Income Tax Amendments

25
59-7-104
59-7-105
59-7-106
59-7-201
59-10-104
59-10-114
0
Income Tax Amendments
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Steve Eliason
Senate Sponsor:
LONG TITLE
General Description:
This bill modifies income tax provisions.
Highlighted Provisions:
This bill:
amends the corporate franchise and income tax rates;
amends the individual income tax rate;
creates an addition for domestic research and experimental expenditures that a taxpayer
fully deducts on the federal tax return for a taxable year; and
authorizes a taxpayer that adds back domestic research and experimental expenditures to
subtract those expenditures according to an amortization schedule on the state tax return.
Money Appropriated in this Bill:
This bill appropriates
($88,461,800)
in capital project funds for fiscal year 2027, all of
which is from the Income Tax Fund.
Other Special Clauses:
This bill provides retrospective operation.
Utah Code Sections Affected:
AMENDS:
59-7-104
Effective
05/06/26
Applies beginning
01/01/26
, as last amended by Laws of
Utah 2025, Chapter 407
59-7-105
Effective
05/06/26
Applies beginning
01/01/26
, as last amended by Laws of
Utah 2025, First Special Session, Chapter 9
59-7-106
Effective
05/06/26
Applies beginning
01/01/26
, as last amended by Laws of
Utah 2025, First Special Session, Chapter 9
59-7-201
Effective
05/06/26
Applies beginning
01/01/26
, as last amended by Laws of
Utah 2025, Chapter 407
59-10-104
Effective
05/06/26
Applies beginning
01/01/26
, as last amended by Laws
of Utah 2025, Chapter 407
59-10-114
Effective
05/06/26
Applies beginning
01/01/26
, as last amended by Laws
of Utah 2025, First Special Session, Chapter 9
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
59-7-104
is amended to read:
59-7-104
Effective
05/06/26
Applies beginning
01/01/26
. Tax -- Minimum tax.
(1)
Each domestic and foreign corporation, except a corporation that is exempt under
Section
59-7-102
, shall pay an annual tax to the state based on the corporation's Utah
taxable income for the taxable year for the privilege of exercising the corporation's
corporate franchise or for the privilege of doing business in the state.
(2)
The tax shall be
4.5
4.45
% of a corporation's Utah taxable income.
(3)
The minimum tax a corporation shall pay under this chapter is $100.
Section 2. Section
59-7-105
is amended to read:
59-7-105
Effective
05/06/26
Applies beginning
01/01/26
. Additions to
unadjusted income.
In computing adjusted income the following amounts shall be added to unadjusted
income:
(1)
interest from bonds, notes, and other evidences of indebtedness issued by any state of
the United States, including any agency and instrumentality of a state of the United
States;
(2)
the amount of any deduction taken on a corporation's federal return for taxes paid by a
corporation:
(a)
to Utah for taxes imposed by this chapter; and
(b)
to another state of the United States, a foreign country, a United States possession, or
the Commonwealth of Puerto Rico for taxes imposed for the privilege of doing
business, or exercising its corporate franchise, including income, franchise, corporate
stock and business and occupation taxes;
(3)
the safe harbor lease adjustment required under Subsections
59-7-111(1)(a)
and
(2)(a)
;
(4)
capital losses that have been deducted on a Utah corporate return in previous years;
(5)
any deduction on the federal return that has been previously deducted on the Utah return;
(6)
charitable contributions, to the extent deducted on the federal return when determining
federal taxable income;
(7)
the amount of gain or loss determined under Section
59-7-114
relating to a target
corporation under Section 338, Internal Revenue Code, unless such gain or loss has
already been included in the unadjusted income of the target corporation;
(8)
the amount of gain or loss determined under Section
59-7-115
relating to
corporations
a corporation
treated for federal purposes as having disposed of
its
the corporation's

assets under Section 336(e), Internal Revenue Code, unless such gain or loss has already
been included in the unadjusted income of the target corporation;
(9)
adjustments to gains, losses, depreciation expense, amortization expense, and similar
items due to a difference between basis for federal purposes and basis as computed
under Section
59-7-107
;
(10)
the amount withdrawn under Title
53H, Chapter 10
, Utah Education Savings, from the
account of a corporation that is an account owner as defined in Section
53H-10-101
, for
the taxable year for which the amount is withdrawn, if that amount withdrawn from the
account of the corporation that is the account owner:
(a)
is not expended for:
(i)
higher education costs as defined in Section
53H-10-201
; or
(ii)
a payment or distribution that qualifies as an exception to the additional tax for
distributions not used for educational expenses provided in Sections 529(c) and
530(d), Internal Revenue Code; and
(b)
is subtracted by the corporation:
(i)
that is the account owner; and
(ii)
in accordance with Subsection
59-7-106(1)(r)
;
(11)
the amount of the deduction for dividends paid, as defined in Section 561, Internal
Revenue Code, that is allowed under Section 857(b)(2)(B), Internal Revenue Code, in
computing the taxable income of a captive real estate investment trust, if that captive
real estate investment trust is subject to federal income taxation;
and
(12)
any deduction on a return filed under this chapter for a royalty or other expense that a
corporation pays to an entity related by common ownership for the use of an intangible
asset where the intangible asset is owned by the entity related by common ownership
unless the corporation can demonstrate to the satisfaction of the commission or a court
on judicial review in accordance with Section
59-1-602
or
Title 63G, Chapter 4, Part 4,
Judicial Review
, that:
(a)
for the same taxable year, the entity related by common ownership is subject to
income taxes on the royalty or other expense:
(i)
under this chapter;
(ii)
under the laws of another state; or
(iii)
by a foreign government that has in force an income tax treaty with the United
States; or
(b)
if Subsection
(12)(a)
does not apply, the corporation paying the royalty or other
expenses never owned the intangible asset
.
; and
(13)
unless the taxpayer made the election described in Subsection 174A(c)(1), Internal
Revenue Code, the amount of domestic research and experimental expenditures
that the
taxpayer deducted on the federal income tax return in accordance with Section 174A(a),
Internal Revenue Code, for the taxable year.
Section 3. Section
59-7-106
is amended to read:
59-7-106
Effective
05/06/26
Applies beginning
01/01/26
. Subtractions from
unadjusted income.
(1)
In computing adjusted income, the following amounts shall be subtracted from
unadjusted income:
(a)
the foreign dividend gross-up included in gross income for federal income tax
purposes under Section 78, Internal Revenue Code;
(b)
subject to Subsection
(2)
, the net capital loss, as defined for federal purposes, if the
taxpayer elects to deduct the net capital loss on the return filed under this chapter for
the taxable year for which the net capital loss is incurred;
(c)
the decrease in salary expense deduction for federal income tax purposes due to
claiming the federal work opportunity credit under Section 51, Internal Revenue
Code;
(d)
the decrease in qualified research and basic research expense deduction for federal
income tax purposes due to claiming the federal credit for increasing research
activities under Section 41, Internal Revenue Code;
(e)
the decrease in qualified clinical testing expense deduction for federal income tax
purposes due to claiming the federal credit for clinical testing expenses for certain
drugs for rare diseases or conditions under Section 45C, Internal Revenue Code;
(f)
any decrease in any expense deduction for federal income tax purposes due to
claiming any other federal credit;
(g)
the safe harbor lease adjustment required under Subsections
59-7-111(1)(b)
and
(2)(b)
;
(h)
any income on the federal corporation income tax return that has been previously
taxed by Utah;
(i)
an amount included in federal taxable income that is due to a refund of a tax,
including a franchise tax, an income tax, a corporate stock and business tax, or an
occupation tax:
(i)
if that tax is imposed for the privilege of:
(A)
doing business; or
(B)
exercising a corporate franchise;
(ii)
if that tax is paid by the corporation to:
(A)
Utah;
(B)
another state of the United States;
(C)
a foreign country;
(D)
a United States possession; or
(E)
the Commonwealth of Puerto Rico; and
(iii)
to the extent that tax was added to unadjusted income under Section
59-7-105
;
(j)
a charitable contribution, to the extent the charitable contribution is allowed as a
subtraction under Section
59-7-109
;
(k)
subject to Subsection
(3)
, 50% of a dividend considered to be received or received
from a subsidiary that:
(i)
is a member of the unitary group;
(ii)
is organized or incorporated outside of the United States; and
(iii)
is not included in a combined report under Section
59-7-402
or
59-7-403
;
(l)
subject to Subsection
(4)
and Section
59-7-401
, 50% of the adjusted income of a
foreign operating company;
(m)
the amount of gain or loss that is included in unadjusted income but not recognized
for federal purposes on stock sold or exchanged by a member of a selling
consolidated group as defined in Section 338, Internal Revenue Code, if an election
has been made in accordance with Section 338(h)(10), Internal Revenue Code;
(n)
the amount of gain or loss that is included in unadjusted income but not recognized
for federal purposes on stock sold, exchanged, or distributed by a corporation in
accordance with Section 336(e), Internal Revenue Code, if an election under Section
336(e), Internal Revenue Code, has been made for federal purposes;
(o)
subject to Subsection
(5)
, an adjustment to the following due to a difference between
basis for federal purposes and basis as computed under Section
59-7-107
:
(i)
an amortization expense;
(ii)
a depreciation expense;
(iii)
a gain;
(iv)
a loss; or
(v)
an item similar to Subsections
(1)(o)(i)
through
(iv)
;
(p)
an interest expense that is not deducted on a federal corporation income tax return
under Section 265(b) or 291(e), Internal Revenue Code;
(q)
100% of dividends received from a subsidiary that is an insurance company if that
subsidiary that is an insurance company is:
(i)
exempt from this chapter under Subsection
59-7-102(1)(c)
; and
(ii)
under common ownership;
(r)
subject to Subsection
59-7-105(10)
, for a corporation that is an account owner as
defined in Section
53H-10-101
, the amount of a qualified investment as defined in
Section
53H-10-201
:
(i)
that the corporation or a person other than the corporation makes into an account
owned by the corporation during the taxable year;
(ii)
to the extent that neither the corporation nor the person other than the corporation
described in Subsection
(1)(r)(i)
deducts the qualified investment on a federal
income tax return; and
(iii)
to the extent the qualified investment does not exceed the maximum amount of
the qualified investment that may be subtracted from unadjusted income for a
taxable year in accordance with Subsection
53H-10-205(1)
;
(s)
for purposes of income included in a combined report under
Part 4, Combined
Reporting
, the entire amount of the dividends a member of a unitary group receives
or is considered to receive from a captive real estate investment trust;
(t)
the increase in income for federal income tax purposes due to claiming a:
(i)
qualified tax credit bond credit under Section 54A, Internal Revenue Code; or
(ii)
qualified zone academy bond under Section 1397E, Internal Revenue Code;
(u)
for a taxable year beginning on or after January 1, 2019, but beginning on or before
December 31, 2019, only:
(i)
the amount of any FDIC premium paid or incurred by the taxpayer that is
disallowed as a deduction for federal income tax purposes under Section 162(r),
Internal Revenue Code, on the taxpayer's 2018 federal income tax return; plus
(ii)
the amount of any FDIC premium paid or incurred by the taxpayer that is
disallowed as a deduction for federal income tax purposes under Section 162(r),
Internal Revenue Code, for the taxable year; and
(v)
(u)
for a taxable year beginning on or after January 1, 2020,
the amount of any
FDIC premium paid or incurred by the taxpayer that is disallowed as a deduction for
federal income tax purposes under Section 162(r), Internal Revenue Code, for the
taxable year
.
; and
(v)
if the taxpayer added domestic research and experimental expenditures in accordance
with Subsection
59-7-105(13)
, the amount of domestic research and experimental
expenditures, as that term is defined in Section 174A(a), Internal Revenue Code, for
the taxable year that the taxpayer may subtract according to the amortization schedule
described in Subsection
(6)
.
(2)
For purposes of Subsection
(1)(b)
:
(a)
the subtraction shall be made by claiming the subtraction on a return filed:
(i)
under this chapter for the taxable year for which the net capital loss is incurred; and
(ii)
by the due date of the return, including extensions; and
(b)
a net capital loss for a taxable year shall be:
(i)
subtracted for the taxable year for which the net capital loss is incurred; or
(ii)
carried forward as provided in Sections 1212(a)(1)(B) and (C), Internal Revenue
Code.
(3)
(a)
For purposes of calculating the subtraction provided for in Subsection
(1)(k)
, a
taxpayer shall first subtract from a dividend considered to be received or received an
expense directly attributable to that dividend.
(b)
For purposes of Subsection
(3)(a)
, the amount of an interest expense that is
considered to be directly attributable to a dividend is calculated by multiplying the
interest expense by a fraction:
(i)
the numerator of which is the taxpayer's average investment in the dividend
paying subsidiaries; and
(ii)
the denominator of which is the taxpayer's average total investment in assets.
(c)
(i)
For purposes of calculating the subtraction allowed by Subsection
(1)(k)
, in
determining income apportionable to this state, a portion of the factors of a foreign
subsidiary that has dividends that are partially subtracted under Subsection
(1)(k)

shall be included in the combined report factors as provided in this Subsection
(3)(c)
.
(ii)
For purposes of Subsection
(3)(c)(i)
, the portion of the factors of a foreign
subsidiary that has dividends that are partially subtracted under Subsection
(1)(k)

that shall be included in the combined report factors is calculated by multiplying
each factor of the foreign subsidiary by a fraction:
(A)
not to exceed 100%; and
(B)
(I)
the numerator of which is the amount of the dividend paid by the foreign
subsidiary that is included in adjusted income; and
(II)
the denominator of which is the current year earnings and profits of the
foreign subsidiary as determined under the Internal Revenue Code.
(d)
A dividend described in Subsection
(1)(k)
includes amounts included in federal
taxable income under Section 965(a), Internal Revenue Code and amounts included
in federal taxable income under Section 951A, Internal Revenue Code.
(4)
(a)
For purposes of Subsection
(1)(l)
, a taxpayer may not make a subtraction under
Subsection
(1)(l)
:
(i)
if the taxpayer elects to file a worldwide combined report as provided in Section
59-7-403
; or
(ii)
for the following:
(A)
income generated from intangible property; or
(B)
a capital gain, dividend, interest, rent, royalty, or other similar item that is
generated from an asset held for investment and not from a regular business
trading activity.
(b)
In calculating the subtraction provided for in Subsection
(1)(l)
, a foreign operating
company:
(i)
may not subtract an amount provided for in Subsection
(1)(k)
or
(l)
; and
(ii)
prior to determining the subtraction under Subsection
(1)(l)
, shall eliminate a
transaction that occurs between members of a unitary group.
(c)
For purposes of the subtraction provided for in Subsection
(1)(l)
, in determining
income apportionable to this state, the factors for a foreign operating company shall
be included in the combined report factors in the same percentages as the foreign
operating company's adjusted income is included in the combined adjusted income.
(d)
In accordance with
Title 63G, Chapter 3, Utah Administrative Rulemaking Act
, the
commission may by rule define what constitutes:
(i)
income generated from intangible property; or
(ii)
a capital gain, dividend, interest, rent, royalty, or other similar item that is
generated from an asset held for investment and not from a regular business
trading activity.
(5)
(a)
For purposes of the subtraction provided for in Subsection
(1)(o)
, the amount of a
reduction in basis shall be allowed as an expense for the taxable year in which a
federal tax credit is claimed if:
(i)
there is a reduction in federal basis for a federal tax credit; and
(ii)
there is no corresponding tax credit allowed in this state.
(b)
In accordance with
Title 63G, Chapter 3, Utah Administrative Rulemaking Act
, the
commission may by rule define what constitutes an item similar to Subsections
(1)(o)(i)
through
(iv)
.
(6)
(a)
Subject to Subsection
(6)(b)
, a taxpayer may take an amortization subtraction for
domestic research and experimental expenditures ratably over a sixty-month period
beginning with the midpoint of the taxable year in which the taxpayer pays or incurs
the domestic research and experimental expenditures.
(b)
The combined amount of subtractions over the sixty-month period may not exceed
the amount added in accordance with Subsection
59-7-105(13)
for the same domestic
research and experimental expenditures.
Section 4. Section
59-7-201
is amended to read:
59-7-201
Effective
05/06/26
Applies beginning
01/01/26
. Tax -- Minimum tax.
(1)
There is imposed upon each corporation, except a corporation that is exempt under
Section
59-7-102
, a tax upon the corporation's Utah taxable income for the taxable year
that is derived from sources within this state other than income for any period that the
corporation is required to include in the corporation's tax base under Section
59-7-104
.
(2)
The tax imposed by Subsection
(1)
shall be
4.5
4.45
% of a corporation's Utah taxable
income.
(3)
In no case shall the tax be less than $100.
Section 5. Section
59-10-104
is amended to read:
59-10-104
Effective
05/06/26
Applies beginning
01/01/26
. Tax basis -- Tax
rate -- Exemption.
(1)
A tax is imposed on the state taxable income of a resident individual as provided in this
section.
(2)
For purposes of Subsection
(1)
, for a taxable year, the tax is an amount equal to the
product of:
(a)
the resident individual's state taxable income for that taxable year; and
(b)
4.5
4.45
%.
(3)
This section does not apply to a resident individual exempt from taxation under Section
59-10-104.1
.
Section 6. Section
59-10-114
is amended to read:
59-10-114
Effective
05/06/26
Applies beginning
01/01/26
. Additions to and
subtractions from adjusted gross income of an individual.
(1)
There shall be added to adjusted gross income of a resident or nonresident individual:
(a)
a lump sum distribution that the taxpayer does not include in adjusted gross income
on the taxpayer's federal individual income tax return for the taxable year;
(b)
the amount of a child's income calculated under Subsection
(4)
that:
(i)
a parent elects to report on the parent's federal individual income tax return for the
taxable year; and
(ii)
the parent does not include in adjusted gross income on the parent's federal
individual income tax return for the taxable year;
(c)
(i)
a withdrawal from a medical care savings account and any penalty imposed for
the taxable year if:
(A)
the resident or nonresident individual does not deduct the amounts on the
resident or nonresident individual's federal individual income tax return under
Section 220, Internal Revenue Code;
(B)
the withdrawal is subject to Subsections
31A-32a-105(1)
and
(2)
; and
(C)
the withdrawal is subtracted on, or used as the basis for claiming a tax credit
on, a return the resident or nonresident individual files under this chapter;
(ii)
a disbursement required to be added to adjusted gross income in accordance with
Subsection
31A-32a-105(3)
; or
(iii)
an amount required to be added to adjusted gross income in accordance with
Subsection
31A-32a-105(5)(c)
;
(d)
the amount withdrawn under Title
53H, Chapter 10
, Utah Education Savings, from
the account of a resident or nonresident individual who is an account owner as
defined in Section
53H-10-101
, for the taxable year for which the amount is
withdrawn, if that amount withdrawn from the account of the resident or nonresident
individual who is the account owner:
(i)
is not expended for:
(A)
higher education costs as defined in Section
53H-10-201
; or
(B)
a payment or distribution that qualifies as an exception to the additional tax
for distributions not used for educational expenses provided in Sections 529(c)
and 530(d), Internal Revenue Code; and
(ii)
is:
(A)
subtracted by the resident or nonresident individual:
(I)
who is the account owner; and
(II)
on the resident or nonresident individual's return filed under this chapter
for a taxable year beginning on or before December 31, 2007; or
(B)
used as the basis for the resident or nonresident individual who is the account
owner to claim a tax credit under Section
59-10-1017
;
(e)
except as provided in Subsection
(5)
, for bonds, notes, and other evidences of
indebtedness acquired on or after January 1, 2003, the interest from bonds, notes, and
other evidences of indebtedness:
(i)
issued by one or more of the following entities:
(A)
a state other than this state;
(B)
the District of Columbia;
(C)
a political subdivision of a state other than this state; or
(D)
an agency or instrumentality of an entity described in Subsections
(1)(e)(i)(A)

through
(C)
; and
(ii)
to the extent the interest is not included in adjusted gross income on the taxpayer's
federal income tax return for the taxable year;
(f)
subject to Subsection
(2)(c)
, any distribution received by a resident beneficiary of a
resident trust of income that was taxed at the trust level for federal tax purposes, but
was subtracted from state taxable income of the trust pursuant to Subsection
59-10-202(2)(b)
;
(g)
any distribution received by a resident beneficiary of a nonresident trust of
undistributed distributable net income realized by the trust on or after January 1,
2004, if that undistributed distributable net income was taxed at the trust level for
federal tax purposes, but was not taxed at the trust level by any state, with
undistributed distributable net income considered to be distributed from the most
recently accumulated undistributed distributable net income;
(h)
any adoption expense:
(i)
for which a resident or nonresident individual receives reimbursement from
another person; and
(ii)
to the extent to which the resident or nonresident individual subtracts that
adoption expense:
(A)
on a return filed under this chapter for a taxable year beginning on or before
December 31, 2007; or
(B)
from federal taxable income on a federal individual income tax return;
(i)
the amount of tax paid on income attributed to the individual in accordance with
Subsection
59-10-1403.2(2)
that is not included in adjusted gross income; and
(j)
the amount of tax paid:
(i)
on income attributed to the individual and taxable in this state, that is not included
in adjusted gross income;
(ii)
to another state; and
(iii)
that the commission determines is substantially similar to the tax imposed under
Subsection
59-10-1403.2(2)
.
; and
(k)
unless the resident or nonresident individual made the election described in
Subsection 174A(c)(1), Internal Revenue Code, the amount of domestic research and
experimental expenditures for the taxable year that the resident or nonresident
individual deducted on the federal income tax return in accordance with Section 174,
Internal Revenue Code.
(2)
There shall be subtracted from adjusted gross income of a resident or nonresident
individual:
(a)
the difference between:
(i)
the interest or a dividend on an obligation or security of the United States or an
authority, commission, instrumentality, or possession of the United States, to the
extent that interest or dividend is:
(A)
included in adjusted gross income for federal income tax purposes for the
taxable year; and
(B)
exempt from state income taxes under the laws of the United States; and
(ii)
any interest on indebtedness incurred or continued to purchase or carry the
obligation or security described in Subsection
(2)(a)(i)
;
(b)
if the conditions of Subsection
(3)(a)
are met, the amount of income derived by a Ute
tribal member:
(i)
during a time period that the Ute tribal member resides on homesteaded land
diminished from the Uintah and Ouray Reservation; and
(ii)
from a source within the Uintah and Ouray Reservation;
(c)
an amount received by a resident or nonresident individual or distribution received
by a resident or nonresident beneficiary of a resident trust:
(i)
if that amount or distribution constitutes a refund of taxes imposed by:
(A)
a state; or
(B)
the District of Columbia; and
(ii)
to the extent that amount or distribution is included in adjusted gross income for
that taxable year on the federal individual income tax return of the resident or
nonresident individual or resident or nonresident beneficiary of a resident trust;
(d)
the amount of a railroad retirement benefit:
(i)
paid:
(A)
in accordance with The Railroad Retirement Act of 1974, 45 U.S.C. Sec. 231
et seq.;
(B)
to a resident or nonresident individual; and
(C)
for the taxable year; and
(ii)
to the extent that railroad retirement benefit is included in adjusted gross income
on that resident or nonresident individual's federal individual income tax return for
that taxable year;
(e)
an amount:
(i)
received by an enrolled member of an American Indian tribe; and
(ii)
to the extent that the state is not authorized or permitted to impose a tax under this
part on that amount in accordance with:
(A)
federal law;
(B)
a treaty; or
(C)
a final decision issued by a court of competent jurisdiction;
(f)
an amount received:
(i)
for the interest on a bond, note, or other obligation issued by an entity for which
state statute provides an exemption of interest on its bonds from state individual
income tax;
(ii)
by a resident or nonresident individual;
(iii)
for the taxable year; and
(iv)
to the extent the amount is included in adjusted gross income on the taxpayer's
federal income tax return for the taxable year;
(g)
the amount of all income, including income apportioned to another state, of a
nonmilitary spouse of an active duty military member if:
(i)
both the nonmilitary spouse and the active duty military member are nonresident
individuals;
(ii)
the active duty military member is stationed in Utah;
(iii)
the nonmilitary spouse is subject to the residency provisions of 50 U.S.C. Sec.
4001(a)(2); and
(iv)
the income is included in adjusted gross income for federal income tax purposes
for the taxable year;
(h)
the amount of any FDIC premium paid or incurred by the taxpayer that is disallowed
as a deduction for federal income tax purposes under Section 162(r), Internal
Revenue Code, for the taxable year;
(i)
an amount of a distribution from a qualified retirement plan under Section 401(a),
Internal Revenue Code, if:
(i)
the amount of the distribution is included in adjusted gross income on the resident
or nonresident individual's federal individual income tax return for the taxable
year; and
(ii)
for the taxable year when the amount of the distribution was contributed to the
qualified retirement plan, the amount of the distribution:
(A)
was not included in adjusted gross income on the resident or nonresident
individual's federal individual income tax return for the taxable year; and
(B)
was taxed by another state of the United States, the District of Columbia, or a
possession of the United States; and
(j)
the amount of any repayment in the current taxable year of social security income
received in a previous taxable year if:
(i)
the individual claimed a credit for the repayment on the individual's federal
individual income tax return for the current taxable year; and
(ii)
the individual did not claim a tax credit under Section
59-10-1042
for the taxable
year in which the individual received the social security income
.
; and
(k)
if the resident or nonresident individual added domestic research and experimental
expenditures in accordance with Subsection
(1)(k)
, the amount of domestic research
and experimental expenditures, as that term is defined in Section 174A, Internal
Revenue Code, for the taxable year that the resident or nonresident individual may
subtract according to the amortization schedule described in Subsection
(6)
.
(3)
(a)
A subtraction for an amount described in Subsection
(2)(b)
is allowed only if:
(i)
the taxpayer is a Ute tribal member; and
(ii)
the governor and the Ute tribe execute and maintain an agreement meeting the
requirements of this Subsection
(3)
.
(b)
The agreement described in Subsection
(3)(a)
:
(i)
may not:
(A)
authorize the state to impose a tax in addition to a tax imposed under this
chapter;
(B)
provide a subtraction under this section greater than or different from the
subtraction described in Subsection
(2)(b)
; or
(C)
affect the power of the state to establish rates of taxation; and
(ii)
shall:
(A)
provide for the implementation of the subtraction described in Subsection
(2)(b)
;
(B)
be in writing;
(C)
be signed by:
(I)
the governor; and
(II)
the chair of the Business Committee of the Ute tribe;
(D)
be conditioned on obtaining any approval required by federal law; and
(E)
state the effective date of the agreement.
(c)
(i)
The governor shall report to the commission by no later than February 1 of each
year regarding whether or not an agreement meeting the requirements of this
Subsection
(3)
is in effect.
(ii)
If an agreement meeting the requirements of this Subsection
(3)
is terminated, the
subtraction permitted under Subsection
(2)(b)
is not allowed for taxable years
beginning on or after the January 1 following the termination of the agreement.
(d)
For purposes of Subsection
(2)(b)
and in accordance with
Title 63G, Chapter 3, Utah
Administrative Rulemaking Act
, the commission may make rules:
(i)
for determining whether income is derived from a source within the Uintah and
Ouray Reservation; and
(ii)
that are substantially similar to how adjusted gross income derived from Utah
sources is determined under Section
59-10-117
.
(4)
(a)
For purposes of this Subsection
(4)
, "Form 8814" means:
(i)
the federal individual income tax Form 8814, Parents' Election To Report Child's
Interest and Dividends; or
(ii)
(A)
a form designated by the commission in accordance with Subsection
(4)(a)(ii)(B)
as being substantially similar to 2000 Form 8814 if for purposes of
federal individual income taxes the information contained on 2000 Form 8814
is reported on a form other than Form 8814; and
(B)
for purposes of Subsection
(4)(a)(ii)(A)
and in accordance with
Title 63G,
Chapter 3, Utah Administrative Rulemaking Act
, the commission may make
rules designating a form as being substantially similar to 2000 Form 8814 if for
purposes of federal individual income taxes the information contained on 2000
Form 8814 is reported on a form other than Form 8814.
(b)
The amount of a child's income added to adjusted gross income under Subsection
(1)(b)
is equal to the difference between:
(i)
the lesser of:
(A)
the base amount specified on Form 8814; and
(B)
the sum of the following reported on Form 8814:
(I)
the child's taxable interest;
(II)
the child's ordinary dividends; and
(III)
the child's capital gain distributions; and
(ii)
the amount not taxed that is specified on Form 8814.
(5)
Notwithstanding Subsection
(1)(e)
, interest from bonds, notes, and other evidences of
indebtedness issued by an entity described in Subsections
(1)(e)(i)(A)
through
(D)
may
not be added to adjusted gross income of a resident or nonresident individual if, as
annually determined by the commission:
(a)
for an entity described in Subsection
(1)(e)(i)(A)
or
(B)
, the entity and all of the
political subdivisions, agencies, or instrumentalities of the entity do not impose a tax
based on income on any part of the bonds, notes, and other evidences of indebtedness
of this state; or
(b)
for an entity described in Subsection
(1)(e)(i)(C)
or
(D)
, the following do not impose
a tax based on income on any part of the bonds, notes, and other evidences of
indebtedness of this state:
(i)
the entity; or
(ii)
(A)
the state in which the entity is located; or
(B)
the District of Columbia, if the entity is located within the District of
Columbia.
(6)
(a)
Subject to Subsection
(6)(b)
, a resident or nonresident individual may take an
amortization subtraction for domestic research and experimental expenditures ratably
over a sixty-month period beginning with the midpoint of the taxable year in which
the resident or nonresident individual pays or incurs the domestic research and
experimental expenditures.
(b)
The combined amount of subtractions over the sixty-month period may not exceed
the amount added in accordance with Subsection
(1)(k)
for the same domestic
research and experimental expenditures.
Section 7.
FY 2027 Appropriations.
The following sums of money are appropriated for the fiscal year beginning July 1,
2026, and ending June 30, 2027. These are additions to amounts previously appropriated for
fiscal year 2027.
Subsection 7(a).
Capital Project Funds
The Legislature has reviewed the following capital project funds. The Legislature
authorizes the State Division of Finance to transfer amounts between funds and accounts as
indicated.
TRANSPORTATION AND INFRASTRUCTURE
CAPITAL BUDGET
ITEM 1
Capital Budget - Higher Education Capital Projects Fund
From Income Tax Fund
(75,851,500)
Higher Education Capital Projects Fund
(75,851,500)
ITEM 2
Capital Budget - Technical Colleges Capital Projects Fund
From Income Tax Fund
(12,610,300)
Technical Colleges Capital Projects Fund
(12,610,300)
Section 8.
Effective Date.
This bill takes effect on
May 6, 2026
.
Section 9.
Retrospective operation.
(1)
Except as provided in subsection (2), this bill has retrospective operation to January 1,
2026.
(2)
FY 2027 Appropriations. which has no retrospective operation.
2-19-26 8:47 PM