Proposal to expand Utah’s earned income tax credit stalls at Legislature

Jan 30, 2024, 6:14 PM | Updated: Jan 31, 2024, 10:00 am

two flags in front of the Utah Capitol...

The new Utah flag flies beneath the state's historical flag at the Utah Capitol on July 9. A recently completed state collection provides access to the more than 7,000 possible new flag designs that were submitted in 2022. (Carter Williams, KSL.com)

(Carter Williams, KSL.com)

SALT LAKE CITY — A bill that would have expanded Utah’s earned income tax credit by making it refundable failed to pass out of a legislative committee Tuesday afternoon.

Rep. Marsha Judkins, R-Provo, who sponsored HB149, said allowing low-income workers to receive any excess credit as a tax refund would help families who truly need it.

“In order to have stable families – in order to have the ability to raise your children — you need to have enough money to pay for rent, food, clothes, education,” Judkins said. “That’s what this program does.”

But most of her fellow Republicans who sit on the House Revenue and Taxation disagreed, voting 2-6 to reject the bill with just over a month left in the legislative session.

Rep. Casey Snider, R-Paradise, said he had concerns with “giving money to individuals that they have not earned and giving them a handout.”

Snider also said he was worried about expanding a program that has only existed for two years. Utah enacted the state earned income tax credit in 2022.

Making the credit refundable would have cost the state of Utah more than $75 million annually, according to a fiscal note. Currently, Utah’s nonrefundable credit can reduce the tax burden of low-income workers, but it can’t be paid out as a refund.

The Utah Taxpayers Association opposed the bill, saying Utahns “are better served by a broader, general tax cut.”

A proposal to cut Utah’s income tax rate from 4.65% to 4.55% cleared a key Senate vote Tuesday and is moving through the process.

But Judkins argued an income tax cut would only save Utah families a few dollars.

Of the states that offer an earned income tax credit, Utah’s is one of just a handful that is nonrefundable, according to the National Conference of State Legislatures.

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Proposal to expand Utah’s earned income tax credit stalls at Legislature