Income Tax Rate Relief in Utah’s Recent Legislative Reform Package

Utah’s Governor Spencer Cox approved a tax reform package that reduces taxes and stimulates economic growth.

The change in legislation is one of the deepest reforms of the state’s taxes to date, covering both individuals and businesses. It lowers the income tax for individuals and corporations by 0.05%, from 4.55% to 4.5%. In addition, the package revises how financial entities calculate tax income and expands tax exemptions for energy storage manufacturing facilities.

• Tax rate relief: Individual and corporate income taxes reduced from 4.55% to 4.55%, effective for the 2025 tax year and thereafter.
• Tax allocation formula for financial institutions overhaul: The new legislation now excludes sales from assets, investments, and trading from the sales factor numerator. This is effective for the 2026 tax year and thereafter.
• Remote seller threshold removed: Marketplace facilitators and remote sellers are only required to collect sales taxes if their annual Utah gross revenue exceeds $100,000. (The previous threshold was 200 transactions.) Effective from July 1st, 2025.
• Tax exemption for energy storage facilities: Qualified energy storage manufacturing businesses are exempt from sales and use tax on the purchase of equipment related to the industry. Effective from July 1st, 2025.

Utah is not alone in this growing U.S. trend of adjusting tax policies to foster business growth. States like Arizona, Nevada, Texas, and California are following suit.

Legislation in a country or state constantly changes, and following the law can become a headache, especially for businesses with nationwide workforces. Compliance is not a joke and failing to follow the legislation can lead to hefty penalties.

We recommend partnering with a reliable online accounting service or taxation software to avoid this and guarantee adherence to ever-changing tax rules. This type of software grants businesses robust tax management and compliance, automated bookkeeping, invoicing, time tracking, payroll management, and more.