Tax Equalization and Reduction Act

by admin Mar 05, 2019

Tax reform is a hot topic among Utahns – especially during the legislative session. Here are a few facts to help you be better informed.

Information provided by the Office of Legislative Research and General Counsel.


Broaden the sales tax base in all sectors

• Minimize tax pyramiding and avoid disruptions
• Anticipate future new economic activity
• Eliminate exemptions where practical
• Implement excise tax where sales tax expansion is not practical
• Structure implementation to: Phase-in the reduced sales tax rate to ensure
assumptions are validated, Make sales tax base expansion/rate reduction and
income tax provisions coincide as much as possible for taxpayers.
• Hold harmless provisions for local option sales taxes
• Maintain statewide local rates (1.0% + 0.25%)
• Excess revenue retained for hold harmless distribution
• Reduce local option rates proportionate to new base


An expanded base is offset by decreased rates.

The General Fund’s tax base is broadened by an estimated $36 Billion
• Bring a significant number of services, including some construction inputs and professional services, into the sales tax base
• 0.075% transfer tax on all real estate transactions other than refinances generates about $18 million
• 1% premium tax on commercial medical insurance generates about $66 million
• Eliminate 15 current sales tax exemptions to generate approximately $72 million

These increases in the base are offset by:
• Sales tax rate reduction to 3.10%
• Income tax rate reduction to 4.75%
• Expanded Utah Personal Exemption for low-to-middle income Utahns
• EITC for Utahns experiencing intergenerational poverty
• Expanded retiree tax credit

At full implementation, a typical Utahn, 31 years of age, married with 1 dependent, making $65,325 per year, would have a net tax reduction $634:
• Although expanding the tax base is mostly paid directly by businesses, about a quarter may be paid by consumers (+$158)
• Lower the overall rate to 3.10% (-$416)
• Expand personal exemptions (-$294)
• Expand retirement tax credit (applies to older Utahns)
• Implement an earned income tax credit (applies to intergenerational poverty)
• Reduce income tax rate to 4.75% (-$82)

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