Once again, Utah lawmakers are eyeing a state income tax cut. That’s on top of slashing the state’s portion of the gas tax and tinkering with property taxes. It’s all in an effort to make life in Utah more affordable.
“We've cut taxes, income taxes, again, again, again, again, again, maybe again this year,” said Senate President Stuart Adams at the announcement of an agreement to spur more state oil and gas production.
Those comments came after the February state revenue estimates came in better than expected. According to Executive Appropriations Chair Sen. Jerry Stevenson, Utah could have an additional $86 million in ongoing money and $125 million in one-time money for the coming fiscal year, thanks to continued economic growth.
“At this time, we'll be able to offer our citizens tax relief, which will make it six years in a row,” Stevenson told lawmakers in mid-February.
When taken as a whole, Utah outperforms national averages in many economic indicators like consumer confidence and wage growth. While Utah has one of the highest household incomes in the country, economic experts say a growing number of families are worried about the effects of inflation and tariffs.
“Even though Utah is doing well in terms of wage growth and job growth, people are still concerned about their costs,” said Kem C. Gardner Policy Institute Senior Research Economist Praopan Pratoomchat at a Feb. 25 newsmaker breakfast.
An increasing number of Utah households have cited tariffs and inflation as the main reasons for putting off a large household purchase, like new appliances or a car. Pratoomchat said that reality is driving broader economic uncertainty.
“Even though Utah people have enough income, have the wage growth, they might say, ‘I'm not sure what's going to happen with my job in the next three months, so I don't think I can afford to buy a big thing right now,’” she said.
It’s that feeling state lawmakers want to address with policies like tax cuts.
But those cuts don’t necessarily change how Utahns feel about their finances. According to Pratoomchat, much of the relief depends on where you fall in the broader socioeconomic scale.
“I don't want you to forget that we have a lot of people that earn fixed income,” she said. “A lot of people earn minimum wage income. So those people definitely suffer from lower purchasing power during high inflation, especially during that time.”
In fact, former lawmaker and Zions Bank Senior Economist Robert Spendlove pointed out that tax cuts can be more of a messaging tool than anything.
“We're talking about a $30 billion budget for the state of Utah, and so even if you cut those taxes by $100 million, it's not a huge cut per person,” he said. “I think the argument in favor of it is it sends the message ‘We know that you're tightening your belts and we at the state also want to be doing our best to tighten our belts.’”
As far as other affordability policies, in addition to increased gasoline production, lawmakers are also targeting housing fixes like first-time homebuyer aid and infrastructure funding.
If lawmakers are going to cut taxes this year, they have until the end of the general session on March 6 to do it.
