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Legislative Tax Reform is Moving Quickly: How Will It Affect You and Your Business?
October 31, 2019
Parsons Behle & Latimer Legal Briefings


Following a marathon five-hour-plus meeting last week, the Utah Tax Restructuring and Equalization Task Force requested its staff draft a bill to make sweeping changes to Utah’s sales and income taxes for the task force’s further consideration.

The following is an outline of the proposal approved by the task force: 

Tax Increases

  • Restore the full sales tax on food.
  • Add the state sales tax (4.85 percent) to gasoline and diesel. Depending on the price of fuel, this would represent a tax of approximately $.12 per gallon.
  • Impose sales tax on numerous consumer services.
    Some examples:
    • Maintenance and repair of real property (e.g. landscaping, painting, cleaning)
    • Streaming media
    • Sports instruction and other types of instruction
    • Parking lots and garages
    • Shipping and handling, if part of a taxable sale
    • Miscellaneous personal services (e.g. dating services)
  • Remove certain sales tax exemptions (meaning sales tax would be charged).
    Some examples:
    • Car washes
    • Admissions to college athletic events
    • Vending machine food
    • Gold, silver, platinum coins and bars (not legal tender)

Tax Cuts

  • Reduce the income tax rate from 4.95 percent to 4.59 percent.
  • Increase the Utah Dependent Exemption from $565 to $2500, phased out over certain income thresholds
  • Create an Income Tax Credit for Social Security Income, reduced over certain income thresholds
  • Create a “Grocery Tax Credit” for low-to-middle-income residents.
  • Create an Earned Income Tax Credit that would focus on addressing intergenerational poverty.
  • Remove the sales tax on feminine hygiene products.

These proposed changes are far from certain. The proposal has several hurdles it must clear before it becomes law, although the approval process is likely to happen very quickly. Entities that would be affected by the tax proposal have an opportunity to be heard and help shape the law, but to do so, they must act without delay.  At the recent meeting, the task force received many negative comments from groups that would be affected by the tax increases. Regardless, the task force requested the bill be drafted with the tax increases included. 

The task force will meet again Nov. 7, and Nov. 21, to consider the draft bill and take public comment. If the task force presents a proposed bill upon which the House and Senate can agree, a special session in December to pass the package of tax increases and tax cuts is likely. 

If you have questions about the proposal or want to discuss how it would affect your business, please contact either Shelly Teuscher or Mike Bailey at (801) 532-1234 or send an email to steuscher@parsonsbehle.com or mbailey@parsonsbehle.com