Senate advances SB11 to exempt more Social Security and military retirement from state income tax

Senator Dan Harper (sponsor) presented Senate Bill 11, a two-part retirement income tax bill that would (1) raise the amount of Social Security benefits exempt from Utah income tax to $48,000 and (2) exempt military retirement pay from state income tax.

"This Senate Bill 11 has two elements," Harper said. "The first, it increases the amount of Social Security that you can receive and makes it up to 48,000 exempt from state income tax. ... Second one, it exempts military pension retirement from the state income tax." Harper said the change to the Social Security exemption would benefit roughly 67,000 Utah taxpayers on fixed incomes and that military exemption would affect about 18,100 retired service members.

Senator Vickers and other senators asked about the fiscal note and the relative cost of each provision. Harper and staff said the bill's fiscal note is about $43 million total, with roughly $20 million attributable to the Social Security exemption and about $23.8 million to the military retirement exemption. Harper said the bill includes coordination so a taxpayer cannot claim both exemptions simultaneously.

After discussion and brief remarks of support from several senators, Harper moved that SB11 be read for a third time and the Senate took a roll-call vote to move the bill to the third-reading calendar. The clerk recorded 27 yea votes, zero nay votes and two senators absent; SB11 was ordered for third reading and will return for final passage at a later point in the session.

Next steps: SB11 was advanced to third reading to allow members more time to review the bill text and fiscal note prior to final passage.