Utah Gov. Spencer Cox on Thursday unveiled how he thinks the Utah Legislature should spend about $30.6 billion in taxpayer money for the 2025-2026 fiscal year — another budget proposal with a record-breaking amount of forecasted revenues available for the state to spend.
The main feature of his budget proposal? Surprise, surprise: another tax cut.
Since 2021, Cox and the GOP-controlled Utah Legislature have approved about $1.2 billion in tax cuts, most of which lowered the state’s income tax rate to 4.55%. But Cox doesn’t want to stop there, and now he’s recommending lawmakers go after another source of income tax revenue — the state’s tax on Social Security benefits.
The governor’s proposed budget characterizes the move as a “major tax overhaul,” and one that the Utah State Tax Commissions estimates will cost the state about $143.8 million a year but save the average Utah tax filer with Social Security benefits about $950 a year. State officials estimate the tax cut would benefit some 150,000 Utahns.
“By implementing this tax cut, Utah will demonstrate its dedication to the well-being of older adults and foster a more supportive environment for those who have contributed to the state’s growth and prosperity,” Cox’s proposed budget says.
Utah is currently one of nine remaining states that still tax Social Security benefits, including Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Vermont and West Virginia. However, West Virginia has started to phase out its tax, expecting to completely eliminate it when 2026 taxes are filed in 2027.
In order to fund that tax cut, Cox is proposing lawmakers use revenue that lawmakers previously set aside in anticipation of eliminating the state’s portion of sales tax on food — something the Legislature made contingent on voters approving a constitutional amendment that would have removed the state’s earmark on income tax dollars for education.
However, in October a judge voided that ballot question, Amendment A, after Utah’s largest teacher union and other plaintiffs sued, and a judge ruled the Legislature failed to properly notice and publish the proposed constitutional amendment under the Utah Constitution. It’s possible lawmakers could try again, but their next opportunity to place a proposed constitutional amendment on the ballot wouldn’t be until the next even-yeared general election, in 2026.
“Since that’s now tabled and we know the Legislature won’t be able to entertain that for another couple of years, we’re preserving that commitment for tax relief in the form of eliminating” the state’s tax on Social Security benefits, Sophia DiCaro, executive director of the Governor’s Office of Planning and Budget, told reporters during a briefing Wednesday ahead of the budget unveiling.
Rather than eliminate the state’s sales tax on food (something low-income advocates have long sought) regardless of the contingent constitutional amendment, DiCaro said Cox is recommending the Legislature “rededicate” that revenue as a different type of tax cut because removing the food tax without also lifting the earmark on income tax dollars would make it challenging to balance the budget.
State officials have long said the state’s budget has faced a “structural imbalance” because income tax revenue growth (which funds education) has been outpacing other types of revenue growth, which fund other needs from the general fund. “If that sales tax on food passed without removing the (income tax) earmark, it would hit entirely on the general fund side, which would make it really difficult to balance the budget in that circumstance,” DiCaro said.
Cox’s budget proposal is just that — a proposal. The Utah Legislature will decide what Utah’s budget for the coming fiscal year, which begins in July, will actually entail. Lawmakers are scheduled to convene for the 2025 general session on Jan. 21, and they typically don’t finalize the budget until the final days of the session, which will end on March 7.
The Social Security tax elimination is only one feature of Cox’s proposed budget, which he presented at the William E. Christoffersen Salt Lake Veterans Home in Salt Lake City — meant to highlight a major theme in the governor’s proposed budget, with initiatives to bolster resources for Utah’s aging population, including veterans.
Here are other proposals to increase resources for seniors, according to Cox’s proposed budget:
- $20.5 million to support “aging in place,” or increasing home-based care. This would include $7.3 million in state funds along with $13.2 million in federal funds meant to “promote independence and reduce reliance on costly institutional care.”
- $1.4 million for Adult Protective Services, the Office of the Public Guardian, and a Southern Utah Medicaid Fraud and Patient Abuse Office, meant to “strengthen protection for vulnerable seniors.” Cox’s budget document says the funding will “improve response times to abuse and neglect cases and safeguard older adults from fraud and exploitation.”
- $4.5 million for Meals on Wheels, a program that delivers healthy food to home-bound seniors.
Aside from the proposal to eliminate the state’s tax on Social Security benefits, Cox’s budget proposal includes investments focused on doubling the state’s energy production — including nuclear — plus hundreds of millions of dollars to fund school safety.
His proposal also includes nearly $19 million more for homelessness as state officials look to increase Utah’s emergency shelter capacity. He also wants to add another family shelter somewhere in Salt Lake County (currently the only family shelter is located in Midvale).
This story was originally published at UtahNewsDispatch.com.
