Senator John D. Johnson proposes the following substitute bill:


1     
INDEPENDENT CONTRACTOR BENEFITS TAX CREDIT

2     
AMENDMENTS

3     
2024 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: John D. Johnson

6     
House Sponsor: ____________

7     

8     LONG TITLE
9     General Description:
10          This bill enacts an income tax credit for the purchase of insurance benefits.
11     Highlighted Provisions:
12          This bill:
13          ▸     enacts a nonrefundable income tax credit for:
14               •     a hiring party that contributes to the purchase of a portable benefit plan or other
15     insurance benefits on behalf of an independent contractor; and
16               •     an independent contractor that pays for a portable benefit plan or other insurance
17     benefits out of pocket; and
18          ▸     provides for apportionment of the income tax credit.
19     Money Appropriated in this Bill:
20          None
21     Other Special Clauses:
22          This bill provides a special effective date.
23     Utah Code Sections Affected:
24     AMENDS:
25          59-10-1002.2, as last amended by Laws of Utah 2023, Chapters 460, 462

26     ENACTS:
27          59-7-627, Utah Code Annotated 1953
28          59-10-1048, Utah Code Annotated 1953
29     

30     Be it enacted by the Legislature of the state of Utah:
31          Section 1. Section 59-7-627 is enacted to read:
32          59-7-627. Nonrefundable tax credit for purchase of insurance benefits.
33          (1) As used in this section:
34          (a) "Contribution" means an amount, up to $2,000, paid to:
35          (i) a portable benefit plan; or
36          (ii) an independent contractor to purchase a portable benefit plan or an insurance
37     product regulated by Title 31A, Insurance Code, or Title 35A, Chapter 4, Employment Security
38     Act.
39          (b) "Hiring party" means the same as that term is defined in Section 34-57-101.
40          (c) "Independent contractor" means the same as that term is defined in Section
41     34A-2-103.
42          (d) (i) "Payment" means an amount, up to $2,000, paid to purchase a portable benefit
43     plan or an insurance product regulated by Title 31A, Insurance Code, or Title 35A, Chapter 4,
44     Employment Security Act.
45          (ii) "Payment" does not include an amount that is a contribution.
46          (e) "Portable benefit plan" means the same as that term is defined in Section
47     34-57-101.
48          (f) "Qualifying hiring party" means a taxpayer that:
49          (i) is a hiring party; and
50          (ii) has a written agreement with an independent contractor to make a contribution in
51     an amount stated in the agreement.
52          (2) (a) A qualifying hiring party may claim a nonrefundable tax credit equal to the
53     percentage listed in Subsection 59-7-104(2) multiplied by the amount of a contribution the
54     qualifying hiring party made during the taxable year.
55          (b) A qualifying hiring party may not claim a tax credit described in this Subsection (2)
56     to the extent that the qualifying hiring party:

57          (i) claims a business expense deduction for the contribution on the qualifying hiring
58     party's federal income tax return for that taxable year; or
59          (ii) makes the contribution with income that is not subject to federal income tax.
60          (3) (a) A taxpayer that is an independent contractor may claim a nonrefundable tax
61     credit equal to the percentage listed in Subsection 59-7-104(2) multiplied by the amount of a
62     payment the independent contractor made during the taxable year.
63          (b) An independent contractor may not claim a tax credit described in this Subsection
64     (3) to the extent that the independent contractor makes the payment with income that is not
65     subject to federal income tax.
66          (4) A qualifying hiring party or an independent contractor may not carry forward or
67     carry back the amount of the tax credit that exceeds tax liability.
68          Section 2. Section 59-10-1002.2 is amended to read:
69          59-10-1002.2. Apportionment of tax credits.
70          (1) A nonresident individual or a part-year resident individual that claims a tax credit
71     in accordance with Section 59-10-1017, 59-10-1018, 59-10-1019, 59-10-1022, 59-10-1023,
72     59-10-1024, 59-10-1028, 59-10-1042, 59-10-1043, 59-10-1044, 59-10-1046, [or] 59-10-1047,
73     or 59-10-1048 may only claim an apportioned amount of the tax credit equal to:
74          (a) for a nonresident individual, the product of:
75          (i) the state income tax percentage for the nonresident individual; and
76          (ii) the amount of the tax credit that the nonresident individual would have been
77     allowed to claim but for the apportionment requirements of this section; or
78          (b) for a part-year resident individual, the product of:
79          (i) the state income tax percentage for the part-year resident individual; and
80          (ii) the amount of the tax credit that the part-year resident individual would have been
81     allowed to claim but for the apportionment requirements of this section.
82          (2) A nonresident estate or trust that claims a tax credit in accordance with Section
83     59-10-1017, 59-10-1020, 59-10-1022, 59-10-1024, [or] 59-10-1028, or 59-10-1048 may only
84     claim an apportioned amount of the tax credit equal to the product of:
85          (a) the state income tax percentage for the nonresident estate or trust; and
86          (b) the amount of the tax credit that the nonresident estate or trust would have been
87     allowed to claim but for the apportionment requirements of this section.

88          Section 3. Section 59-10-1048 is enacted to read:
89          59-10-1048. Nonrefundable tax credit for purchase of insurance benefits.
90          (1) As used in this section:
91          (a) "Contribution" means an amount, up to $2,000, paid to:
92          (i) a portable benefit plan; or
93          (ii) an independent contractor to purchase a portable benefit plan or an insurance
94     product regulated by Title 31A, Insurance Code, or Title 35A, Chapter 4, Employment Security
95     Act.
96          (b) "Hiring party" means the same as that term is defined in Section 34-57-101.
97          (c) "Independent contractor" means the same as that term is defined in Section
98     34A-2-103.
99          (d) (i) "Payment" means an amount, up to $2,000, paid to purchase a portable benefit
100     plan or an insurance product regulated by Title 31A, Insurance Code, or Title 35A, Chapter 4,
101     Employment Security Act.
102          (ii) "Payment" does not include an amount that is a contribution.
103          (e) "Portable benefit plan" means the same as that term is defined in Section
104     34-57-101.
105          (f) "Qualifying hiring party" means a claimant, estate, or trust that:
106          (i) is a hiring party; and
107          (ii) has a written agreement with an independent contractor to make a contribution in
108     an amount stated in the agreement.
109          (2) (a) Subject to Section 59-10-1002.2, a qualifying hiring party may claim a
110     nonrefundable tax credit equal to the percentage listed in Subsection 59-10-104(2)(b)
111     multiplied by the amount of a contribution the qualifying hiring party made during the taxable
112     year.
113          (b) A qualifying hiring party may not claim a credit described in this Subsection (2) to
114     the extent that the qualifying hiring party:
115          (i) claims a business expense deduction for the contribution on the qualifying hiring
116     party's federal income tax return for that taxable year; or
117          (ii) makes the contribution with income that is not subject to federal income tax.
118          (3) (a) Subject to Section 59-10-1002.2, a claimant, estate, or trust that is an

119     independent contractor may claim a nonrefundable tax credit equal to the percentage listed in
120     Subsection 59-10-104(2)(b) multiplied by the amount of a payment the independent contractor
121     made during the taxable year.
122          (b) An independent contractor may not claim a credit described in this Subsection (3)
123     to the extent that the independent contractor makes the payment with income that is not subject
124     to federal income tax.
125          (4) A qualifying hiring party or an independent contractor may not carry forward or
126     carry back the amount of the tax credit that exceeds tax liability.
127          Section 4. Effective date.
128          This bill takes effect for a taxable year beginning on or after January 1, 2025.