HB 106: Income Tax Revisions - Utah

Substitute #5 → Enrolled · 3 edits · Mar 26, 2025

MINOR

The bill was expanded to include tax rate adjustments for corporations and individuals, which were previously missing from the version. The core provisions for child care tax credits and the child tax credit remain substantively the same, though the section numbering and the list of amended code sections were updated to reflect the new rate changes.

Scope change

The bill's scope was broadened to include amendments to corporate and individual income tax rates, whereas the previous version only addressed child care credits and the child tax credit.

FISCAL

New provisions were added to lower the corporate franchise tax rate and the individual income tax rate from 4.95% to 4.5%.

TECHNICAL

The list of Utah Code sections affected was updated to include the new rate amendments, and the internal section numbers were renumbered to accommodate the additional content.

DEFINITION

The 'Highlighted Provisions' summary was updated to explicitly mention the tax rate changes alongside the existing child care and child tax credit provisions.

Introduced → Substitute #1 · 3 edits

MINOR

The bill text was updated to add a Senate Sponsor and change the effective date to May 7, 2025, while also adding a retrospective operation clause for tax years starting on or after January 1, 2025. Additionally, the corporate and individual income tax rates were slightly adjusted from 4.554.45% to 4.554.5%.

Scope change

The bill now applies retrospectively to taxable years beginning on or after January 1, 2025, whereas the previous version did not explicitly state this effective date or retrospective operation.

TIMELINE

Added an effective date of May 7, 2025, and specified that the bill has retrospective operation for tax years beginning on or after January 1, 2025.

TECHNICAL

Added a Senate Sponsor to the bill header information.

REQUIREMENT

Adjusted the corporate and individual income tax rate from 4.554.45% to 4.554.5%.

Substitute #4 → Substitute #5 · 6 edits

MODERATE

This bill amends Utah's income tax provisions to update tax rates and introduce new nonrefundable tax credits for employer-provided child care and dependent children under five years old. The changes affect both corporate and individual taxpayers by adjusting tax rates and adding specific credits to encourage child care investment and support families with young children.

Scope change

The bill expands the scope of tax credits to include employer-provided child care expenditures and extends the child tax credit eligibility to include children under one year old up to five years old, whereas previously it only covered children aged one to five.

REQUIREMENT

Corporate and individual income tax rates were updated from 4.5% to 4.554.5%.

ELIGIBILITY

New nonrefundable tax credits were enacted for employer-provided child care expenditures, allowing employers to claim 20% of qualified construction expenditures and 10% of qualified child care expenditures.

The child tax credit eligibility was expanded to include children under one year old, in addition to children up to five years old.

DEFINITION

New definitions were added for qualified child care expenditure, qualified child care facility, qualified construction expenditure, qualifying taxpayer, recapture event, and third party provider.

TIMELINE

The bill includes retrospective operation for taxable years beginning on or after January 1, 2025, and takes effect on May 7, 2025.

ENFORCEMENT

Recapture provisions were added requiring repayment of tax credits if employers fail to operate child care facilities for at least five consecutive taxable years after claiming the credit.

Substitute #3 → Substitute #4 · 6 edits

MODERATE

This bill revises Utah's income tax rates from 4.55% to 4.5% for both corporations and individuals, while adding new tax credits for employer-provided child care and expanding the child tax credit to include dependents under one year old and up to five years old. The changes aim to reduce the overall tax burden while providing targeted relief for families with young children and employers offering child care services.

Scope change

The bill applies to all domestic and foreign corporations doing business in Utah, all resident individuals, and expands eligibility for child tax credits to include younger dependents (under one year old and up to five years old).

FISCAL

Corporate and individual income tax rates reduced from 4.55% to 4.5%.

ELIGIBILITY

New nonrefundable tax credits enacted for employer-provided child care expenditures, allowing employers to claim 20% of qualified construction expenditures and 10% of qualified child care expenditures.

Child tax credit eligibility expanded to include dependents under one year old and up to five years old, increasing the credit amount to $1,000 per qualifying child.

REQUIREMENT

New recapture provisions require employers to repay portions of child care tax credits if they fail to operate child care facilities for at least five consecutive years after claiming the credit.

DEFINITION

Added definitions for 'qualified child care expenditure,' 'qualified child care facility,' 'qualified construction expenditure,' 'qualifying taxpayer,' 'recapture event,' and 'third party provider' to govern the new child care tax credits.

TIMELINE

Bill takes effect on May 7, 2025, with retrospective operation for taxable years beginning on or after January 1, 2025.

Substitute #2 → Substitute #3 · 5 edits

MODERATE

This bill substitutes a new version of HB 106 that lowers corporate and individual income tax rates from 4.55% to 4.5%, adds new nonrefundable tax credits for employer-provided child care, and expands the nonrefundable child tax credit to include children under one year old. The bill also updates the Senate sponsor name and adds new code sections for corporate child care tax credits.

Scope change

The bill now includes new corporate tax credits for employer-provided child care that were not present in the previous version, and adds new Utah Code sections (59-7-627 and 59-10-1048) to govern these credits.

FISCAL

Corporate and individual income tax rates were reduced from 4.55% to 4.5% across all affected code sections.

ELIGIBILITY

The nonrefundable child tax credit now applies to children under one year old, in addition to children up to five years old.

REQUIREMENT

New nonrefundable tax credits were created for employers who provide child care facilities, allowing a 20% credit on construction expenditures and a 10% credit on operating expenditures.

DEFINITION

New definitions were added for qualified child care expenditures, qualified child care facilities, qualifying taxpayers, and recapture events related to employer-provided child care.

TECHNICAL

The Senate sponsor name was updated from LONG TITLE to Daniel McCay, and new Utah Code sections were added to the list of affected sections.

Substitute #1 → Substitute #2 · 4 edits

MODERATE

The bill was revised to add a new nonrefundable child tax credit for children under six years old, while simplifying the tax rate from 4.55% to 4.5% for corporations and individuals. The new version also includes a new section for the child tax credit that was not present in the original substitute.

Scope change

The bill's scope expanded to include a new child tax credit provision for taxpayers with qualifying children under six years old, in addition to the existing income tax rate amendments.

ELIGIBILITY

Added a new nonrefundable child tax credit of $1,000 per qualifying child under six years old, with income phase-out thresholds ranging from $27,000 to $54,000 depending on filing status.

REQUIREMENT

Reduced the corporate and individual income tax rate from 4.55% to 4.5% across all affected sections.

DEFINITION

Added new definitions for filing statuses and modified the age eligibility for the child tax credit from 'one year old and up to five years old' to 'under six years old'.

SCOPE

Added a new section (59-10-1047) specifically governing the nonrefundable child tax credit, which was not present in the original version.

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