In March, USA Today declared Utah the nation’s most affordable state. They said Utahns spent less on “necessities” like housing and health care than other states and have the most annual income left over.
The one area where Utah did not do so well in the ranking was the amount of state income tax residents pay compared to the median income of $89,168. The study slots the Beehive State at number 42 in the nation. While statistics and data tables are nice, how do things stand for Utahns?
Compared to the rest of the country, Utah’s 4.65% income tax is in the middle of states. Over the last four years, the Legislature has voted to reduce that rate. It will be 4.55% starting in 2025.
Eric Valchuis started Baby’s Bagels with two business partners in 2022. He also does independent consulting and juggles multiple income streams and tax forms every year, making his personal and business accounting a year-round endeavor.
“So it’s actually more than every spring,” he said. “As a business owner, you have to pay different types of taxes to the state, including sales tax, personal property tax, income tax. It actually takes up quite a bit of time, filing all those different taxes.”
When it comes to tax relief provided by the Legislature, the most recent cut would amount to a savings of $43 for someone who makes $46,800. For Valchuis, not only does he not notice the income tax reductions, but tax season is always a surprise with a “fairly volatile” income stream.
“The couple of basis points that the Legislature might be reducing that tax rate by feels fairly inconsequential compared to the bigger picture of my finances.”
He’s not alone.
University of Utah Student Miles Elkins has worked a multitude of part-time jobs from airline ramp agent to undergraduate researcher. While he’s admittedly “not caught up with everything in the political realm,” he hasn’t noticed the cuts, either.
“Because there's many steps [to doing taxes] and especially when I'm trying to file for many different things, like the American Opportunity Tax Credit.”
For him, increased access to additional resources for young people to help them take advantage of tax programs that could save even more money would be more helpful than an arguably negligible tax break.
“It would be awesome as a student to have more directive and an education on taxes and also [better] understand the opportunities that students have,” he said. “A lot of the things that I found through taxes are kind of word of mouth … But it'd be nice if it was super transparent and there is more direct and open information for students.”
For Valchuis, although filing taxes for a business can be complicated, he did commend the state for being responsive to questions about the tax process he has had as a small business owner.
“You can talk to a human if you have questions,” he said.
When it comes to improving the tax return affair, it’s all about consolidating the process and getting back something just as valuable as money: time.
“It just feels like a lot of administrative work,” he said. “I'm happy to pay taxes so long as it's going to good uses. But just the administrative burden of all of those different types of taxes does take its toll and takes up an amount of time that I wish I could spend elsewhere.”
Tax Day is Monday, April 15, 2024.
