Here’s what the Utah legislature did with tax cuts in 2025

SALT LAKE CITY (ABC4)— The Utah legislature has passed a tax cut package, reducing income tax, social security tax, and expanding child tax credits in the waning days of the 2025 legislative session.

The GOP-led legislature is touting the relief as promoting upward mobility for all Utahns, while Utah Democrats argue that it drains resources from some of the state’s essential services, such as child care and public education.

The primary tax cut bill – H.B. 106 “Income Tax Revisions” – passed the Utah legislature and awaits the likely signature of Governor Spencer Cox. It lumps together three proposals — reducing the income tax rate from 4.55% to 4.5%, expanding the child tax credit to children under six, and giving a tax credit to businesses to build and operate childcare facilities.

Another bill, S.B. 71 — raises the threshold for seniors who don’t have to pay income tax on their social security from those making $75,000 up to those making $90,000 or less per year.

“Once again, we are prioritizing caring seniors on fixed incomes, supporting young families and championing upward mobility for all Utahns,” said Senate President Stuart Adams (R-Layton). “Thanks to Utah’s robust economy and our steadfast conservative policies, we’re putting money back where it belongs—with the people who earned it.”

But Utah Democrats argue that the lean budget does not support the cuts. The tax relief money comes from the income tax fund, which pays for the state’s public and higher education and some social services.

“This is the fifth income tax cut in recent years, costing the state more than $165 million annually; money that could instead strengthen schools, expand services, and improve healthcare,” said the Senate minority caucus.

But, GOP leaders argue that they’ve added to education spending over the last decade.

“Public education funding in Utah has increased by $3.1 billion, a 112% increase from 2015-2025,” said senate leaders.

Democrats also took issue with the fact that the child tax credit and business tax credit were originally run and passed through the House as separate proposals but were later lumped into H.B. 106.

“Combining them with an income tax cut is a coercive and unfair move that mirrors a Washington D.C. style of political tactics,” said Senate Minority Leader, Luz Escamillia (D-Salt Lake City). “This is a disservice to Utah’s working families.”

Democrats argue the income tax cuts would be minimal, saving the average family around $45 per year. The bill’s republican sponsor, Kay Christofferson (R-Lehi), acknowledged that when debating the bill, but argued the cut is still worth it.

“It’s a small amount really,” he said. “Each family gets a small amount but it is some relief for families who want to use that the way they see fit to meet their needs.”

President Adams also argues that small cuts — now five years in a row — add up.

“By cutting taxes for the fifth year in a row, we’re ensuring more of Utahns’ hard-earned dollars stay in their pockets, all while maintaining our commitment to essential services and fostering long-term economic growth for future generations,” he said.

In total, the tax cuts add up to $127 million. In December, the Executive Appropriations Committee set aside $165 million for tax relief. The remaining $38 million, Senate leaders say, will be restored to the state’s rainy day fund.

In addition to the tax cuts, GOP leaders are touting that $276 million of the state’s $28 billion budget is going toward a direct salary increase of $1,446 for teachers, a $1,000 bonus for education support staff and a 4% funding increase for school districts. The 4% funding increase, known as the Weighted Pupil Unit, is required by law to increase with inflation and enrollment numbers.

As for the rest of the state budget, the Executive Appropriations Committee meets Thursday afternoon to finalize what your tax dollars will pay for, that should pass Friday in what’s known as the Bill of Bills.