HB 210: Tax Penalties Amendments - Utah

Substitute #4 → Substitute #5 · 3 edits

MINOR

This bill removes marriage penalties from several Utah individual income tax credits, ensuring that single, head of household, and married-filing-separately filers receive the same tax benefits as joint filers starting in 2030. The changes adjust income phaseout thresholds to gradually align with joint filing limits over a five-year period, beginning in 2026. Additionally, the bill reorganizes the bill's sections and updates the effective date to May 6, 2026, while maintaining retrospective operation for tax years starting on or after January 1, 2026.

Scope change

The scope of the tax credits has been broadened to eliminate disparities between filing statuses, specifically targeting the removal of marriage penalties for the Nonrefundable Taxpayer Tax Credit, Nonrefundable Retirement Tax Credit, Nonrefundable Tax Credit for Social Security Benefits, and Nonrefundable Child Tax Credit.

ELIGIBILITY

Income phaseout thresholds for the Nonrefundable Taxpayer Tax Credit, Retirement Tax Credit, Social Security Benefits Credit, and Child Tax Credit were adjusted to gradually increase limits for single, head of household, and married-filing-separately filers, reaching 50% of joint filing limits by 2030.

TIMELINE

The effective date for the bill was changed to May 6, 2026, and the section numbering was reorganized to consolidate the effective date and retrospective operation clauses.

TECHNICAL

Specific dollar amounts for income phaseouts in 2026, 2027, 2028, and 2029 were updated to reflect the new gradual phaseout schedule for non-joint filing statuses.

Substitute #3 → Substitute #4 · 6 edits

MODERATE

This bill updates Utah's individual income tax credits to gradually eliminate 'marriage penalties' by 2030, ensuring that single, head of household, and married-filing-separately filers receive the same tax benefits as joint filers. The changes adjust income thresholds and phase-out rates for four major credits (nonrefundable taxpayer, retirement, social security, and child tax credits) to align with this goal. Additionally, the bill corrects a retrospective effective date for the tax year beginning January 1, 2026, and includes technical formatting updates to the code sections.

Scope change

The bill expands the scope of tax equity by modifying the income phase-out thresholds for multiple tax credits to remove disparities between different filing statuses, specifically targeting the removal of marriage penalties over a five-year period.

TIMELINE

The retrospective effective date for the tax year beginning January 1, 2026, was corrected from February 20, 2026, to February 20, 2026, at 3:56 PM (likely a timestamp correction or clarification of the filing deadline context).

ELIGIBILITY

Income phase-out thresholds for the nonrefundable taxpayer tax credit were adjusted to increase the income limit for single and married-filing-separately filers in 2026, moving toward parity with joint filers by 2030.

Income phase-out thresholds for the nonrefundable retirement tax credit were modified to raise limits for single and married-filing-separately filers in 2026, aligning them closer to joint filer limits over subsequent years.

Income phase-out thresholds for the nonrefundable social security benefits tax credit were increased for single and married-filing-separately filers in 2026, reducing the income gap compared to joint filers.

Income phase-out thresholds for the nonrefundable child tax credit were raised for single and head of household filers in 2026, narrowing the disparity with joint filers.

REQUIREMENT

The calculation method for the nonrefundable taxpayer tax credit was updated to use percentage-based phase-outs (e.g., 72%, 67%, 60%) for intermediate years, creating a graduated reduction in the income threshold until full parity is reached in 2030.

Substitute #2 → Substitute #3 · 4 edits

MODERATE

This bill amends Utah's Individual Income Tax Act to gradually eliminate marriage penalties by adjusting income phaseout thresholds for non-married filers over a five-year period. Starting in 2026, the income limits for single, head of household, and married filing separately filers will be increased annually, reaching half the limit of joint filers by 2030. The legislation also adds a new nonrefundable tax credit specifically for married couples and includes technical corrections to existing definitions.

Scope change

The bill expands the scope of tax relief by introducing a new credit for married filers and modifies the applicability of existing credits to reduce the financial disadvantage faced by non-married filers compared to joint filers.

ELIGIBILITY

A new nonrefundable tax credit of $79 for married filing separately filers and $158 for joint filers was enacted to provide direct financial relief to married couples.

Existing tax credits for retirement, social security, and child care were modified to include specific phaseout amounts for each year from 2026 to 2030, gradually aligning non-married limits with half of the joint limit.

TIMELINE

Income phaseout thresholds for single, head of household, and married filing separately filers were updated with specific annual increases from 2026 through 2029, ensuring they reach half the joint filing threshold by 2030.

TECHNICAL

The long title and general description were updated to reflect the five-year transition period and the enactment of the new marriage tax credit.

Substitute #1 → Substitute #2 · 5 edits

MODERATE

The bill was updated to correct the Senate sponsor's name and clarify that it enacts a new tax credit for married couples rather than repealing the earned income tax credit. The most significant policy change is the addition of a new Section 6, which creates a nonrefundable marriage tax credit of $79 for married filing separately filers and $158 for joint filers, effective May 6, 2026. This new credit is designed to provide financial relief to married couples, while the bill retains its retrospective operation for tax years starting on or after January 1, 2026.

Scope change

The bill's scope expanded by adding a new tax credit specifically for married filers (Section 6), whereas the previous version focused on removing marriage penalties and repealing the earned income tax credit.

ELIGIBILITY

Added a new nonrefundable marriage tax credit available to married filers, providing $79 for those filing separately and $158 for those filing jointly.

TIMELINE

Added a new effective date of May 6, 2026, for the newly enacted marriage tax credit.

TECHNICAL

Corrected the Senate sponsor's name from 'LONG TITLE' to 'Heidi Balderree' and updated the bill's highlighted provisions to reflect the enactment of the new marriage tax credit instead of the repeal of the earned income tax credit.

REQUIREMENT

Removed the provision repealing the nonrefundable earned income tax credit, which was present in the previous version but not included in the final text.

ENFORCEMENT

Added a specific section (Section 8) detailing the retrospective operation of the bill for taxable years beginning on or after January 1, 2026.

Introduced → Substitute #1 · 4 edits

MODERATE

This bill updates Utah's tax code to eliminate marriage penalties for certain tax credits by aligning income phaseout thresholds for single and married-filing-separately filers with half the amount for joint filers. It also increases the nonrefundable taxpayer tax credit for married couples and repeals the nonrefundable earned income tax credit. Additionally, the bill modifies the calculation method for the nonrefundable taxpayer tax credit increase, changing it from a fixed dollar amount to a percentage-based formula tied to the standard deduction.

Scope change

The bill applies to taxable years beginning on or after January 1, 2026, and includes retrospective operation for those years.

ELIGIBILITY

Income phaseout thresholds for the nonrefundable taxpayer tax credit, child tax credit, and social security benefits credit are adjusted to remove marriage penalties by setting limits for single and married-filing-separately filers at half the joint filing limit.

FISCAL

The nonrefundable taxpayer tax credit is increased for married claimants, while the nonrefundable earned income tax credit is repealed entirely.

REQUIREMENT

The increase to the nonrefundable taxpayer tax credit for 2026 and later years is now calculated as 6% of specific dollar amounts ($550 for married-filing-separately and $1,100 for joint filers) rather than fixed dollar additions.

TECHNICAL

Various section numbering and formatting inconsistencies in the definitions and phaseout rules were corrected to improve clarity and consistency.

Tax Penalties Amendments

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