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Income Tax Amendments
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Heidi Balderree
House Sponsor:
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LONG TITLE
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General Description:
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This bill enacts an income tax credit for self-employment income.
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Highlighted Provisions:
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This bill:
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▸ defines terms;
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▸ enacts a nonrefundable income tax credit for individuals under a certain age who earn
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self-employment income in Utah; and
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▸ provides for apportionment of the tax credit for nonresidents and part-time residents.
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Money Appropriated in this Bill:
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None
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Other Special Clauses:
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This bill provides retrospective operation.
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Utah Code Sections Affected:
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AMENDS:
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59-10-1002.2 (Effective 05/07/25), as last amended by Laws of Utah 2023, Chapters
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460, 462
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ENACTS:
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59-10-1048 (Effective 05/07/25) (Applies beginning 01/01/25), Utah Code Annotated
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1953
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Be it enacted by the Legislature of the state of Utah:
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Section 1. Section 59-10-1002.2 is amended to read:
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59-10-1002.2 (Effective 05/07/25). Apportionment of tax credits.
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(1) A nonresident individual or a part-year resident individual that claims a tax credit in
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accordance with Section 59-10-1017, 59-10-1018, 59-10-1019, 59-10-1022, 59-10-1023,
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59-10-1024, 59-10-1028, 59-10-1042, 59-10-1043, 59-10-1044, 59-10-1046,[ or]
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59-10-1047, or 59-10-1048 may only claim an apportioned amount of the tax credit
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equal to:
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(a) for a nonresident individual, the product of:
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(i) the state income tax percentage for the nonresident individual; and
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(ii) the amount of the tax credit that the nonresident individual would have been
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allowed to claim but for the apportionment requirements of this section; or
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(b) for a part-year resident individual, the product of:
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(i) the state income tax percentage for the part-year resident individual; and
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(ii) the amount of the tax credit that the part-year resident individual would have been
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allowed to claim but for the apportionment requirements of this section.
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(2) A nonresident estate or trust that claims a tax credit in accordance with Section
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59-10-1017, 59-10-1020, 59-10-1022, 59-10-1024, or 59-10-1028 may only claim an
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apportioned amount of the tax credit equal to the product of:
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(a) the state income tax percentage for the nonresident estate or trust; and
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(b) the amount of the tax credit that the nonresident estate or trust would have been
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allowed to claim but for the apportionment requirements of this section.
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Section 2. Section 59-10-1048 is enacted to read:
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59-10-1048 (Effective 05/07/25) (Applies beginning 01/01/25). Nonrefundable tax
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credit for self-employment earners under a certain age.
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(1) As used in this section:
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(a) "Adjusted taxable value limit" means:
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(i) for the taxable year beginning on January 1, 2025, $3,000; or
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(ii) for a taxable year beginning on or after January 1, 2026, an amount equal to the
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sum of:
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(A) the amount of the adjusted taxable value limit for the previous taxable year;
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and
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(B) an amount calculated by multiplying the amount of the adjusted taxable value
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limit for the previous taxable year and the actual percentage change in the
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consumer price index during the previous calendar year, rounded to the nearest
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whole dollar.
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(b) "Qualifying claimant" means an individual who:
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(i) earns self-employment income in Utah during a taxable year; and
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(ii) is 19 years old or younger on the last day of the taxable year in which the
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individual claims a tax credit under this section.
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(c) "Self-employment" means employment in which an individual operates a trade or
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business, either as an owner, sole proprietor, or partner, rather than working for an
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employer.
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(d) "Self-employment income" means income that:
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(i) is derived from self-employment during a taxable year; and
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(ii) is subject to self-employment tax for federal income tax purposes.
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(2) Subject to Section 59-10-1002.2, a qualifying claimant may claim a nonrefundable
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income tax credit in an amount equal to the lesser of:
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(a) the product of:
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(i) the total amount of self-employment income derived from Utah sources that the
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qualifying claimant earns during the taxable year; and
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(ii) the percentage listed in Subsection 59-10-104(2); and
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(b) the adjusted taxable value limit.
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(3) A qualifying claimant may not carry forward or carry back the amount of the tax credit
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that exceeds the qualifying claimant's tax liability for the taxable year.
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Section 3. Effective Date.
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This bill takes effect on May 7, 2025.
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Section 4. Retrospective operation.
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This bill has retrospective operation for a taxable year beginning on or after January 1,
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2025.
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