Representative Steve Eliason proposes the following substitute bill:


1     
AMENDMENTS TO TAX LAW

2     
2018 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Daniel McCay

5     
Senate Sponsor: ____________

6     

7     LONG TITLE
8     General Description:
9          This bill amends the state's income tax provisions.
10     Highlighted Provisions:
11          This bill:
12          ▸     addresses the apportionment of business income for income tax purposes by:
13               •     phasing in a requirement that certain taxpayers use only the sales factor to
14     calculate the fraction for apportioning business income to the state;
15               •     allowing an optional apportionment taxpayer to choose between a single sales
16     factor and an equally weighted method to calculate the fraction for apportioning
17     business income to the state; and
18               •     requiring an optional apportionment taxpayer that chooses to apportion business
19     income using the single sales factor method to continue using the single sales
20     factor method of apportionment in subsequent taxable years;
21          ▸     provides a method for a taxpayer to determine if the taxpayer is an optional
22     apportionment taxpayer;
23          ▸     reduces the state's corporate and individual income tax rates;
24          ▸     defines terms;
25          ▸     modifies the calculation of the taxpayer tax credit; and
26          ▸     makes technical and conforming changes.
27     Money Appropriated in this Bill:
28          None
29     Other Special Clauses:
30          This bill provides retrospective operation.
31          This bill provides a special effective date.
32     Utah Code Sections Affected:
33     AMENDS:
34          59-7-104, as repealed and reenacted by Laws of Utah 1993, Chapter 169
35          59-7-110, as last amended by Laws of Utah 2016, Chapters 311 and 323
36          59-7-201, as last amended by Laws of Utah 1993, Chapter 169
37          59-7-302, as last amended by Laws of Utah 2017, Chapters 181 and 268
38          59-7-311, as last amended by Laws of Utah 2016, Chapters 311 and 323
39          59-7-312, as last amended by Laws of Utah 2008, Chapter 283
40          59-7-315, as last amended by Laws of Utah 2008, Chapter 283
41          59-10-104, as last amended by Laws of Utah 2008, Chapter 389
42          59-10-1018, as last amended by Laws of Utah 2012, Chapter 295
43     

44     Be it enacted by the Legislature of the state of Utah:
45          Section 1. Section 59-7-104 is amended to read:
46          59-7-104. Tax -- Minimum tax.
47          (1) Each domestic and foreign corporation, except [those exempted] a corporation that
48     is exempt under Section 59-7-102, shall pay an annual tax to the state based on [its] the
49     corporation's Utah taxable income for the taxable year for the privilege of exercising [its] the
50     corporation's corporate franchise or for the privilege of doing business in the state.
51          (2) The tax shall be [5%] 4.95% of a corporation's Utah taxable income.
52          (3) The minimum tax a corporation shall pay under this chapter is $100.
53          Section 2. Section 59-7-110 is amended to read:
54          59-7-110. Utah net loss -- Carryforward and carryback -- Deduction.
55          (1) [The amount of Utah net loss that shall be carried] A taxpayer shall determine the
56     amount of Utah net loss that the taxpayer may carry back or forward to offset income of
57     another taxable year [is determined] as provided in this section.
58          [(2) (a) Subject to the other provisions of this section, a Utah net loss from a taxable
59     year beginning before January 1, 1994, shall be carried back three taxable years preceding the
60     taxable year of the loss and any remaining loss shall be carried forward five taxable years
61     following the taxable year of the loss.]
62          [(b) (i)] (2) (a) Subject to the other provisions of this section, a taxpayer may:
63          (i) carry back a Utah net loss from a taxable year [beginning on or after January 1,
64     1994, may be carried back] for three taxable years preceding the taxable year of the loss; and
65     [carried]
66          (ii) carry forward a Utah net loss from a taxable year for 15 taxable years following the
67     taxable year of the loss.
68          [(ii)] (b) If [an election is made to] a taxpayer elects to forego the federal net operating
69     loss carryback, the taxpayer may not carry back a Utah net loss [is not eligible to be carried
70     back] unless the taxpayer makes an election [is made] for state purposes.
71          (3) A taxpayer that carries forward a Utah net loss shall carry forward the Utah net loss
72     [shall be carried] to the earliest eligible year for which the Utah taxable income before net loss
73     deduction, minus Utah net losses from previous years that [were applied or required to be
74     applied] a taxpayer applied or was required to apply to offset income, is not less than zero.
75          (4) (a) Except as provided in Subsection (4)(b), the amount of Utah net loss that [shall
76     be carried] a taxpayer may carry to the year identified in Subsection (3) is the lesser of:
77          (i) the remaining Utah net loss after deduction of any amounts of the Utah net loss that
78     [were] a taxpayer carried to previous years; or
79          (ii) the remaining Utah taxable income before net loss deduction of the year identified
80     in Subsection (3) after deduction of Utah net losses from previous years that [were carried or
81     required to be carried] a taxpayer carried or was required to carry to the year identified in
82     Subsection (3).
83          (b) (i) The amount of Utah net loss [carried] that a taxpayer carries back from a taxable
84     year may not exceed $1,000,000 in Utah taxable income for each return filed under this chapter
85     in a taxable year.
86          (ii) A taxpayer may carry forward a Utah net loss in excess of $1,000,000 [may be
87     carried forward].
88          (iii) A taxpayer may carry a remaining Utah net loss [shall be available to be carried] to
89     one or more taxable years in accordance with this section.
90          (5) (a) (i) Subject to Subsection (5)(a)(ii), a corporation acquiring the assets or stock of
91     another corporation may not deduct any net loss incurred by the acquired corporation prior to
92     the date of acquisition.
93          (ii) Subsection (5)(a)(i) does not apply if the only change in the corporation is that of
94     the state of incorporation.
95          (b) An acquired corporation may deduct the acquired corporation's net losses incurred
96     before the date of acquisition against the acquired corporation's separate income as calculated
97     under Subsections (6) and (7) if the acquired corporation has continued to carry on a trade or
98     business substantially the same as that conducted before the acquisition.
99          (6) For purposes of Subsection (5)(b), the amount of net loss an acquired corporation
100     that is acquired by a unitary group may deduct is calculated by:
101          (a) subject to Subsection (7):
102          (i) except as provided in Subsection (6)(a)(ii), calculating the sum of:
103          (A) an amount determined by dividing the average value of the acquired corporation's
104     real and tangible personal property owned or rented and used in this state during the taxable
105     year by the average value of all of the unitary group's real and tangible personal property owned
106     or rented and used during the taxable year;
107          (B) an amount determined by dividing the total amount paid in this state during the
108     taxable year by the acquired corporation for compensation by the total compensation paid
109     everywhere by the unitary group during the taxable year; and
110          (C) an amount determined by[: (I)] dividing the total sales of the acquired corporation
111     in this state during the taxable year by the total sales of the unitary group everywhere during the
112     taxable year; [and] or
113          [(II) if the unitary group elects to calculate the fraction for apportioning business
114     income to this state using the method described in Subsection 59-7-311(2)(b), multiplying the
115     amount calculated under Subsection (6)(a)(i)(C)(I) by two; or]
116          (ii) if the unitary group is required or elects to calculate the fraction for apportioning
117     business income to this state using the method described in Subsection 59-7-311[(3)](2),
118     calculating an amount determined by dividing the total sales of the acquired corporation in this
119     state during the taxable year by the total sales of the unitary group everywhere during the
120     taxable year;
121          (b) dividing the amount calculated under Subsection (6)(a) by the same denominator of
122     the fraction the unitary group uses to apportion business income to this state[: (i)] for that
123     taxable year[; and (ii)] in accordance with Section 59-7-311;
124          (c) multiplying the amount calculated under Subsection (6)(b) by the business income
125     of the unitary group for the taxable year that is subject to apportionment under Section
126     59-7-311; and
127          (d) calculating the sum of:
128          (i) the amount calculated under Subsection (6)(c); and
129          (ii) the following amounts allocable to the acquired corporation for the taxable year:
130          (A) nonbusiness income allocable to this state; or
131          (B) nonbusiness loss allocable to this state.
132          (7) The amounts calculated under Subsection (6)(a) shall be derived in the same
133     manner as those amounts are derived for purposes of apportioning the unitary group's business
134     income before deducting the net loss, including a modification made in accordance with
135     Section 59-7-320.
136          Section 3. Section 59-7-201 is amended to read:
137          59-7-201. Tax -- Minimum tax.
138          (1) There is imposed upon each corporation, except [those] a corporation that is
139     exempt under Section 59-7-102 [for each taxable year], a tax upon [its] the corporation's Utah
140     taxable income for the taxable year that is derived from sources within this state other than
141     income for any period [which] that the corporation is required to include in [its] the
142     corporation's tax base under Section 59-7-104.
143          (2) The tax imposed by Subsection (1) shall be [5%] 4.95% of a corporation's Utah
144     taxable income.
145          (3) In no case shall the tax be less than $100.
146          Section 4. Section 59-7-302 is amended to read:
147          59-7-302. Definitions -- Determination of taxpayer status.
148          (1) As used in this part, unless the context otherwise requires:
149          (a) "Aircraft type" means a particular model of aircraft as designated by the
150     manufacturer of the aircraft.
151          (b) "Airline" means the same as that term is defined in Section 59-2-102.
152          (c) "Airline revenue ton miles" means, for an airline, the total revenue ton miles during
153     the airline's tax period.
154          (d) "Business income" means income arising from transactions and activity in the
155     regular course of the taxpayer's trade or business and includes income from tangible and
156     intangible property if the acquisition, management, and disposition of the property constitutes
157     integral parts of the taxpayer's regular trade or business operations.
158          (e) "Commercial domicile" means the principal place from which the trade or business
159     of the taxpayer is directed or managed.
160          (f) "Compensation" means wages, salaries, commissions, and any other form of
161     remuneration paid to employees for personal services.
162          (g) "Excluded NAICS code" means a NAICS code of the 2017 North American
163     Industry Classification System of the federal Executive Office of the President, Office of
164     Management and Budget, within:
165          (i) NAICS Code 211120, Crude Petroleum Extraction;
166          (ii) NAICS Industry Group 2121, Coal Mining;
167          (iii) NAICS Industry Group 2212, Natural Gas Distribution;
168          (iv) NAICS Subsector 311, Food Manufacturing;
169          (v) NAICS Industry Group 3121, Beverage Manufacturing;
170          (vi) NAICS Code 327310, Cement Manufacturing;
171          (vii) NAICS Subsector 482, Rail Transportation; or
172          (viii) NAICS Code 522110, Commercial Banking.
173          [(g)] (h) (i) Except as provided in Subsection (1)[(g)](h)(ii), "mobile flight equipment"
174     means the same as that term is defined in Section 59-2-102.
175          (ii) "Mobile flight equipment" does not include:
176          (A) a spare engine; or
177          (B) tangible personal property described in Subsection 59-2-102(27) owned by an air
178     charter service or an air contract service.
179          [(h)] (i) "Nonbusiness income" means all income other than business income.
180          [(i) Subject to Subsection (2), "optional sales factor weighted taxpayer" means:]
181          [(i) for a taxpayer that is not a unitary group, regardless of the number of economic
182     activities the taxpayer performs, a taxpayer having greater than 50% of the taxpayer's total sales
183     everywhere generated by economic activities performed by the taxpayer if the economic
184     activities are classified in a NAICS code within NAICS Subsector 334, Computer and
185     Electronic Product Manufacturing, of the 2002 or 2007 North American Industry Classification
186     System of the federal Executive Office of the President, Office of Management and Budget; or]
187           [(ii) for a taxpayer that is a unitary group, a taxpayer having greater than 50% of the
188     taxpayer's total sales everywhere generated by economic activities performed by the taxpayer if
189     the economic activities are classified in a NAICS code within NAICS Subsector 334,
190     Computer and Electronic Product Manufacturing, of the 2002 or 2007 North American
191     Industry Classification System of the federal Executive Office of the President, Office of
192     Management and Budget.]
193          (j) "Optional apportionment taxpayer" means a taxpayer described in Subsection (3).
194          (k) "Phased-in sales factor weighted taxpayer" means a taxpayer that:
195          (i) is not a sales factor weighted taxpayer;
196          (ii) does not meet the definition of an optional apportionment taxpayer; or
197          (iii) for a taxable year beginning on or after January 1, 2020:
198          (A) meets the definition of an optional apportionment taxpayer; and
199          (B) apportioned business income using the method described in Subsection
200     59-7-311(4) during the previous taxable year.
201          [(j)] (l) "Revenue ton miles" is determined in accordance with 14 C.F.R. Part 241.
202          [(k)] (m) "Sales" means all gross receipts of the taxpayer not allocated under Sections
203     59-7-306 through 59-7-310.
204          [(l)] (n) [Subject to Subsection (2), "sales] "Sales factor weighted taxpayer" means[:] a
205     taxpayer described in Subsection (2).
206          [(i) for a taxpayer that is not a unitary group, regardless of the number of economic
207     activities the taxpayer performs, a taxpayer having greater than 50% of the taxpayer's total sales
208     everywhere generated by economic activities performed by the taxpayer if the economic
209     activities are classified in a NAICS code of the 2002 or 2007 North American Industry
210     Classification System of the federal Executive Office of the President, Office of Management
211     and Budget, except for:]
212          [(A) a NAICS code within NAICS Sector 21, Mining;]
213          [(B) a NAICS code within NAICS Industry Group 2212, Natural Gas Distribution;]
214          [(C) a NAICS code within NAICS Sector 31-33, Manufacturing, other than NAICS
215     Code 336111, Automobile Manufacturing;]
216          [(D) a NAICS code within NAICS Sector 48-49, Transportation and Warehousing;]
217          [(E) a NAICS code within NAICS Sector 51, Information, other than NAICS Subsector
218     519, Other Information Services; or]
219          [(F) a NAICS code within NAICS Sector 52, Finance and Insurance; or]
220          [(ii) for a taxpayer that is a unitary group, a taxpayer having greater than 50% of the
221     taxpayer's total sales everywhere generated by economic activities performed by the taxpayer if
222     the economic activities are classified in a NAICS code of the 2002 or 2007 North American
223     Industry Classification System of the federal Executive Office of the President, Office of
224     Management and Budget, except for a NAICS code under Subsections (1)(l)(i)(A) through (F).]
225          [(m)] (o) "State" means any state of the United States, the District of Columbia, the
226     Commonwealth of Puerto Rico, any territory or possession of the United States, and any
227     foreign country or political subdivision thereof.
228          [(n)] (p) "Transportation revenue" means revenue an airline earns from:
229          (i) transporting a passenger or cargo; or
230          (ii) from miscellaneous sales of merchandise as part of providing transportation
231     services.
232          [(o)] (q) "Utah revenue ton miles" means, for an airline, the total revenue ton miles
233     within the borders of this state:
234          (i) during the airline's tax period; and
235          (ii) from flight stages that originate or terminate in this state.
236          [(2) The following apply to Subsections (1)(i) and (l):]
237          [(a) (i) Subject to the other provisions of this Subsection (2), for each taxable year, a
238     taxpayer shall determine whether the taxpayer is a sales factor weighted taxpayer.]
239          (2) (a) A taxpayer is a sales factor weighted taxpayer if, regardless of the number of
240     economic activities the taxpayer performs, the taxpayer generates greater than 50% of the
241     taxpayer's total sales everywhere from economic activities that are classified in a NAICS code
242     of the 2002 or 2007 North American Industry Classification System of the federal Executive
243     Office of the President, Office of Management and Budget, other than:
244          (i) a NAICS code within NAICS Sector 21, Mining;
245          (ii) a NAICS code within NAICS Industry Group 2212, Natural Gas Distribution;
246          (iii) a NAICS code within NAICS Sector 31-33, Manufacturing, except NAICS Code
247     336111, Automobile Manufacturing;
248          (iv) a NAICS code within NAICS Sector 48-49, Transportation and Warehousing;
249          (v) a NAICS code within NAICS Sector 51, Information, except NAICS Subsector
250     519, Other Information Services; or
251          (vi) a NAICS code within NAICS Sector 52, Finance and Insurance.
252          [(ii)] (b) A taxpayer shall [make the determination required by Subsection (2)(a)(i)]
253     determine if the taxpayer is a sales factor weighted taxpayer each year before the due date for
254     filing the taxpayer's return under this chapter for the taxable year, including extensions.
255          [(iii)] (c) For purposes of making the determination required by Subsection (2)(a)[(i)],
256     total sales everywhere include only the total sales everywhere:
257          [(A)] (i) as determined in accordance with this part; and
258          [(B)] (ii) made during the taxable year for which a taxpayer makes the determination
259     required by Subsection (2)(a)[(i)].
260          (3) (a) A taxpayer is an optional apportionment taxpayer if the average calculated in
261     accordance with Subsection (3)(b) is greater than .50.
262          (b) To calculate the average described in Subsection (3)(a), a taxpayer shall:
263          (i) calculate the following two fractions:
264          (A) the property factor fraction as described in Subsection 59-7-312(3); and
265          (B) the payroll factor fraction as described in Subsection 59-7-315(3);
266          (ii) add together the fractions described in Subsection (3)(b)(i); and
267          (iii) divide the sum calculated in Subsection (3)(b)(ii):
268          (A) except as provided in Subsection (3)(b)(iii)(B), by two; or
269          (B) if either the property factor fraction or the payroll factor fraction has a denominator
270     of zero or is excluded in accordance with Subsection 59-7-312(3)(b) or 59-7-315(3)(b), by one.
271          (c) A taxpayer shall determine if the taxpayer is an optional apportionment taxpayer
272     before the due date for filing the taxpayer's return under this chapter for the taxable year,
273     including extensions.
274          [(b) (i) (A) Subject to other provisions of this Subsection (2), for each taxable year, a
275     taxpayer that is not a sales factor weighted taxpayer may determine whether the taxpayer is an
276     optional sales factor weighted taxpayer.]
277          [(B) A taxpayer that is not a sales factor weighted taxpayer shall determine that the
278     taxpayer is an optional sales factor weighted taxpayer before the taxpayer may use the
279     apportionment options described in Subsection 59-7-311(4).]
280          [(ii) A taxpayer making the determination described in Subsection (2)(b)(i) shall make
281     the determination before the due date for filing the taxpayer's return under this chapter for the
282     taxable year, including extensions.]
283          [(iii) For purposes of making the determination described in Subsection (2)(b)(i), total
284     sales everywhere include only the total sales everywhere:]
285          [(A) as determined in accordance with this part; and]
286          [(B) made during the taxable year for which a taxpayer makes a determination
287     described in Subsection (2)(b)(i).]
288          [(c)] (4) A taxpayer that files a return as a unitary group for a taxable year is considered
289     to be a unitary group for that taxable year.
290          [(d)] (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
291     Act, the commission may define the term "economic activity" consistent with the use of the
292     term "activity" in the 2007 North American Industry Classification System of the federal
293     Executive Office of the President, Office of Management and Budget.
294          Section 5. Section 59-7-311 is amended to read:
295          59-7-311. Method of apportionment of business income.
296          (1) For a taxable year, a taxpayer shall apportion all business income [shall be
297     apportioned] to this state by multiplying the business income by a fraction calculated as
298     provided in this section.
299          [(2) Subject to the other provisions of this part, a taxpayer, except for a sales factor
300     weighted taxpayer and an optional sales factor weighted taxpayer, shall calculate the fraction
301     for apportioning business income to this state using one of the following fractions:]
302          [(a) a fraction where:]
303          [(i) the numerator of the fraction is the sum of:]
304          [(A) the property factor as calculated under Section 59-7-312;]
305          [(B) the payroll factor as calculated under Section 59-7-315; and]
306          [(C) the sales factor as calculated under Section 59-7-317; and]
307          [(ii) the denominator of the fraction is three; or]
308          [(b) a fraction where:]
309          [(i) the numerator of the fraction is the sum of:]
310          [(A) the property factor as calculated under Section 59-7-312;]
311          [(B) the payroll factor as calculated under Section 59-7-315; and]
312          [(C) the sales factor as calculated under Section 59-7-317 multiplied by two; and]
313          [(ii) the denominator of the fraction is four.]
314          [(3)] (2) Subject to the other provisions of this part, a sales factor weighted taxpayer
315     shall calculate the fraction for apportioning business income to this state using a fraction
316     where:
317          (a) the numerator of the fraction is the sales factor as calculated under Section
318     59-7-317; and
319          (b) the denominator of the fraction is one.
320          [(4)] (3) Subject to the other provisions of this part, an optional [sales factor weighted]
321     apportionment taxpayer that is not a phased-in sales factor weighted taxpayer shall calculate
322     the fraction for apportioning business income to this state using [a method described in
323     Subsection (2)(a), (2)(b), or (3).] one of the following fractions:
324          (a) the fraction described in Subsection (4); or
325          (b) the fraction where:
326          (i) the numerator of the fraction is the sum of:
327          (A) the property factor as calculated under Section 59-7-312;
328          (B) the payroll factor as calculated under Section 59-7-315; and
329          (C) the sales factor as calculated under Section 59-7-317; and
330          (ii) the denominator of the fraction is three.
331          (4) (a) Subject to other provisions of this part, a phased-in sales factor weighted
332     taxpayer shall calculate the fraction for apportioning business income to this state as provided
333     in Subsections (4)(b) through (d).
334          (b) For the taxable year that begins on or after January 1, 2019, but begins on or before
335     December 31, 2019:
336          (i) the numerator of the fraction is the sum of:
337          (A) the property factor as calculated under Section 59-7-312;
338          (B) the payroll factor as calculated under Section 59-7-315; and
339          (C) the sales factor as calculated under Subsection (4)(e)(i); and
340          (ii) the denominator of the fraction is six.
341          (c) For the taxable year that begins on or after January 1, 2020, but begins on or before
342     December 31, 2020:
343          (i) the numerator of the fraction is the sum of:
344          (A) the property factor as calculated under Section 59-7-312;
345          (B) the payroll factor as calculated under Section 59-7-315; and
346          (C) the sales factor as calculated under Subsection (4)(e)(ii); and
347          (ii) the denominator of the fraction is 10.
348          (d) For a taxable year that begins on or after January 1, 2021, a phased-in sales factor
349     weighted taxpayer shall calculate the fraction as described in Subsection (2).
350          (e) (i) For the taxable year that begins on or after January 1, 2019, but begins on or
351     before December 31, 2019, the sales factor shall be:
352          (A) calculated as described in Section 59-7-317; and
353          (B) multiplied by four.
354          (ii) For the taxable year that begins on or after January 1, 2020, but begins on or before
355     December 31, 2020, the sales factor shall be:
356          (A) calculated as described in Section 59-7-317; and
357          (B) multiplied by eight.
358          (5) (a) The taxpayer shall determine the method for calculating the fraction for
359     apportioning business income to this state under this section on or before the due date for filing
360     the taxpayer's return under this chapter for the taxable year, including extensions.
361          (b) The method described in Subsection (5)(a) is in effect for the taxable year.
362          (6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
363     commission may make rules providing procedures for a taxpayer to make the election required
364     by [Subsections (2) and (4)] Subsection (3).
365          Section 6. Section 59-7-312 is amended to read:
366          59-7-312. Property factor for apportionment of business income -- Mobile flight
367     equipment of an airline.
368          (1) Except as provided in [Subsection (2)] Subsections (2) and (3), the property factor
369     is a fraction[,]:
370          (a) the numerator of which is the average value of the taxpayer's real and tangible
371     personal property owned or rented and used in this state during the tax period; and
372          (b) the denominator of which is the average value of all the taxpayer's real and tangible
373     personal property owned or rented and used during the tax period.
374          (2) The average value of an airline's real and tangible personal property owned or
375     rented and used in this state attributable to mobile flight equipment for purposes of the
376     numerator of the fraction described in Subsection (1) shall be calculated for each aircraft type
377     by [determining the product of] multiplying:
378          (a) the total average value of the airline's mobile flight equipment of the aircraft type
379     owned or rented and used during the tax period; and
380          (b) a fraction[,]:
381          (i) the numerator of which is the Utah revenue ton miles for the aircraft type; and
382          (ii) the denominator of which is the airline revenue ton miles for the aircraft type.
383          (3) (a) For purposes of Subsection 59-7-302(3)(b)(i)(A) and subject to Subsection
384     (3)(b), the property factor is a fraction:
385          (i) the numerator of which is the value of the property in this state that is attributable to
386     economic activities that are classified in an excluded NAICS code; and
387          (ii) the denominator of which is the value of all property in this state.
388          (b) A taxpayer shall exclude property from the calculation of the property factor
389     fraction described in Subsection (3)(a) if the property may be attributed to economic activities
390     in both excluded NAICS codes and NAICS codes that are not excluded NAICS codes.
391          Section 7. Section 59-7-315 is amended to read:
392          59-7-315. Payroll factor for apportionment of business income -- Compensation
393     of flight personnel by an airline.
394          (1) Except as provided in [Subsection (2)] Subsections (2) and (3), the payroll factor is
395     a fraction[,]:
396          (a) the numerator of which is the total amount paid in this state during the tax period by
397     the taxpayer for compensation[,]; and
398          (b) the denominator of which is the total compensation paid everywhere during the tax
399     period.
400          (2) The total amount paid in this state during the tax period by an airline for
401     compensation attributable to the compensation of flight personnel for purposes of the
402     numerator of the fraction described in Subsection (1) shall be calculated for each aircraft type
403     by [determining the product of] multiplying:
404          (a) the total amount paid during the tax period by the airline to flight personnel for
405     compensation for the aircraft type; and
406          (b) a fraction[,]:
407          (i) the numerator of which is the Utah revenue ton miles for the aircraft type; and
408          (ii) the denominator of which is the airline revenue ton miles for the aircraft type.
409          (3) (a) For purposes of Subsection 59-7-302(3)(b)(i)(B) and subject to Subsection
410     (3)(b), the payroll factor is a fraction:
411          (i) the numerator of which is the amount of the payroll in this state that is attributable
412     to economic activities that are classified in an excluded NAICS code; and
413          (ii) the denominator of which is the total amount of the payroll in this state.
414          (b) A taxpayer engaged in economic activities that are classified in an excluded NAICS
415     code shall exclude an individual's payroll from the calculation of the payroll factor fraction
416     described in Subsection (3)(a) if the individual's payroll may be attributed:
417          (i) to economic activities in both excluded NAICS codes and NAICS codes that are not
418     excluded NAICS codes; or
419          (ii) to providing management, information technology, finance, accounting, legal, or
420     human resource services.
421          Section 8. Section 59-10-104 is amended to read:
422          59-10-104. Tax basis -- Tax rate -- Exemption.
423          (1) [For taxable years beginning on or after January 1, 2008, a] A tax is imposed on the
424     state taxable income of a resident individual as provided in this section.
425          (2) For purposes of Subsection (1), for a taxable year, the tax is an amount equal to the
426     product of:
427          (a) the resident individual's state taxable income for that taxable year; and
428          (b) [5%] 4.95%.
429          (3) This section does not apply to a resident individual exempt from taxation under
430     Section 59-10-104.1.
431          Section 9. Section 59-10-1018 is amended to read:
432          59-10-1018. Definitions -- Nonrefundable taxpayer tax credits.
433          (1) As used in this section:
434          [(a) "Dependent adult with a disability" means an individual who:]
435          [(i) a claimant claims as a dependent under Section 151, Internal Revenue Code, on the
436     claimant's federal individual income tax return for the taxable year;]
437          [(ii) is not the claimant or the claimant's spouse; and]
438          [(iii) is:]
439          [(A) 18 years of age or older;]
440          [(B) eligible for services under Title 62A, Chapter 5, Services for People with
441     Disabilities; and]
442          [(C) not enrolled in an education program for students with disabilities that is
443     authorized under Section 53A-15-301.]
444          [(b) "Dependent child with a disability" means an individual 21 years of age or younger
445     who:]
446          [(i) a claimant claims as a dependent under Section 151, Internal Revenue Code, on the
447     claimant's federal individual income tax return for the taxable year;]
448          [(ii) is not the claimant or the claimant's spouse; and]
449          [(iii) is:]
450          [(A) an eligible student with a disability; or]
451          [(B) identified under guidelines of the Department of Health as qualified for Early
452     Intervention or Infant Development Services.]
453          [(c) "Eligible student with a disability" means an individual who is:]
454          [(i) diagnosed by a school district representative under rules the State Board of
455     Education adopts in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
456     Act, as having a disability classified as autism, deafness, preschool developmental delay, dual
457     sensory impairment, hearing impairment, intellectual disability, multidisability, orthopedic
458     impairment, other health impairment, traumatic brain injury, or visual impairment;]
459          [(ii) not receiving residential services from the Division of Services for People with
460     Disabilities created under Section 62A-5-102 or a school established under Title 53A, Chapter
461     25b, Utah Schools for the Deaf and the Blind; and]
462          [(iii) (A) enrolled in an education program for students with disabilities that is
463     authorized under Section 53A-15-301; or]
464          [(B) a recipient of a scholarship awarded under Title 53A, Chapter 1a, Part 7, Carson
465     Smith Scholarships for Students with Special Needs Act.]
466          [(d)] (a) "Head of household filing status" means a head of household, as defined in
467     Section 2(b), Internal Revenue Code, who files a single federal individual income tax return for
468     the taxable year.
469          [(e)] (b) "Joint filing status" means:
470          (i) [a husband and wife] spouses who file a single return jointly under this chapter for a
471     taxable year; or
472          (ii) a surviving spouse, as defined in Section 2(a), Internal Revenue Code, who files a
473     single federal individual income tax return for the taxable year.
474          [(f)] (c) "Single filing status" means:
475          (i) a single individual who files a single federal individual income tax return for the
476     taxable year; or
477          (ii) a married individual who:
478          (A) does not file a single federal individual income tax return jointly with that married
479     individual's spouse for the taxable year; and
480          (B) files a single federal individual income tax return for the taxable year.
481          (d) "State or local income tax" means the lesser of:
482          (i) the amount of state or local income tax that the claimant:
483          (A) pays for the taxable year; and
484          (B) reports on the claimant's federal individual income tax return for the taxable year,
485     regardless of whether the claimant is allowed an itemized deduction on the claimant's federal
486     individual income tax return for the taxable year for the full amount of state or local income tax
487     paid; and
488          (ii) $10,000.
489          (e) (i) "Utah itemized deduction" means the amount the claimant deducts as allowed as
490     an itemized deduction on the claimant's federal individual income tax return for that taxable
491     year minus any amount of state or local income tax for the taxable year.
492          (ii) "Utah itemized deduction" does not include any amount of qualified business
493     income that the claimant subtracts as allowed by Section 199A, Internal Revenue Code, on the
494     claimant's federal income tax return for that taxable year.
495          (2) Except as provided in Section 59-10-1002.2, and subject to Subsections (3) through
496     (5), a claimant may claim a nonrefundable tax credit against taxes otherwise due under this part
497     equal to [the sum of]:
498          (a) [(i)] for a claimant that deducts the standard deduction on the claimant's federal
499     individual income tax return for the taxable year, 6% of the amount the claimant deducts as
500     allowed as the standard deduction on the claimant's federal individual income tax return for
501     that taxable year; or
502          [(ii)] (b) for a claimant that itemizes deductions on the claimant's federal individual
503     income tax return for the taxable year, [the product of:] 6% of the amount of the claimant's
504     Utah itemized deduction.
505          [(A) the difference between:]
506          [(I) the amount the claimant deducts as allowed as an itemized deduction on the
507     claimant's federal individual income tax return for that taxable year; and]
508          [(II) any amount of state or local income taxes the claimant deducts as allowed as an
509     itemized deduction on the claimant's federal individual income tax return for that taxable year;
510     and]
511          [(B) 6%; and]
512          [(b) the product of:]
513          [(i) 75% of the total amount the claimant deducts as allowed as a personal exemption
514     deduction on the claimant's federal individual income tax return for that taxable year, plus an
515     additional 75% of the amount the claimant deducts as allowed as a personal exemption
516     deduction on the claimant's federal individual income tax return for that taxable year with
517     respect to each dependent adult with a disability or dependent child with a disability; and]
518          [(ii) 6%.]
519          (3) A claimant may not carry forward or carry back a tax credit under this section.
520          (4) The tax credit allowed by Subsection (2) shall be reduced by $.013 for each dollar
521     by which a claimant's state taxable income exceeds:
522          (a) for a claimant who has a single filing status, $12,000;
523          (b) for a claimant who has a head of household filing status, $18,000; or
524          (c) for a claimant who has a joint filing status, $24,000.
525          (5) (a) For [taxable years] a taxable year beginning on or after January 1, 2009, the
526     commission shall increase or decrease annually the following dollar amounts by a percentage
527     equal to the percentage difference between the consumer price index for the preceding calendar
528     year and the consumer price index for calendar year 2007:
529          (i) the dollar amount listed in Subsection (4)(a); and
530          (ii) the dollar amount listed in Subsection (4)(b).
531          (b) After the commission increases or decreases the dollar amounts listed in Subsection
532     (5)(a), the commission shall round those dollar amounts listed in Subsection (5)(a) to the
533     nearest whole dollar.
534          (c) After the commission rounds the dollar amounts as required by Subsection (5)(b),
535     the commission shall increase or decrease the dollar amount listed in Subsection (4)(c) so that
536     the dollar amount listed in Subsection (4)(c) is equal to the product of:
537          (i) the dollar amount listed in Subsection (4)(a); and
538          (ii) two.
539          (d) For purposes of Subsection (5)(a), the commission shall calculate the consumer
540     price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
541          Section 10. Retrospective operation and effective date.
542          (1) Except as provided in Subsection (2), this bill has retrospective operation for a
543     taxable year beginning on or after January 1, 2018.
544          (2) The amendments to Sections 59-7-110, 59-7-302, 59-7-311, 59-7-312, and
545     59-7-315 take effect for a taxable year beginning on or after January 1, 2019.