
year.
(4)
(a)
The
For the taxable year beginning on January 1, 2026, the
tax credit allowed by
Subsection
(2)
claimed on a return filed under this
part
chapter
shall be reduced by
$.025 for each dollar by which modified adjusted gross income for purposes of the
return exceeds:
(a)
(i)
for a federal individual income tax return that is allowed a married filing
separately status, $16,000;
(b)
(ii)
for a federal individual income tax return that is allowed a single filing
status,
$25,000
$24,400
;
(c)
(iii)
for a federal individual income tax return that is allowed a head of
household filing status,
$32,000
$31,200
; or
(d)
(iv)
for a
return under this chapter
federal individual income tax return
that is
allowed a joint filing status, $32,000.
(b)
For the taxable year beginning on January 1, 2027, the tax credit allowed by
Subsection
(2)
claimed on a return filed under this chapter shall be reduced by $.025
for each dollar by which modified adjusted gross income for purposes of the return
exceeds:
(i)
for a federal individual income tax return that is allowed a married filing
separately status, $16,000;
(ii)
for a federal individual income tax return that is allowed a single filing status,
$23,200;
(iii)
for a federal individual income tax return that is allowed a head of household
filing status, $29,600; or
(iv)
for a federal individual income tax return that is allowed a joint filing status,
$32,000.
(c)
For the taxable year beginning on January 1, 2028, the tax credit allowed by
Subsection
(2)
claimed on a return filed under this chapter shall be reduced by $.025
for each dollar by which modified adjusted gross income for purposes of the return
exceeds:
(i)
for a federal individual income tax return that is allowed a married filing
separately status, $16,000;
(ii)
for a federal individual income tax return that is allowed a single filing status,
$20,800;
(iii)
for a federal individual income tax return that is allowed a head of household
filing status, $26,700; or
(iv)
for a federal individual income tax return that is allowed a joint filing status,
$32,000.
(d)
For the taxable year beginning on January 1, 2029, the tax credit allowed by
Subsection
(2)
claimed on a return filed under this chapter shall be reduced by $.025
for each dollar by which modified adjusted gross income for purposes of the return
exceeds:
(i)
for a federal individual income tax return that is allowed a married filing
separately status, $16,000;
(ii)
for a federal individual income tax return that is allowed a single filing status,
$17,700;
(iii)
for a federal individual income tax return that is allowed a head of household
filing status, $22,700; or
(iv)
for a federal individual income tax return that is allowed a joint filing status,
$32,000.
(e)
For a taxable year beginning on or after January 1, 2030, the tax credit allowed by
Subsection
(2)
claimed on a return filed under this chapter shall be reduced by $.025
for each dollar by which modified adjusted gross income for purposes of the return
exceeds:
(i)
for a federal individual income tax return that is allowed a single filing status, a
head of household filing status, or a married filing separately status, $16,000; or
(ii)
for a federal individual income tax return that is allowed a joint filing status,
$32,000.
Section 3. Section
59-10-1047
is amended to read:
59-10-1047
. Nonrefundable child tax credit.
(1)
As used in this section:
(a)
"Joint filing status" means the same as that term is defined in Section
59-10-1018
.
(b)
"Head of household filing status" means the same as that term is defined in Section
59-10-1018
.
(c)
"Married filing separately status" means a married individual who:
(i)
does not file a single federal individual income tax return jointly with that married
individual's spouse for the taxable year; and
(ii)
files a single federal individual income tax return for the taxable year.
(d)
"Modified adjusted gross income" means the sum of the following for a claimant or,
if the claimant's federal individual income tax return is allowed a joint filing status,
the claimant and the claimant's spouse:
(i)
adjusted gross income for the taxable year for which a tax credit is claimed under
this section;
(ii)
any interest income that is not included in adjusted gross income for the taxable
year described in Subsection
(1)(d)(i)
; and
(iii)
any addition to adjusted gross income required by Section
59-10-114
for the
taxable year described in Subsection
(1)(d)(i)
.
(e)
"Qualifying child" means an individual:
(i)
with respect to whom the claimant is allowed to claim a tax credit under Section
24, Internal Revenue Code, on the claimant's federal individual income tax return
for the taxable year; and
(ii)
who is under six years old on the last day of the claimant's taxable year.
(f)
"Single filing status" means a single individual who files a single federal individual
income tax return for the taxable year.
(2)
Subject to Section
59-10-1002.2
, a claimant may claim a nonrefundable tax credit of
$1,000 for each qualifying child.
(3)
A claimant may not carry forward or carry back the amount of the tax credit that
exceeds the claimant's tax liability.
(4)
(a)
For the taxable year beginning on January 1, 2026, the tax credit allowed by
Subsection
(2)
claimed on a return filed under this chapter shall be reduced by $.10
for each dollar by which modified adjusted gross income for purposes of the return
exceeds:
(i)
for a federal individual income tax return that is allowed a married filing
separately status, $27,000;
(ii)
for a federal individual income tax return that is allowed a single filing status or a
head of household filing status, $41,900; or
(iii)
for a federal individual income tax return that is allowed a joint filing status,
$54,000.
(b)
For the taxable year beginning on January 1, 2027, the tax credit allowed by
Subsection
(2)
claimed on a return filed under this chapter shall be reduced by $.10
for each dollar by which modified adjusted gross income for purposes of the return
exceeds:
(i)
for a federal individual income tax return that is allowed a married filing
separately status, $27,000;
(ii)
for a federal individual income tax return that is allowed a single filing status or a
head of household filing status, $39,800; or
(iii)
for a federal individual income tax return that is allowed a joint filing status,
$54,000.
(c)
For the taxable year beginning on January 1, 2028, the tax credit allowed by
Subsection
(2)
claimed on a return filed under this chapter shall be reduced by $.10
for each dollar by which modified adjusted gross income for purposes of the return
exceeds:
(i)
for a federal individual income tax return that is allowed a married filing
separately status, $27,000;
(ii)
for a federal individual income tax return that is allowed a single filing status or a
head of household filing status, $35,800; or
(iii)
for a federal individual income tax return that is allowed a joint filing status,
$54,000.
(d)
For the taxable year beginning on January 1, 2029, the tax credit allowed by
Subsection
(2)
claimed on a return filed under this chapter shall be reduced by $.10
for each dollar by which modified adjusted gross income for purposes of the return
exceeds:
(i)
for a federal individual income tax return that is allowed a married filing
separately status, $27,000;
(ii)
for a federal individual income tax return that is allowed a single filing status or a
head of household filing status, $30,500; or
(iii)
for a federal individual income tax return that is allowed a joint filing status,
$54,000.
(e)
For a taxable year beginning on or after January 1, 2030, the tax credit allowed by
Subsection
(2)
claimed on a return filed under this chapter shall be reduced by $.10
for each dollar by which modified adjusted gross income for purposes of the return
exceeds:
(i)
for a federal individual income tax return that is allowed a single filing status, a
head of household filing status, or a married filing separately status, $27,000; or
(ii)
for a federal individual income tax return that is allowed a joint filing status,
$54,000.
(4)
The tax credit allowed by Subsection
(2)
claimed on a return filed under this part shall
be reduced by $.10 for each dollar by which modified adjusted gross income for
purposes of the return exceeds:
(a)
for a federal individual income tax return that is allowed a married filing separately
status, $27,000;
(b)
for a federal individual income tax return that is allowed a single filing status or
head of household filing status, $43,000; and
(c)
for a federal individual income tax return that is allowed a joint filing status,
$54,000.
Section 4.
Effective Date.
This bill takes effect on
May 6, 2026
.
Section 5.
Retrospective operation.
This bill has retrospective operation for a taxable year beginning on or after
January 1,
2026
.
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