Utah taxpayers will soon be taking home more of their paychecks. Thanks to the leadership of Gov. Spencer Cox and Republicans in the Utah House of Representatives and Senate, the individual income tax will be reduced from 4.65% to 4.55%. This income tax cut — which is the third to be delivered since 2021 — will allow an additional $176 million to remain in the pockets of individual taxpayers, families and small businesses every year while also helping Utah remain an attractive place to live, raise a family and do business. It is a win for all Utahns.
In 2021, Utah had a flat income tax rate of 4.95%. While that was once considered competitive, over the last few years, a growing number of state lawmakers across the country have begun working to reduce and ultimately phase out income taxes in their states. For example, in 2021, Arizona had a graduated income tax with a top rate of 4.5%. To attract investment to the Grand Canyon State and, of course, provide much-needed tax cuts to Arizonans, Republican lawmakers streamlined their income tax to a flat rate of 2.5%. Nearly every Republican lawmaker in Arizona has voted for legislation that would put the state income tax on the path to zero.
Iowa Republicans have also made considerable progress toward their goal of making their state a “no income tax” state. Just two years ago, Iowa had a graduated income tax with a top rate of 8.98% — one of the highest income tax rates in the country. Thanks to a law enacted in 2022, it is now in the process of being streamlined to a flat rate of 3.9% by 2026. And now, lawmakers there are considering legislation that would move Iowa to a flat income tax rate of 3.65% in 2027 and then begin phasing it out completely.
Kentucky now has a full phaseout of the income tax in law, which has already taken its flat income tax from 5% to 4% over the past two years. Arkansas’ top income tax rate has been reduced from 4.9% in 2022 to 4.4%. Since 2022, income tax cuts have also been enacted in Louisiana, Mississippi, Georgia, Montana, North Carolina, West Virginia, South Carolina and several other states. Indeed, the list of no income tax states — which currently includes Utah’s neighbors Nevada and Wyoming, as well as Texas, Tennessee, Florida, Alaska and South Dakota — is soon to grow.
Fortunately, Gov. Cox, Senate President Stuart Adams, House Speaker Mike Schultz and Republican lawmakers are aware of this trend toward lower and no income taxes and have taken steps to ensure Utah does not fall behind. After two consecutive years of income tax cuts in Utah, they used the 2024 legislation to provide even more income tax relief. This pro-growth rate cut, sponsored by Sen. Chris Wilson and Rep. Kay Christofferson, is a huge victory for households across Utah. It will help Utah remain competitive as the movement toward lower and no state income taxes continues to grow, keeping jobs and opportunities in the state. It will allow small businesses, who file their taxes on the personal side of the code, to invest more in their employees and business operations.
And most importantly, it will allow every single income taxpayer to keep more of their own money.
Grover Norquist is the president of Americans For Tax Reform. Rusty Cannon is the president of Utah Taxpayers Association.