Utah — Personal Income Tax

Utah residents and part-year residents who are required to file a federal income tax return must file a Utah return. Nonresidents and part-year residents with Utah-source income must also file a Utah return if they are required to file a federal return, unless their only Utah income is from a partnership, S corporation, or trust that passes through to their federal return. Individuals may also file to claim a refund of overpaid Utah income tax. A person is considered a Utah resident if they reside in the state for 183 or more days in a calendar year or if they are domiciled in Utah under the statutory presumption tests outlined in Utah Code § 59-10-136.

Source: Utah Tax Commission — Who Must File and Utah Code § 59-10-103

Utah imposes a flat personal income tax rate of 4.5% on the state taxable income of resident individuals. The tax is calculated by multiplying state taxable income by 0.045. This single rate applies to all income levels and filing statuses. The 4.5% rate became effective for tax years beginning on or after January 1, 2025, as amended by the 2024 General Session.

Source: Utah Code § 59-10-104

Utah defines state taxable income for resident individuals as federal adjusted gross income (as defined in Internal Revenue Code Section 62), after making the additions and subtractions required by Utah Code Section 59-10-114 and the adjustments required by Section 59-10-115. The state does not use federal taxable income as the starting point. This definition applies to the 4.5% flat tax rate.

Source: Utah Code § 59-10-103

Utah individual income tax returns are due on the same date as the corresponding federal income tax return. For calendar-year filers, this is April 15 (or the next business day if April 15 falls on a weekend or holiday). Fiscal-year filers must file by the 15th day of the fourth month following the close of their taxable year. Utah grants an automatic six-month extension to file if the taxpayer pays at least 90% of the current year's tax liability or 100% of the prior year's liability by the original due date. The extension applies only to filing, not to payment.

Source: Utah Tax Commission — Who Must File

Utah state taxable income begins with federal adjusted gross income (AGI) under Internal Revenue Code Section 62, then applies the additions and subtractions required by Utah Code § 59-10-114 and adjustments required by § 59-10-115. These modifications reconcile differences between federal and Utah tax treatment of specific income and deduction items.

Additions to federal AGI

Utah Code § 59-10-114(1) requires the following items to be added to federal AGI:

• Lump sum distributions not included in federal AGI — A lump sum distribution that the taxpayer does not include in adjusted gross income on the federal return for the taxable year must be added to Utah AGI (subsection (1)(a)).

• Child's income elected for parent's return — The amount of a child's income calculated under the kiddie-tax rules that a parent elects to report on the parent's federal return but does not include in the parent's federal AGI must be added (subsection (1)(b)).

• Medical care savings account withdrawals — A withdrawal from a medical care savings account (established under Utah Code Title 31A, Chapter 32a) and any penalty imposed for the taxable year must be added if the taxpayer does not deduct or include the amounts on the federal return pursuant to IRC Section 220 and did not include the withdrawal in federal AGI (subsection (1)(c)).

• Interest on obligations of other states — Interest income from bonds, notes, or other obligations issued by states or political subdivisions other than Utah must be added, even though such interest is exempt from federal income tax (subsection (1)(d)). Utah taxes this interest while exempting interest on its own obligations.

Subtractions from federal AGI

Utah Code § 59-10-114(2) requires the following items to be subtracted from federal AGI:

• Interest on Utah and U.S. obligations — Interest income from bonds, notes, or other obligations issued by the state of Utah, its political subdivisions, or the United States (to the extent includible in federal AGI) is subtracted (subsection (2)(c)).

• Railroad retirement benefits — Railroad retirement benefits included in federal AGI under the Railroad Retirement Act are subtracted (subsection (2)(d)).

• Native American income from Uintah and Ouray Reservation — Income derived from sources within the Uintah and Ouray Reservation by an enrolled member of the Ute Indian Tribe is subtracted, provided certain conditions are met under subsection (2)(k), including existence of an agreement between the tribe and the state. The Uintah and Ouray Reservation boundaries are those recognized in Hagen v. Utah, 510 U.S. 399 (1994), as referenced in Utah Code § 59-10-103.

• Medical care savings account contributions — Contributions made during the taxable year to a Utah medical care savings account and interest earned on the account may be subtracted if the contribution is accepted by the account administrator and the taxpayer did not deduct or include amounts on the federal return pursuant to IRC Section 220 (subsection (2)(h)). The deduction may not exceed the maximum contribution allowed under the Medical Care Savings Account Act for the tax year (multiplied by two for joint filers if neither spouse is covered by employer health insurance).

• Nonresident active-duty military pay — Compensation received by a nonresident service member for military service while serving in Utah in compliance with military orders is subtracted (subsection (2)(l)).

• Social Security benefits — Social Security benefits included in federal AGI are subtracted, subject to an income-based phase-out under subsection (2)(m).

• Government bond interest exempt by statute — Interest on bonds issued by entities for which state statute provides an exemption from Utah individual income tax is subtracted (subsection (2)(c)(i)).

Equitable adjustments under § 59-10-115

Utah Code § 59-10-115 authorizes the Utah Tax Commission to make equitable adjustments "to prevent double taxation or the elimination of taxation" in cases where timing or classification differences exist between federal and Utah treatment of income or deductions. The statute directs the Commission to make rules for such adjustments.

Reporting requirements

Taxpayers report additions to income on Schedule TC-40A and subtractions on the same form as part of the calculation of Utah taxable income. Part-year residents and nonresidents must allocate additions and subtractions between Utah-source and non-Utah-source income on Schedule TC-40B, with only Utah-attributable modifications reflected in the Utah portion of taxable income.

Source: Utah Code § 59-10-114 Source: Utah Code § 59-10-115 Source: Utah Code § 59-10-103 (definitions) Source: Utah Tax Commission — TC-40B Instructions

Utah taxes nonresidents and part-year residents only on income derived from Utah sources. Understanding what constitutes Utah-source income is essential for practitioners advising clients who work remotely, move into or out of Utah, or have business activities spanning multiple states.

Statutory categories of Utah-source income

Utah Code § 59-10-117(1) defines state taxable income derived from Utah sources as income attributable to or resulting from:

• Ownership of Utah real or tangible personal property — Income from any interest in real property or tangible personal property located in Utah constitutes Utah-source income. This includes gross income from mining as defined in Internal Revenue Code Section 613(c) derived from Utah property or property rights (subsection (1)(a)).

• Carrying on business, trade, profession, or occupation in Utah — Income from conducting a business, trade, profession, or occupation in Utah is Utah-source income (subsection (1)(b)). A nonresident does not carry on a business in Utah solely by buying or selling property for the nonresident's own account, unless the nonresident is a dealer holding property primarily for sale to customers in the ordinary course of the dealer's trade or business (subsection (2)(e)).

• Certain prior additions and subtractions — Additions to adjusted gross income required by Utah Code § 59-10-114(1)(c), (d), or (h) are Utah-source income to the extent those items were previously subtracted from state taxable income. Similarly, subtractions under § 59-10-114(2)(c) for refunds are Utah-source to the extent the refund relates to a tax imposed by Utah (subsections (1)(c) and (1)(d)).

Compensation for personal services performed in Utah

Compensation for personal services is Utah-source income if the services are performed in Utah, subject to Utah Code § 59-10-117.5. Conversely, compensation for services performed outside Utah is not Utah-source income (subsection (2)(c)). This is a physical-presence sourcing rule: a nonresident who performs services entirely outside Utah—such as a remote worker physically located in another state—does not earn Utah-source compensation even if the employer is a Utah company or the work benefits a Utah business.

Nonresident active-duty military pay is specifically excluded from Utah-source income under § 59-10-114(2)(l), even when the service member is stationed in Utah under military orders.

Business income carried on partly in and partly outside Utah

When a trade, business, profession, or occupation is carried on partly within and partly outside Utah, items of income, gain, loss, or deduction derived from or connected with Utah sources are determined under the allocation and apportionment rules in the manner prescribed by the Utah Tax Commission (subsection (2)(f)). The Commission is authorized to adopt such rules as necessary to fairly apportion income between Utah and other jurisdictions.

Pass-through entity income

A nonresident partner, member, shareholder, or beneficiary's share of income, gain, loss, deduction, or credit from a pass-through entity (as defined in § 59-10-1402) derived from or connected with Utah sources is determined under Utah Code § 59-10-118 (subsection (2)(d)). Pass-through entities are required to withhold Utah income tax on Utah-source income for nonresident owners under § 59-10-1403.2.

Real estate investment trust (REIT) distributions to nonresidents

Dividends, interest, or distributive shares from a real estate investment trust (as defined in § 59-7-101) distributed to a nonresident investor—including any shareholder, beneficiary, or owner of a beneficial interest—are treated as income from intangible personal property and constitute Utah-source income only to the extent the nonresident investor is employing its beneficial interest in the trust in a trade, business, profession, or occupation carried on by the investor in Utah (subsection (2)(h)). For most passive REIT investors who are nonresidents, REIT distributions are not Utah-source income.

Allocation for part-year residents

Part-year residents must allocate their income between Utah-source and non-Utah-source for the period they were nonresidents, using Schedule TC-40B. During the period of Utah residency, all income is taxable in Utah regardless of where earned. During the period of nonresidency, only Utah-source income (as defined in § 59-10-117) is taxable.

Reporting

Nonresidents and part-year residents report Utah-source income on Schedule TC-40B, completing Column A (Utah income) and Column B (total income). The form instructions require entering in Column A all income earned or received from Utah sources while a nonresident, plus all income from all sources while a Utah resident. The state income tax percentage—Utah taxable income divided by total adjusted gross income (after Utah additions and subtractions)—is then applied to the tax computation.

Source: Utah Code § 59-10-117 Source: Utah Tax Commission — TC-40B Instructions Source: Utah Tax Commission — Who Must File