Federal HR 1 tax changes could cut Utah income‑tax receipts by hundreds of millions, staff warns

SALT LAKE CITY — Committee staff told the Utah Legislature’s Revenue and Taxation Interim Committee on Sept. 16 that federal tax changes in HR 1 will materially alter Utah’s starting points for state income‑tax calculations and could reduce state income‑tax collections by hundreds of millions of dollars in the near term.

Chris Stitt, committee staff, described a package of federal changes that alter adjusted gross income (AGI) and other federal starting points Utah uses to compute state individual and corporate taxes. He told the committee the package could produce a “very wide” first‑year fiscal impact depending on how the Internal Revenue Service implements the changes, and that staff’s working range for the first year is roughly $300 million to $480 million in reduced Utah income‑tax collections.

Why it matters: Utah starts its individual income‑tax calculation from federal AGI. Changes at the federal level that are treated “above the line” on federal returns therefore alter the base the state uses to calculate taxes. Several high‑value provisions in HR 1 produce one‑time or front‑loaded reductions in tax receipts even when the long‑run tax base is unchanged, the presentation said.

Major provisions and staff’s preliminary fiscal impacts

- Increased standard deduction and indexing: HR 1 raised the federal standard deduction for 2025 (single filer example from $15,000 to $15,750; married filing jointly from $30,000 to $31,500). Because…