The Utah legislature has expanded the child tax credit to cover more children. The Utah child tax credit now covers children under five years old, compared to those under four earlier. Separately, lawmakers have also approved a nearly $170 million income tax cut.
Utah child tax credit: what does it offer?
On Wednesday, the Utah legislature approved HB153, which raises the age limit for the state’s child tax credit program to children under five years. The bill was sponsored by Rep. Susan Pulsipher (R-South Jordan).
Utah offers a nonrefundable income tax credit of $1,000 to eligible parents. The Utah child tax credit phases out for single filers with income above $43,000, and $53,000 for those filing joint returns. The credit amount phases out by $10 for every $1 in income exceeding the threshold.
Besides expanding the age limit, HB153 also boosts the number of children allowed at unlicensed daycare facilities. The bill allows unlicensed providers to care for up to eight children, up from six earlier.
The controversial bill generated a lot of emotion and debate but cleared its last hurdle on Wednesday. HB153 narrowly passed the Senate with a 15-12 vote on Tuesday, while the House of Representatives approved it by 50-21 Wednesday morning. Now the bill heads to Gov. Spencer Cox’s desk.
Most criticism against HB153 centered on easing restrictions on home-based childcare providers. Rep. Pulsipher has added two requirements for unlicensed providers to address those concerns.
First, unlicensed providers will have to undergo a background check, and second, they won’t be allowed to care for more than two children below three years of age at a time.
Another income tax cut for taxpayers
In addition to expanding the Utah child tax credit, lawmakers on Wednesday also approved SB69. The bill reduces the state income tax rate from 4.65% to 4.55%. Sen. Chris Wilson (R-Logan) is the sponsor of the bill.
“If we want a strong economy we do not want to tax productivity,” Sen. Wilson told the House Revenue and Taxation Committee last week. “Taxing productivity stifles the economy.”
A recent analysis by the Institute on Taxation and Economic Policy found that the tax cut would largely benefit the state’s wealthiest residents. According to the nonprofit liberal tax policy think tank, more than 60% of the cut will benefit the state’s top 20% of income earners.
Reducing income tax was the top priority of Republicans. If the bill becomes law, it will mark the third year of income tax reductions in the state. The tax cut is estimated to cost the state nearly $10 million more than the initial estimate of $160 million due to an anticipated increase in revenue collections.
Although Democrats in the House and the Senate have opposed another tax cut this session, three minority party members in the House supported Republicans in passing the tax cut bill by a 55-11 vote. Last month, the Senate approved the bill (23-6 vote). The bill now heads to Gov. Cox’s desk.
