2020 Bills

HB 181: Reducing Double Taxation of Social Security Benefits

This bill passed the house with a vote of 67-2. However, the bill did not get a vote in the senate.

Libertas Institute supports this bill

Staff review of this legislation finds that it is aligned with our principles and merits support.

Utah is one of only 13 states that taxes social security payments as income. Social security, unlike welfare, is an earned benefit by those who work and contribute to the program, and not given to everyone. While working, workers are already taxed to pay for their social security contribution and for Utah to tax the income post-retirement is akin to double taxation on the state’s part.

Unfortunately, exempting Social Security from the income tax would eliminate tax revenue by approximately $127 million annually, causing short-term budgetary problems for the Legislature. Though it would be ideal to absolve most seniors of the responsibility of paying state income tax on their social security benefits, the Legislature is making a small step forward in the right direction.

Representative Walt Brooks’s House Bill 181 seeks to help seniors whose adjusted gross income is made up mostly by social security benefits. Eligible retirees who are having a hard time dealing with rising costs due to their fixed incomes would be provided a non-refundable income tax credit of up to $450.

HB 181 is an important first step to future expansion of this tax credit that would promote financial security and self-reliance for seniors who have structured their retirement to depend upon these promised payments.