1     
INCOME TAX MODIFICATIONS

2     
2022 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Daniel McCay

5     
House Sponsor: Mark A. Strong

6     

7     LONG TITLE
8     General Description:
9          This bill modifies provisions related to income tax.
10     Highlighted Provisions:
11          This bill:
12          ▸     updates the language that the State Tax Commission prints on certain documents
13     related to individual income tax returns;
14          ▸     clarifies that when a tax credit that allows a carry forward expires or is repealed, the
15     applicable carry forward remains in effect;
16          ▸     provides that a claimant may not claim a social security tax credit or a military
17     retirement tax credit, if a retirement tax credit is claimed on the same return; and
18          ▸     makes technical and conforming changes.
19     Money Appropriated in this Bill:
20          None
21     Other Special Clauses:
22          This bill provides a special effective date.
23          This bill provides retrospective operation.
24     Utah Code Sections Affected:
25     AMENDS:
26          59-10-103.1, as last amended by Laws of Utah 2011, Chapter 410
27          59-10-1019, as last amended by Laws of Utah 2021, Chapters 68 and 428
28          59-10-1042, as enacted by Laws of Utah 2021, Chapter 428
29          59-10-1043, as enacted by Laws of Utah 2021, Chapter 68
30     ENACTS:
31          59-7-538, Utah Code Annotated 1953
32          59-10-552, Utah Code Annotated 1953
33     

34     Be it enacted by the Legislature of the state of Utah:
35          Section 1. Section 59-7-538 is enacted to read:
36          59-7-538. Carry forward of expired or repealed tax credit.
37          When a nonrefundable corporate income tax credit under Part 6, Credits, expires or is
38     repealed, the commission shall allow a taxpayer to carry forward any amount of the tax credit
39     that remains for the period of time described in the tax credit for the taxable year in which the
40     taxpayer first claimed the tax credit.
41          Section 2. Section 59-10-103.1 is amended to read:
42          59-10-103.1. Information to be contained on individual income tax returns or
43     booklets.
44          (1) The commission shall print the phrase "all state income tax dollars [fund education]
45     support education, children, and individuals with disabilities" on:
46          (a) the first page of an individual income tax return; and
47          (b) the cover page of an individual income tax forms and instructions booklet.
48          (2) The commission shall include on an individual income tax return a statement for a
49     property owner to declare that the property owner no longer qualifies to receive a residential
50     exemption authorized under Section 59-2-103 for that property owner's primary residence.
51          Section 3. Section 59-10-552 is enacted to read:
52          59-10-552. Carry forward of expired or repealed tax credit.
53          When a nonrefundable individual income tax credit, under Part 10, Nonrefundable Tax
54     Credit Act, expires or is repealed, the commission shall allow a claimant, estate, or trust to
55     carry forward any amount of the tax credit that remains for the period of time described in the
56     tax credit for the taxable year in which the estate, claimant, or estate first claimed the tax credit.
57          Section 4. Section 59-10-1019 is amended to read:
58          59-10-1019. Definitions -- Nonrefundable retirement tax credit.
59          (1) As used in this section:
60          (a) "Eligible claimant" means a claimant, regardless of whether that claimant is retired,
61     who was born on or before December 31, 1952.
62          (b) "Head of household filing status" means the same as that term is defined in Section
63     59-10-1018.
64          (c) "Joint filing status" means the same as that term is defined in Section 59-10-1018.
65          (d) "Married filing separately status" means a married individual who:
66          (i) does not file a single federal individual income tax return jointly with that married
67     individual's spouse for the taxable year; and
68          (ii) files a single federal individual income tax return for the taxable year.
69          (e) "Modified adjusted gross income" means the sum of the following for an eligible
70     claimant or, if the eligible claimant's return under this chapter is allowed a joint filing status,
71     the eligible claimant and the eligible claimant's spouse:
72          (i) adjusted gross income for the taxable year for which a tax credit is claimed under
73     this section;
74          (ii) any interest income that is not included in adjusted gross income for the taxable
75     year described in Subsection (1)(e)(i); and
76          (iii) any addition to adjusted gross income required by Section 59-10-114 for the
77     taxable year described in Subsection (1)(e)(i).
78          (f) "Single filing status" means a single individual who files a single federal individual
79     income tax return for the taxable year.
80          (2) Except as provided in Section 59-10-1002.2 and Subsections (3) and (4), each
81     eligible claimant may claim a nonrefundable tax credit of $450 against taxes otherwise due
82     under this part.
83          (3) [(a)] An eligible claimant may not:
84          [(i)] (a) carry forward or carry back the amount of a tax credit under this section that
85     exceeds the eligible claimant's tax liability for the taxable year; or
86          [(ii)] (b) claim a tax credit under this section [and] for a taxable year if a tax credit
87     under Section 59-10-1042 or 59-10-1043 is claimed on the claimant's return for the same
88     taxable year.
89          [(b) An eligible claimant who qualifies for a tax credit under this section and a tax
90     credit under Section 59-10-1042 or 59-10-1043 may elect whether to claim a tax credit under
91     this section or a tax credit under Section 59-10-1042 or 59-10-1043.]
92          (4) The tax credit allowed by Subsection (2) claimed on a return filed under this part
93     shall be reduced by $.025 for each dollar by which modified adjusted gross income for
94     purposes of the return exceeds:
95          (a) for a federal individual income tax return that is allowed a married filing separately
96     status, $16,000;
97          (b) for a federal individual income tax return that is allowed a single filing status,
98     $25,000;
99          (c) for a federal individual income tax return that is allowed a head of household filing
100     status, $32,000; or
101          (d) for a return under this chapter that is allowed a joint filing status, $32,000.
102          Section 5. Section 59-10-1042 is amended to read:
103          59-10-1042. Nonrefundable tax credit for social security benefits.
104          (1) As used in this section:
105          (a) "Head of household filing status" means the same as that term is defined in Section
106     59-10-1018.
107          (b) "Joint filing status" means the same as that term is defined in Section 59-10-1018.
108          (c) "Married filing separately status" means a married individual who:
109          (i) does not file a single federal individual income tax return jointly with that married
110     individual's spouse for the taxable year; and
111          (ii) files a single federal individual income tax return for the taxable year.
112          (d) "Modified adjusted gross income" means the sum of the following for a claimant
113     or, if the claimant's return under this chapter is allowed a joint filing status, the claimant and
114     the claimant's spouse:
115          (i) adjusted gross income for the taxable year for which a tax credit is claimed under
116     this section;
117          (ii) any interest income that is not included in adjusted gross income for the taxable
118     year described in Subsection (1)(d)(i); and
119          (iii) any addition to adjusted gross income required by Section 59-10-114 for the
120     taxable year described in Subsection (1)(d)(i).
121          (e) "Single filing status" means a single individual who files a single federal individual
122     income tax return for the taxable year.
123          (f) "Social security benefit" means an amount received by a claimant as a monthly
124     benefit in accordance with the Social Security Act, 42 U.S.C. Sec. 401 et seq.
125          (2) Except as provided in Section 59-10-1002.2 and Subsections (3) and (4), each
126     claimant on a return that receives a social security benefit may claim a nonrefundable tax credit
127     against taxes otherwise due under this part equal to the product of:
128          (a) the percentage listed in Subsection 59-10-104(2); and
129          (b) the claimant's social security benefit that is included in adjusted gross income on
130     the claimant's federal income tax return for the taxable year.
131          (3) [(a)] A claimant may not:
132          [(i)] (a) carry forward or carry back the amount of a tax credit under this section that
133     exceeds the claimant's tax liability for the taxable year; or
134          [(ii)] (b) claim a tax credit under this section [and] for a taxable year if a tax credit
135     under Section 59-10-1019 is claimed on the claimant's return for the same taxable year.
136          [(b) A claimant that qualifies for a tax credit under this section and a tax credit under
137     Section 59-10-1019 may elect whether to claim a tax credit under this section or a tax credit
138     under Section 59-10-1019.]
139          (4) The tax credit allowed by Subsection (2) claimed on a return filed under this part
140     shall be reduced by $.025 for each dollar by which modified adjusted gross income for
141     purposes of the return exceeds:
142          (a) for a federal individual income tax return that is allowed a married filing separately
143     status, $25,000;
144          (b) for a federal individual income tax return that is allowed a single filing status,
145     $30,000;
146          (c) for a federal individual income tax return that is allowed a head of household filing
147     status, $50,000; or
148          (d) for a return under this chapter that is allowed a joint filing status, $50,000.
149          (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
150     commission may make rules governing the calculation and method for claiming the tax credit
151     described in this section.
152          Section 6. Section 59-10-1043 is amended to read:
153          59-10-1043. Nonrefundable tax credit for military retirement.
154          (1) As used in this section:
155          [(a)] (a) (i) "Military retirement pay" means retirement pay, including survivor benefits,
156     that relates to service in the armed forces[, including service in the Reserves or the National
157     Guard] or the reserve components, as described in 10 U.S.C. Sec. 10101.
158          (ii) "Military retirement pay" does not include:
159          (A) Social Security income;
160          (B) 401(k) or IRA distributions; or
161          (C) income from other sources.
162          (b) "Survivor benefits" means the retired pay portion of the benefits described in 10
163     U.S.C. Secs. 1447 through 1455.
164          (2) Except as provided in Section 59-10-1002.2, a claimant who receives military
165     retirement pay may claim a nonrefundable tax credit against taxes equal to the product of:
166          (a) the percentage listed in Subsection 59-10-104(2); and
167          (b) the amount of military retirement pay that is included in adjusted gross income on
168     the claimant's federal income tax return for the taxable year.
169          (3) [(a)] A claimant may not:
170          [(i)] (a) carry forward or carry back the amount of a tax credit that exceeds the
171     claimant's tax liability for the taxable year; or
172          [(ii)] (b) claim a tax credit under this section [and] for a taxable year if a tax credit
173     under Section 59-10-1019 is claimed on the claimant's return for the same taxable year.
174          [(b) A claimant that qualifies for a tax credit under this section and a tax credit under
175     Section 59-10-1019 may elect whether to claim a tax credit under this section or a tax credit
176     under Section 59-10-1019.]
177          Section 7. Effective date.
178          If approved by two-thirds of all the members elected to each house, this bill takes effect
179     upon approval by the governor, or the day following the constitutional time limit of Utah
180     Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
181     the date of veto override.
182          Section 8. Retrospective operation.
183          The changes to Sections 59-10-1019, 59-10-1042, and 59-10-1043 have retrospective
184     operation for a taxable year beginning on or after January 1, 2021.