H.B. 277

1

EARNED INCOME TAX CREDIT
2 2006 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Jackie Biskupski
5 Senate Sponsor: ____________
6
7 LONG TITLE
8 General Description:
9 This bill amends the Individual Income Tax Act to provide for an earned income tax
10 credit.
11 Highlighted Provisions:
12 This bill:
13 . provides for a refundable state earned income tax credit that is a certain percentage
14 of the federal earned income tax credit;
15 . requires the State Tax Commission to increase or decrease for inflation or deflation
16 federal adjusted gross income amounts used in determining the tax credit; and
17 . grants rulemaking authority to the State Tax Commission to provide procedures for
18 issuing refunds under certain circumstances to a resident or nonresident individual
19 claiming the tax credit.
20 Monies Appropriated in this Bill:
21 None
22 Other Special Clauses:
23 None
24 Utah Code Sections Affected:
25 ENACTS:
26 59-10-134.3, Utah Code Annotated 1953
27

28 Be it enacted by the Legislature of the state of Utah:
29 Section 1. Section 59-10-134.3 is enacted to read:
30 59-10-134.3. Definitions -- State earned income tax credit.
31 (1) As used in this section:
32 (a) "federal adjusted gross income" is as defined in Section 62, Internal Revenue Code;
33 (b) "federal earned income tax credit" means the amount of the federal earned income
34 tax credit an individual is allowed for the taxable year in accordance with Section 32, Internal
35 Revenue Code; and
36 (c) notwithstanding Section 59-10-103 , "nonresident individual" means an individual
37 who:
38 (i) is not a resident of this state; and
39 (ii) has federal adjusted gross income derived from Utah sources as calculated under
40 Section 59-10-117 .
41 (2) For taxable years beginning on or after January 1, 2007, a resident individual may
42 claim as provided in this section a refundable earned income tax credit as follows:
43 (a) the tax credit is equal to 10% of the federal earned income tax credit if:
44 (i) the federal adjusted gross income of the following is less than or equal to $5,000:
45 (A) a husband and wife filing a single tax return jointly; or
46 (B) a head of household; or
47 (ii) the federal adjusted gross income of a resident individual other than the following
48 is less than or equal to $2,500:
49 (A) a husband and wife filing a single tax return jointly; or
50 (B) a head of household;
51 (b) the tax credit is equal to 7% of the federal earned income tax credit if:
52 (i) the federal adjusted gross income of the following is greater than $5,000 but less
53 than or equal to $15,000:
54 (A) a husband and wife filing a single tax return jointly; or
55 (B) a head of household; or
56 (ii) the federal adjusted gross income of a resident individual other than the following
57 is greater than $2,500 but less than or equal to $7,500:
58 (A) a husband and wife filing a single tax return jointly; or

59 (B) a head of household; or
60 (c) the tax credit is equal to 4% of the federal earned income tax credit if:
61 (i) the federal adjusted gross income of the following is greater than $15,000 but less
62 than or equal to $25,000:
63 (A) a husband and wife filing a single tax return jointly; or
64 (B) a head of household; or
65 (ii) the federal adjusted gross income of a resident individual other than the following
66 is greater than $7,500 but less than or equal to $12,500:
67 (A) a husband and wife filing a single tax return jointly; or
68 (B) a head of household.
69 (3) A nonresident individual may claim a refundable earned income tax credit as
70 provided in this section in an amount equal to the product of:
71 (a) the tax credit that the nonresident individual would have been allowed under
72 Subsection (2) had the nonresident individual been a resident individual; and
73 (b) a percentage calculated by dividing the nonresident individual's federal adjusted
74 gross income derived from Utah sources for the taxable year, as calculated under Section
75 59-10-117 , by the nonresident individual's total federal adjusted gross income for that same
76 taxable year.
77 (4) (a) For taxable years beginning on or after January 1, 2008, the commission shall
78 increase or decrease the federal adjusted gross income amounts provided for in Subsection (2)
79 by a percentage equal to the percentage difference between the consumer price index for the
80 preceding calendar year and the consumer price index for calendar year 2006.
81 (b) For purposes of Subsection (4)(a), the commission shall calculate the consumer
82 price index in accordance with Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
83 (5) A resident or nonresident individual may not claim a tax credit under this section if
84 the resident or nonresident individual's federal adjusted gross income is greater than the
85 greatest amount of federal adjusted gross income for which a tax credit is allowed under
86 Subsection (2)(c).
87 (6) A resident or nonresident individual may not carry forward or carry back a tax
88 credit provided for under this section.
89 (7) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the

90 commission may make rules providing procedures for issuing a refund to a resident or
91 nonresident individual for a tax credit provided for under this section if the tax credit exceeds
92 the resident or nonresident individual's tax liability under this chapter for the taxable year for
93 which the resident or nonresident individual claims the tax credit.




Legislative Review Note
as of 1-4-06 12:40 PM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel