S.B. 34

1

INDIVIDUAL INCOME TAX RELIEF FOR
2 LOW-INCOME INDIVIDUALS AND RELATED
3 STATE TAX COMMISSION AMENDMENTS
4 2001 GENERAL SESSION
5 STATE OF UTAH
6 Sponsor: Lyle W. Hillyard
7 Millie M. Peterson

8 This act modifies the Individual Income Tax Act by establishing an income level below which
9 a taxpayer is not subject to state individual income taxes. The act amends the authority of
10 the State Tax Commission to prescribe tax tables. This act defines terms, repeals obsolete
11 language, and makes technical changes. This act takes effect for taxable years beginning on
12 or after January 1, 2002.
13 This act affects sections of Utah Code Annotated 1953 as follows:
14 AMENDS:
15 59-10-104, as last amended by Chapter 333, Laws of Utah 1996
16 59-10-105, as last amended by Chapter 213, Laws of Utah 1988
17 59-10-116, as renumbered and amended by Chapter 2, Laws of Utah 1987
18 ENACTS:
19 59-10-104.1, Utah Code Annotated 1953
20 Be it enacted by the Legislature of the state of Utah:
21 Section 1. Section 59-10-104 is amended to read:
22 59-10-104. Tax basis -- Rates.
23 [(1) For taxable years beginning on or after January 1, 1996, but beginning before January
24 1, 1997, a tax is imposed on the state taxable income, as defined in Section 59-10-112 , of every
25 resident individual as follows:]
26 [(a) For an individual, other than a husband and wife or head of household required to use
27 the tax table under Subsection (1)(b), the tax under this section is imposed in accordance with the

28 following table:]
29 [If the state taxable income is: The tax is:]
30 [Less than or equal to $750 2.55% of the state taxable income]
31 [Greater than $750 but less than or equal $19, plus 3.5% of state taxable income]
32 [to $1,500 greater than $750]
33 [Greater than $1,500 but less than or equal $45, plus 4.4% of state taxable income]
34 [to $2,250 greater than $1,500]
35 [Greater than $2,250 but less than or equal $78, plus 5.35% of state taxable income]
36 [to $3,000 greater than $2,250]
37 [Greater than $3,000 but less than or equal $119, plus 6% of state taxable income]
38 [to $3,750 greater than $3,000]
39 [Greater than $3,750 $164, plus 7% of state taxable income]
40 [greater than $3,750]
41 [(b) For a husband and wife filing a single return jointly, or a head of household as defined
42 in Section 2(b), Internal Revenue Code, filing a single return, the tax under this section is imposed
43 in accordance with the following table:]
44 [If the state taxable income is: The tax is:]
45 [Less than or equal to $1,500 2.55% of the state taxable income]
46 [Greater than $1,500 but less than or equal $38, plus 3.5% of state taxable income]
47 [to $3,000 greater than $1,500]
48 [Greater than $3,000 but less than or equal $91, plus 4.4% of state taxable income]
49 [to $4,500 greater than $3,000]
50 [Greater than $4,500 but less than or equal $157, plus 5.35% of state taxable income]
51 [to $6,000 greater than $4,500]
52 [Greater than $6,000 but less than or equal $237, plus 6% of state taxable income]
53 [to $7,500 greater than $6,000]
54 [Greater than $7,500 $327, plus 7% of state taxable income]
55 [greater than $7,500]
56 [(2) For] (1) Except as provided in Subsection (2), for taxable years beginning on or after
57 January 1, 1997, a tax is imposed on the state taxable income, as defined in Section 59-10-112 ,
58 of every resident individual as follows:

59 (a) For an individual, other than a husband and wife or head of household required to use
60 the tax table under Subsection [(2)] (1)(b), the tax under this section is imposed in accordance with
61 the following table:
62 If the state taxable income is: The tax is:
63 Less than or equal to $750 2.3% of the state taxable income
64 Greater than $750 but less than or equal $17, plus 3.3% of state taxable income
65 to $1,500 greater than $750
66 Greater than $1,500 but less than or equal $42, plus 4.2% of state taxable income
67 to $2,250 greater than $1,500
68 Greater than $2,250 but less than or equal $74, plus 5.2% of state taxable income
69 to $3,000 greater than $2,250
70 Greater than $3,000 but less than or equal $113, plus 6% of state taxable income
71 to $3,750 greater than $3,000
72 Greater than $3,750 $158, plus 7% of state taxable income
73 greater than $3,750
74 (b) For a husband and wife filing a single return jointly, or a head of household as defined
75 in Section 2(b), Internal Revenue Code, filing a single return, the tax under this section is imposed
76 in accordance with the following table:
77 If the state taxable income is: The tax is:
78 Less than or equal to $1,500 2.3% of the state taxable income
79 Greater than $1,500 but less than or equal $35, plus 3.3% of state taxable income
80 to $3,000 greater than $1,500
81 Greater than $3,000 but less than or equal $84, plus 4.2% of state taxable income
82 to $4,500 greater than $3,000
83 Greater than $4,500 but less than or equal $147, plus 5.2% of state taxable income
84 to $6,000 greater than $4,500
85 Greater than $6,000 but less than or equal $225, plus 6% of state taxable income
86 to $7,500 greater than $6,000
87 Greater than $7,500 $315, plus 7% of state taxable income
88 greater than $7,500
89 (2) Subsection (1) does not apply to a resident individual exempt from taxation under

90 Section 59-10-104.1 .
91 Section 2. Section 59-10-104.1 is enacted to read:
92 59-10-104.1. Exemption from taxation.
93 (1) For purposes of this section:
94 (a) "personal exemptions" means the total exemption amount an individual is allowed to
95 claim for the taxable year under Section 151, Internal Revenue Code, for:
96 (i) the individual;
97 (ii) the individual's spouse; and
98 (iii) the individual's dependents; and
99 (b) "standard deduction":
100 (i) except as provided in Subsection (1)(b)(ii), means the standard deduction an individual
101 is allowed to claim for the taxable year under Section 63, Internal Revenue Code; and
102 (ii) notwithstanding Subsection (1)(b)(i), does not include an additional amount allowed
103 under Section 63(f), Internal Revenue Code, for an individual or an individual's spouse who is:
104 (A) blind; or
105 (B) 65 years of age or older.
106 (2) For taxable years beginning on or after January 1, 2002, an individual is exempt from
107 a tax imposed by Section 59-10-104 , 59-10-105 , or 59-10-116 if the individual's adjusted gross
108 income on the individual's federal individual income tax return for the taxable year is less than or
109 equal to the sum of the individual's:
110 (i) personal exemptions for that taxable year; and
111 (ii) standard deduction for that taxable year.
112 Section 3. Section 59-10-105 is amended to read:
113 59-10-105. Optional tax.
114 [In lieu of the tax imposed under Section 59-10-104 there is hereby imposed]
115 (1) (a) Except as provided in Subsection (4), for [each] taxable [year] years beginning on
116 or after [December 31, 1972] January 1, 2002, if the commission prescribes state individual
117 income tax tables in accordance with Subsection (2), a tax is imposed as provided in this section
118 on the state taxable income of [every] an individual who elects to compute [his] the individual's
119 income tax in accordance with the state individual income tax tables prescribed [in Section 3 of
120 the Internal Revenue Code, a tax computed in accordance with the tax tables applicable to such

121 taxable year as prescribed by the commission. Such an electing taxpayer] by the commission.
122 (b) An individual who pays a tax imposed by this section is not subject to the tax imposed
123 by Section 59-10-104 .
124 (2) The commission may prescribe state individual income tax tables:
125 (a) for a taxable year;
126 (b) for purposes of computing the tax authorized by this section; and
127 (c) if the state individual income tax tables are substantially in accordance with Section
128 3, Internal Revenue Code, except that the commission shall use:
129 (i) the tax rates and tax brackets provided for in Section 59-10-104 ;
130 (ii) state taxable income as defined in Section 59-10-112 ; and
131 (iii) any other provision of this chapter necessary to prescribe state individual income tax
132 tables under this section.
133 (3) An individual electing to compute the individual's income tax in accordance with this
134 section shall use the:
135 (a) standard deduction as provided in Section 63(c) [of the], Internal Revenue Code; and
136 [the]
137 (b) number and amount of exemptions allowed by Section 151 [of the], Internal Revenue
138 Code.
139 (4) This section does not apply to an individual exempt from taxation under Section
140 59-10-104.1 .
141 Section 4. Section 59-10-116 is amended to read:
142 59-10-116. Tax on nonresident individual's state taxable income.
143 (1) For purposes of this section:
144 (a) "state income tax percentage" means a percentage equal to a nonresident individual's
145 federal adjusted gross income for the taxable year received from Utah sources, as determined under
146 Section 59-10-117 , divided by the nonresident individual's total federal adjusted gross income for
147 that taxable year; and
148 (b) "state taxable income" means the product of a nonresident individual's:
149 (i) federal taxable income, as defined in Section 59-10-111 , with the modifications,
150 subtractions, and adjustments provided for in Section 59-10-114 ; and
151 (ii) state income tax percentage.

152 [A] (2) Except as provided in Subsection (3), a tax is [hereby] imposed as provided in this
153 section on the state taxable income[, as defined in Sections 59-10-111 and 59-10-112 , of every]
154 calculated under this section of a nonresident individual in accordance with the [schedules] tables
155 provided for in Section 59-10-104 [, but the individual's Utah tax shall be only the portion of the
156 resident tax so calculated as the individual's federal adjusted gross income received from Utah
157 sources (determined under Section 59-10-117 ) bears to the individual's total federal adjusted gross
158 income for the same taxable year].
159 (3) This section does not apply to a nonresident individual exempt from taxation under
160 Section 59-10-104.1 .
161 Section 5. Effective date.
162 This act takes effect for taxable years beginning on or after January 1, 2002.




Legislative Review Note
as of 1-11-01 12:45 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel