Southern Utah continues to draw national attention as being one of the most desirable retirement spots in the United States. Many people are considering moving here upon their retirement or just to enjoy the wonderful lifestyle which is available here. Some of these potential residents are from other states and have questions regarding the tax structure in the State of Utah as well as in Southern Utah. The following information is prepared to answer some of the more commonly asked questions raised by potential home-buyers. In some instances we have drawn comparison with the State of California since a large number of the retirees moving into Washington and Iron Counties are from the State of California.
QUESTION 1: Will I have to file a Utah income tax return if I move to Utah?
The Utah income tax laws are generally based upon the corresponding Federal Laws. The Utah computation begins with Federal Adjusted Gross Income, and allows itemized deductions, as claimed on the Federal income tax return as well as personal exemptions similar to the Federal methods. In general terms, if you are required to file a Federal income tax return, you most likely will be required to file a Utah state tax return.
QUESTION 2: In the year that I move to Utah, do I have to pay Utah tax on all of my income earned during that year even though part of it was earned while I was living in another state?
Utah tax laws allow you to file tax returns as a part-year resident. The calculation is as follows: Your tax is computed on your world-wide income as though you were a full-year resident and that amount is reduced by the percentage of your income which was actually earned while you were living outside the State of Utah. A Utah resident is defined as an individual who is domiciled for the entire year in Utah or is domiciled in Utah for any period of time during the tax year (part-year resident) or is an individual who maintains a permanent resident outside of the state but nevertheless spends at least 183 days of the taxable year in Utah.
QUESTION 3: How do Utah income tax rates compare to other states?
The maximum Utah tax rate is 7%. Single individuals are taxed at that rate on taxable income more than $4,313 whereas married individuals and heads of household reach that tax bracket at taxable income exceeding $8626. (California’s maximum rate is 9.3%, Idaho’s is 7.8%, Arizona’s is 5.04%.)
QUESTION 4: Does Utah tax law provide a benefit for elderly taxpayers?
Taxpayers under age 65 can exclude up to $4,800 per person of retirement income (pension, annuities or social security benefits which were taxable on the Federal return). Taxpayers 65 years old and older can exclude $7,500 each of income regardless of whether it is retirement income or not. Both of these exemption amounts are phased out for higher income individuals.
Married taxpayers making more than $32,000 and single taxpayers making more than $25,000 will lose some or all of these exemptions depending upon the level of their adjusted gross income.
QUESTION 5: Does Utah have a sales tax?
Utah does have a state sales tax varying between 5.75% and 7.75% depending upon the county in which the purchase is made (the cities in Washington and Iron counties are taxed at either 6 or 6.25%).
QUESTION 6: Is it true that California will still tax my California retirement income even though I don’t live there anymore?
This law has now been changed. California can no longer tax non-resident retirees whose sole California-sourced income is from retirement plans. This change was enacted for 1996 and future years.
QUESTION 7: Does Utah have property tax and an automobile licensing tax?
The real estate property tax rates are computed at just over .61percent of the market value of the home for primary residences and approximately 1.1% of the market value of the home for second homes. These taxes are due by November 30
of each year.
Automobile fees range between $10 and $150 based on the age of the vehicle.
QUESTION 8: Does Utah have an estate tax?
The Utah estate tax rules are very similar to the Federal rules. If there is a Federal estate tax liability, whatever credit is allowed for state inheritance taxes is the amount that Utah will require to be paid. Therefore, if there is no Federal estate tax liability, there will be no Utah inheritance tax.
We understand that this “thumbnail sketch” will not answer all of the questions which you may have in contemplating a move to the State of Utah. These questions are for general information only and any more specific questions should be discussed with competent counsel.
This information was provided by Hinton Burdick CPA’s & Advisors, 63 South 300 East, Suite 100, St. George, UT 84770 – Phone:
If you have further questions regarding tax laws or regarding the services which Hinton Burdick provides, please don’t hesitate to call their St. George Office at (435) 628-3663.
“We feel confident that we can give you the highest quality accounting and tax services available in Southern Utah at reasonable prices. We look forward to hearing from you.” – Hinton Burdick