Utah Exemptions Act Modifications

8
78B-5-505
78B-5-507
0
Utah Exemptions Act Modifications
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Todd Weiler
House Sponsor: Nelson T. Abbott
LONG TITLE
General Description:
This bill amends the Utah Exemptions Act.
Highlighted Provisions:
This bill:
allows an individual subject to collection of an unsecured debt to exempt any federal
income tax refund attributed to an earned income tax credit or child tax credit; and
makes technical and conforming changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
78B-5-505
, as last amended by Laws of Utah 2025, First Special Session, Chapter 11
78B-5-507
, as last amended by Laws of Utah 2020, Chapter 425
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
78B-5-505
is amended to read:
78B-5-505
. Property exempt from execution.
(1)
(a)
An individual is entitled to exemption of the following property:
(i)
(a)
a burial plot for the individual and the individual's family;
(ii)
(b)
health aids reasonably necessary to enable the individual or a dependent to work
or sustain health;
(iii)
(c)
benefits that the individual or the individual's dependent have received or are
entitled to receive from any source because of:
(A)
(i)
disability;
(B)
(ii)
illness; or
(C)
(iii)
unemployment;
(iv)
(d)
benefits paid or payable for medical, surgical, or hospital care to the extent that
the benefits are used by an individual or the individual's dependent to pay for that
care;
(v)
(e)
veterans benefits;
(vi)
(f)
money or property received, and rights to receive money or property for child
support;
(vii)
(g)
money or property received, and rights to receive money or property for
alimony or separate maintenance, to the extent reasonably necessary for the support
of the individual and the individual's dependents;
(viii)
(h)
(A)
one:
(I)
(i)
one
clothes washer
and
;
(ii)
one clothes
dryer;
(II)
(iii)
one
refrigerator;
(III)
(iv)
one
freezer;
(IV)
(v)
one
stove;
(V)
(vi)
one
microwave oven;
and
(VI)
(vii)
one
sewing machine;
(B)
(viii)
all carpets in use;
(C)
(ix)
provisions sufficient for 12 months actually provided for individual or
family use;
(D)
(x)
all wearing apparel of
every
each
individual and dependent, not including
jewelry or furs; and
(E)
(xi)
all beds and bedding for
every
each
individual
or
and
dependent;
(ix)
(i)
except for works of art held by the debtor as part of a trade or business, works of
art:
(A)
(i)
depicting the debtor or the debtor and the debtor's resident family; or
(B)
(ii)
produced by the debtor or the debtor and the debtor's resident family;
(x)
(j)
proceeds of insurance, a judgment, or a settlement, or other rights accruing as a
result of bodily injury of the individual or of the wrongful death or bodily injury of
another individual of whom the individual was or is a dependent to the extent that
those proceeds are compensatory;
(xi)
(k)
the proceeds or benefits of any life insurance contracts or policies paid or
payable to the debtor or any trust of which the debtor is a beneficiary upon the death
of the spouse or children of the debtor, provided that the contract or policy has been
owned by the debtor for a continuous unexpired period of one year;
(xii)
(l)
the proceeds or benefits of any life insurance contracts or policies paid or
payable to the spouse or children of the debtor or any trust of which the spouse or
children are beneficiaries upon the death of the debtor, provided that the contract or
policy has been in existence for a continuous unexpired period of one year;
(xiii)
(m)
proceeds and avails of any unmatured life insurance contracts owned by the
debtor or any revocable grantor trust created by the debtor, excluding any payments
made on the contract during the one year immediately preceding a creditor's levy or
execution;
(xiv)
(n)
except as provided in Subsection
(1)(b)
(2)
, and except for a judgment
described in Subsection
75B-2-503(2)(c)
, any money or other assets held for or
payable to the individual as an owner, participant, or beneficiary from or an interest
of the individual as an owner, participant, or beneficiary in a fund or account,
including an inherited fund or account, in a retirement plan or arrangement that is
described in Section 401(a), 401(h), 401(k), 403(a), 403(b), 408, 408A, 409, 414(d),
414(e), or 457, Internal Revenue Code, including an owner's, a participant's, or a
beneficiary's interest that arises by inheritance, designation, appointment, or
otherwise;
(xv)
(o)
the interest of or any money or other assets payable to an alternate payee under
a qualified domestic relations order as those terms are defined in Section 414(p),
Internal Revenue Code;
(xvi)
(p)
unpaid earnings of the household of the filing individual due as of the date of
the filing of a bankruptcy petition in the amount of 1/24 of the Utah
State
state

annual median family income for the household size of the filing individual as
determined by the Utah
State Annual Median Family Income
state annual median
family income
reported by the United States Census Bureau and as adjusted based
upon the Consumer Price Index for All Urban Consumers for an individual whose
unpaid earnings are paid more often than once a month or, if unpaid earnings are not
paid more often than once a month, then in the amount of 1/12 of the Utah
State
state

annual median family income for the household size of the individual as determined
by the Utah
State Annual Median Family Income
state annual median family income

reported by the United States Census Bureau and as adjusted based upon the
Consumer Price Index for All Urban Consumers;
(xvii)
(q)
except for curio or relic firearms, any three of the following:
(A)
(i)
one handgun and ammunition for the handgun not exceeding 1,000 rounds;
(B)
(ii)
one shotgun and ammunition for the shotgun not exceeding 1,000 rounds;
and
(C)
(iii)
one shoulder arm and ammunition for the shoulder arm not exceeding 1,000
rounds;
and
(xviii)
(r)
money, not exceeding $200,000, in the aggregate, that an individual deposits,
more than 18 months before the day on which the individual files a petition for
bankruptcy or an action is filed by a creditor against the individual, as applicable, in
all tax-advantaged accounts for saving for higher education costs on behalf of a
particular individual that meets the requirements of Section 529, Internal Revenue
Code
.
; and
(s)
the full amount of any federal income tax refund attributed to an earned income tax
credit or any child tax credit, whether as a refundable tax credit or as a nonrefundable
reduction in tax.
(b)
(i)
Any money, asset, or other interest in a fund or account that is exempt from a
claim of a creditor of the owner, beneficiary, or participant under Subsection
(1)(a)(xiv)
does not cease to be exempt after the owner's, participant's, or
beneficiary's death by reason of a direct transfer or eligible rollover to an inherited
individual retirement account as defined in Section 408(d)(3), Internal Revenue
Code.
(ii)
Subsections
(1)(a)(xiv)
and
(1)(b)(i)
apply to all inherited individual retirement
accounts without regard to the date on which the account was created.
(c)
(i)
The exemption granted by Subsection
(1)(a)(xiv)
does not apply to:
(A)
an alternate payee under a qualified domestic relations order, as those terms
are defined in Section 414(p), Internal Revenue Code; or
(B)
amounts contributed or benefits accrued by or on behalf of a debtor within
one year before the debtor files for bankruptcy, except amounts directly rolled
over from other funds that are exempt from attachment under this section.
(ii)
The exemptions in Subsections
(1)(a)(xi)
,
(xii)
, and
(xiii)
do not apply to the
secured creditor's interest in proceeds and avails of any matured or unmatured life
insurance contract assigned or pledged as collateral for repayment of a loan or
other legal obligation.
(2)
(a)
Any money, asset, or other interest in a fund or account that is exempt from a
claim of a creditor of the owner, beneficiary, or participant under Subsection
(1)(n)

does not cease to be exempt after the owner's, participant's, or beneficiary's death by
reason of a direct transfer or eligible rollover to an inherited individual retirement
account as defined in Section 408(d)(3), Internal Revenue Code.
(b)
Subsections
(1)(n)
and
(2)(a)
apply to all inherited individual retirement accounts
without regard to the date on which the account was created.
(c)
The exemption granted by Subsection
(1)(n)
does not apply to:
(i)
an alternate payee under a qualified domestic relations order, as those terms are
defined in Section 414(p), Internal Revenue Code; or
(ii)
amounts contributed or benefits accrued by or on behalf of a debtor within one
year before the debtor files for bankruptcy, except amounts directly rolled over
from other funds that are exempt from attachment under this section.
(3)
The exemptions in Subsections
(1)(k)
, (l), and (m) do not apply to the secured creditor's
interest in proceeds and avails of any matured or unmatured life insurance contract
assigned or pledged as collateral for repayment of a loan or other legal obligation.
(2)
(4)
(a)
Disability benefits, as described in Subsection
(1)(a)(iii)(A)
(1)(c)(i)
, and
veterans benefits, as described in Subsection
(1)(a)(v)
(1)(e)
, may be garnished on
behalf of a victim who is a child if the person receiving the benefits has been
convicted of a felony sex offense against the victim and ordered by the sentencing
court to pay restitution to the victim.
(b)
The exemption from execution under this Subsection
(2)
(4)
shall be reinstated upon
payment of the restitution in full.
(3)
The exemptions under this section do not limit items that may be claimed as exempt
under Section
78B-5-506
.
(4)
(5)
(a)
The exemptions described in Subsections
(1)(a)(iii)
,
(iv)
,
(vi)
,
(vii)
,
(x)
,
(xii)
,
(xiii)
,
(xiv)
,
(xv)
,
(xvii)
, and
(xviii)
(1)(c)
, (d), (f), (g), (j), (l), (m), (n), (o), (q), and (r)

do not apply to a civil accounts receivable or a civil judgment of restitution for an
individual who is found in contempt under Section
78B-6-317
.
(b)
Subsection
(4)(a)
(5)(a)
does not apply to the benefits described in Subsection
(1)(a)(iii)
(1)(c)
if the individual's dependent received, or is entitled to receive, the
benefits.
(6)
The exemptions under this section do not limit items that may be claimed as exempt
under Section
78B-5-506
.
Section 2. Section
78B-5-507
is amended to read:
78B-5-507
. Exemption of proceeds from property sold, taken by condemnation,
lost, damaged, or destroyed -- Tracing exempt property and proceeds.
(1)
(a)
An individual who owned property described in this Subsection
(1)
is entitled to
an exemption of proceeds that are traceable for one year after the compensation for
the property is received if:
(i)
(a)
(A)
(i)
the property, or a part of the property, could have been claimed
exempt under Subsection
78B-5-505(1)(a)(i)
or
(ii)
78B-5-505(1)(a)
or
(b)
; or
(B)
(ii)
the property is personal property subject to a value limitation under
Subsection
78B-5-506(1)(a)
,
(b)
, or
(c)
; and
(ii)
the property has been:
(A)
sold or taken by condemnation; or
(B)
lost, damaged, or destroyed; and
(C)
the owner has been compensated for the property.
(b)
(i)
the property has been sold or taken by condemnation; or
(ii)
(A)
the property has been lost, damaged, or destroyed; and
(B)
the owner has been compensated for the property.
(b)
(2)
The exemption of proceeds under
this
Subsection
(1)
does not entitle the
individual to claim an aggregate exemption in excess of the value limitation otherwise
allowable under Section
78B-5-503
or
78B-5-506
.
(2)
(3)
Money or other property exempt under Subsection
78B-5-505(1)(a)(iii)
,
(iv)
,
(v)
,
(vi)
,
(vii)
,
(xiii)
,
(xiv)
, or
(xviii)
78B-5-505(1)(c)
, (d), (e), (f), (g), (m), (n), or (r)

remains exempt after
its receipt by, and while it is in the possession of, the individual or
in any other form into which it is traceable.
receipt by the individual, while in
possession of the individual, or in any other form into which the money or property is
traceable.
(3)
(4)
Money or other property and proceeds exempt under this chapter are traceable
under this section by application of:
(a)
the principle of:
(i)
first-in first-out; or
(ii)
last-in last-out; or
(b)
any other reasonable basis for tracing selected by the individual.
Section 3.
Effective Date.
This bill takes effect on
May 6, 2026
.
3-11-26 10:02 AM