Could Utah's income tax rate drop below 4%? Leaders hope so

SALT LAKE CITY — Utah lawmakers have incrementally lowered the state's income tax rate in recent years but are now setting an even more ambitious goal: lowering the income tax rate below 4%.

The Legislature recently decreased the rate from 4.5% to 4.45%, a move that will save a typical Utah family $45 annually while costing the state about $100 million in revenue. But top Republican lawmakers say further reducing the rate will spur the state's economy and put money back in families' pockets.

"President (Stuart) Adams and I have a goal: We want to get out of the 4% income tax range and get into the 3% income tax range," House Speaker Mike Schultz, R-Hooper, said during a virtual press conference from Washington, D.C., alongside Utah's four Republican representatives. "We know if we're able to do that, we'll be able to stay and keep Utah's economy flowing and, most importantly, keep opportunities for our families, for our kids and our grandkids moving into the future."

That doesn't mean the change will happen overnight. Schultz said lawmakers will set aside extra revenue to help pay for future tax cuts, but didn't set a specific timeline.

"If I had my preference, I'd like to go to 3%," he said. "I don't know that that's physically possible or realistically possible, but it's something that I think we should certainly have as a goal moving forward."

Schultz and Adams, R-Layton, were in Washington and celebrated Utah being named the state with the best economic outlook by the conservative American Legislative Exchange Council for the 19th consecutive year. It's a measure state leaders have loved to tout in recent years, and they credited their approach to taxation as a factor.

"One of Utah's greatest strengths is that we plan with our children and grandchildren in mind," Adams said. "Whether it's infrastructure, education or economic development, the focus isn't short-term gain, it's long-term strength. This foresight is how we create lasting opportunity and ensure the next generation inherits an even better Utah."

Gov. Spencer Cox said the ranking "reflects years of disciplined policy."

"We're focused on keeping Utah a place where families can succeed, businesses can grow and the next generation has every opportunity to build a strong future."

During the virtual press conference, Schultz responded to a question about rising gas prices stemming from the conflict with Iran by expressing frustration with media attention on costs.

"It's a little bit frustrating for me to hear the media just pounce on gas prices where they're at today and blame it all on President Trump — and because of the war, certainly that's the case," the speaker said. "But I just want to remind everybody, go back two years ago and look where gas prices were at. They are where they're at today, and we didn't hear all this from the media and from everybody screaming at gas prices."

Schultz credited Trump with bringing prices down when he took office early last year and said prices have "temporarily" gone up because of the war.

The national average price for a gallon of gas hit a high of $5.26 in 2022 under President Joe Biden, according to AAA. Two years ago, in April 2024, the average price was $3.67. When Trump took office early last year, prices were around $3.10.

Today, according to AAA, the national average sits at $4.10.

According to Stanford University economics professor Neale Mahoney, the higher prices due to the Iran conflict could cost American households an extra $740 in gas costs this year.

Contributing: Daniel Woodruff

Related topics