Top 10 Utah Deductions & Tax Credits
Consult with a tax advisor. The following is for educational purposes, not tax advice.
Some of these deductions/credits can/are applied automatically through tax software when preparing your tax returns whereas others are applied manually.
However, knowing these deductions/credits can help adjust your decisions as you plan for taxes each year. For example, Roth conversions, retirement contributions, HSA contributions, tax exempt interest, and other strategies may affect the credits you could receive.
1. My529
Through Utah's My529 Plan you can receive a tax deduction for your 529 plan contributions. There are contribution limits to the Utah credit.
Currently, the Utah income tax rate shows 4.65% for 2024. However, recent legislation has passed to drop that down to 4.55%.
The contribution limit is:
$2,410 if you file as Single on your tax return;
$4,820 if you file a Married Filing Joint tax return.
You can contribute more, but those are the limits to get the max credit.
The maximum credit per beneficiary is as follows:
$2,410 x 4.55% = $109.66
$4,820 x 4.55% = $219.31
For example, if you have two children and file a Married Joint tax return in 2024 and contribute the max of $4,820 for each child for a total of $9,640 then you receive a Utah tax credit of $438.62. There's no tax credit at the federal level, but keep in mind that your 529 plan can grow tax free and withdrawals are tax free as long as you withdraw money for qualified education expenses for the beneficiary of the 529 plan.
2. Child Tax Credit
Starting in 2024 there is a child tax credit of $1,000 for each child ages 1-3. However, to be eligible your income must fall below the following:
Married Filing Separate: <$27,001
Single Filing: <$43,001
Married Filing Joint: <$54,001
The credit is non-refundable meaning it will only decrease your taxes owed to $0. This is different from the Federal child tax credit which has up to $1,600 that is refundable.
It is very specific with the age of children between 1 & 3 years old. In the past, with this income you would have likely qualified for the Utah Earned Income Credit and probably owed very little or nothing anyway. You would also still likely qualify for the Utah EIC.
Between the Utah EIC and the Child Tax Credit - it's likely that Utah families earning less than $54,001/year will owe next to $0 in taxes depending on the number of children they have.
In addition, there's also an 'At-Home Parent Credit' of $100 that is non-refundable. Your Federal AGI must be $50,000 or less and one parent must stay at home with less than $3k of income and have a child 12 months old or young by the last day of the year. So for the few families that don't receive the Utah EIC nor the Child Tax Credit (or even if they do) and still owe tax, then the $100 helps out a little more. A family with a <12 month old on December 31st and exactly $50,000 in income would owe $545 in Utah taxes and wouldn't qualify for the Utah EIC or Child Tax Credit.
3. Utah Earned Income Tax Credit
This credit is for those who qualify for the federal earned income tax credit. However, it's equal to 20% of the federal credit that you receive.
You have to have earned Utah income reported on a W2
And
Qualify for and claim the federal credit in the same tax year
However, the credit only reduces tax owed and is not refundable.
Here's a table of the Federal Earned Income Credits based on Income in 2023:
In most cases, this will likely help reduce individuals/families' Utah tax to $0.
4. Mental Health Nurse Practitioner Credit: $10,000+!
This is a credit for mental health nurse practitioners who work at least 30 hours or more per week on average of licensed services in Utah. For new practitioners there's a $10,000 refundable Utah credit. That means even if you owe $0 in Utah taxes, then you would still receive the $10,000 from Utah!
This is the biggest refundable tax credit I have ever seen.
You can also receive the $10,000 credit if you are providing 25% or more of those hours to an 'underserved population.'
You can even receive both credits totaling $20,000!
Tax Credit Attestations must be filled out and approved by the DOPL.
There's a New Practice Attestation and a Underserved Population Attestation
5. Military Retirement Credit
You cannot take this credit if you are already taking the Retirement Credit or if you receive survivor benefits (pay from a loved one who died while on active duty or in training; see the link for Military Survivor Benefits Credit).
You or your spouse (when filing jointly) can qualify if you receive taxable military retirement pay. This is pay related to service in the armed forces even if the service member is deceased and you are receiving survivor military retirement benefits.
Essentially you'll take the amount of taxable military retirement pay (does not include 401k/IRA/non-military pay sources) and multiply it by the state tax rate: 4.55%
For example, if you received $20,000 of Military Retirement Pay (DFAS) then your credit would be $910.
If your retirement is social security & military retirement then Utah has some great credits now to keep your Utah taxes low.
6. Pass-Through Entity Taxpayer Income Tax Credit
Currently, there are only two more years (potentially) for this tax deduction.
Do you itemize your tax deductions federally and face the SALT cap of $10,000?
SALT = State and Local Tax Deduction
Utah provides a way to get around the SALT cap if you own a pass-through entity such as an S-Corp, partnerships, and LLCs treated as partnerships.
This means that the Utah income tax owed from your business income (ex. S-Corp) can be deducted as an expense on the business return instead of added as income tax paid in Schedule A. That way you receive the federal income tax deduction and thus side step the cap on your state income taxes.
For example, your S-Corp has a net profit of $50,000, but you paid your Utah income tax of $2,275. You do have to add back the $2,275 (SALT tax) as income on your Utah income tax return.
Consult a tax professional to ensure this makes sense for you. It does not apply to very many people, but is a great deduction when it does.
Here's a link to the Frequently Asked Questions and an instructional video: FAQ
7. Social Security Benefits
If you or your wife currently receive social security benefits, then this credit can apply to you unless you already receive the Retirement Credit (for those born on or before Dec. 31st, 1952). Most likely you will want to receive the Social Security Benefit instead of the Retirement Credit (if applicable).
You receive a credit on the taxes that are owed because of taxable Social Security benefits received. However, that credit is reduced by $.025 for every dollar above MAGI based on your filing status.
For example, if you file a married joint return, then MAGI above $75,000 is reduced by $.025.
Let's say your MAGI is $100,000, then Social Security Benefit credit is reduced by ~$625. If your taxable social security is $35,000, then your credit would be ~$1,627 and then reduced by ~$625 for a total credit of $1,002.
This is an extremely valuable benefit for even higher income retirees/earners receiving social security.
8. Retirement Credit
If you are not claiming the Social Security Benefits Credit and you were born on or before Dec. 31st 1952 then you may qualify for this credit.
It's worth $450 or $900 for filing jointly.
If your income is above the Federal Standard/Itemized deduction, then this credit may be beneficial to you since you may owe tax. However, once your Adjusted Gross Income is over ~$70,000 then the credit will not help.
This credit is more beneficial for those who do not receive social security benefits and are over age 72.
9. Special Needs Opportunity Program
This program was started in 2020 and gives you a 100% credit towards your state taxes based on your tax liability!
For example, if you owe $3,000 in Utah income tax and instead donate the $3,000 to the Special Needs Opportunity Scholarship Program, then you'll now owe $0 in Utah income tax!
Essentially it is a choice where you want your tax liability to go: Utah or specifically the Special Needs Opportunity Program.
Children First Education Fund is the organization that administers the Utah program. You can learn more about it here: Children First Education Fund
This is a Nonapportionable Nonrefundable Credit with Code AG on your Utah tax return.
You cannot claim the donation on your Federal Itemized Deductions. If you do, then you cannot claim the Utah credit.
This credit also applies to Utah Corporations.
10. Live Organ Donation Expenses
If you pay for expenses to donate human bone marrow, any part of an intestine, kidney, liver, lung, or pancreas for transplanting in another person, then you can claim a credit up to $10,000 of qualifying expenses.
Utah specifies that qualified expenses include travel, lodging, or even 'lost wage' (as long the expenses were not reimbursed). The organ must be donated by you, your spouse, or a dependent.
You can also carry the credit forward for five years if the credit is more than your tax liability. For example, if you owe $2,000 and your expenses were $5,000, then the $3,000 credit would be carried forward.
About the Author
Blake Jones, CFP®, EA
is a fee-only financial advisor who works with individuals and families with retirement planning, tax preparation and planning, and debt management among many other services.
