AARP Utah calls governor’s wish to eliminate state’s Social Security tax ‘a huge deal’
Dec 6, 2024, 10:33 AM
FILE - In this Feb. 11, 2005 file photo, trays of printed social security checks wait to be mailed from the U.S. Treasury's Financial Management services facility in Philadelphia. (AP Photo. Bradley C Bower, File)
(AP Photo. Bradley C Bower, File)
SALT LAKE CITY — Part of the budget proposed Thursday by Utah Gov. Spencer Cox for the state’s next fiscal year includes eliminating Utah’s tax on Social Security.
It’s part of “tax relief for aging residents” that the governor highlighted in a press release ahead of the announcement. It’s what the governor called “the cornerstone” of his proposed budget that would impact more than 150,000 senior citizens in Utah.
“This is a huge deal for retired Utahns,” said Joe Hirabayashi, an advocacy director for the American Association of Retired Persons, or AARP.
Of particular concern for retired people is how to deal with rising costs when their income stays the same. “They’re feeling the pressure of rising grocery bills, health care costs, gas, property taxes and other essentials,” Hirabayashi said.
“Eliminating the state tax on Social Security would put more of retired Utahns’ hard-earned back in their pocket.”
Currently, most states do not tax Social Security benefits. Utah is one of only nine states that do.
How would this work?
Of the 430,000 Utahns on Social Security, Hirabayashi said about 300,000 receive retirement benefits. There are already thresholds that limit whether someone receiving retirement benefits must pay a state tax on the money. Joint filers who claim $75,000 in income and single filers who claim $45,000 can receive a tax credit.
If the governor’s plan is approved, the tax goes away completely.
“This would remove the tax entirely. So regardless of income, you would no longer be paying tax on Social Security,” Hirabayashi said.
Good for Utah?
Can Utah do without the money that will be removed from state coffers if the governor’s plan is approved? Hirabayashi said there’s a more important question to ask.
“Removing the tax would allow you to remain competitive with our neighboring states,” he said. “We’ve seen quite a few trends of people moving from high tax to low tax states. So it’s not a stretch to assume that eliminating the tax would help incentivize retirees to stay.”
