Does Utah Tax Social Security and Retirement Income?

Social Security is taxed, then credited back below an income threshold

Utah starts its return from federal adjusted gross income and has no subtraction for Social Security, so the part of a benefit that is taxable federally is in Utah taxable income and is taxed at the flat rate. Relief comes afterwards, as a nonrefundable credit equal to the income tax rate, 4.45% for 2026, multiplied by the Social Security benefits included in state taxable income. A claimant under the income threshold gets back exactly the Utah tax on the benefits. (Utah Code 59-10-1042, Nonrefundable tax credit for social security benefits)

The credit is reduced by 2.5 cents for each dollar by which modified adjusted gross income exceeds $54,000 for a single filer, $90,000 for a joint return or a head of household, and $45,000 for a married person filing separately. Modified adjusted gross income is federal AGI plus any interest that is not included in it, such as tax-exempt municipal bond interest, plus the additions Utah requires on its own return. The thresholds are written into the statute as fixed dollar amounts, with no inflation adjustment. (Utah Code 59-10-1042, Nonrefundable tax credit for social security benefits)

On the 2026 return the credit is worked out on Form TC-150 and carried to TC-40 Schedule A under code AN005PT. The worksheet multiplies line 6b of the federal Form 1040 by 0.0445, then subtracts 2.5% of the amount by which modified income exceeds the threshold. For the single retiree in our examples, $25,500 of taxable benefits gives $1,135; income of $70,500 is $16,500 over $54,000, which removes $413; the credit is $722. (Utah State Tax Commission, 2026 Form TC-150, Credits, Recaptures and Use Tax Worksheets (draft dated September 29, 2026))

The couple with $136,750 of income have $46,750 of taxable benefits and a starting credit of $2,080, of which $1,169 is lost to the phase-out, leaving $911. The couple with $279,500 of income start with $2,648 and lose all of it, because they are $189,500 over the threshold. The income at which the credit reaches zero depends on the size of the benefit: about $99,400 for the single retiree, $173,200 for the first couple and $195,900 for the second. (Utah State Tax Commission, 2026 Form TC-150, Credits, Recaptures and Use Tax Worksheets (draft dated September 29, 2026))

The credit covers taxable Social Security retirement, disability and survivor benefits, and only those included in adjusted gross income on the return. It cannot reduce tax below zero, cannot be carried forward or back, and is not available on a return that claims the retirement credit for people born before 1953. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Pensions are taxed at 4.45%; military retired pay is offset by a credit

Utah has no pension exclusion. A private-employer pension, a state or local government pension and a federal civil service annuity all arrive in federal adjusted gross income and are taxed at 4.45%. The instructions list the subtractions allowed from income and none covers ordinary pension income; the retirement-related entries are for Railroad Retirement benefits, which federal law does not permit states to tax, and a rarely used subtraction for retirement plan contributions that another state already taxed. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

Military retirement pay is handled through a credit. A claimant may take a nonrefundable credit equal to the tax rate, 4.45%, multiplied by the military retirement pay included in federal adjusted gross income, including survivor benefits paid as retired pay, and the statute sets no income limit. That cancels the Utah tax on the pay at any income level, which is why this page lists it as exempt. The credit does not extend to Social Security, 401(k) or IRA distributions or income from other sources. (Utah Code 59-10-1043, Nonrefundable tax credit for military retirement)

An older credit remains for anyone born on or before December 31, 1952, whether retired or not: $450 per person, reduced by 2.5 cents for each dollar of modified adjusted gross income above $25,000 (single) or $32,000 (joint or head of household). It reaches zero at $43,000 for a single filer and $68,000 for a couple who both qualify. A return that claims it cannot also claim the Social Security benefits credit or the military retirement credit, so a household works out both routes and takes the larger. (Utah Code 59-10-1019, Nonrefundable retirement tax credit)

IRA and 401(k) withdrawals are taxed in full; conversions can cost more than 4.45%

Traditional IRA and 401(k) withdrawals are taxed in full at 4.45%. The 2026 TC-40 begins with federal adjusted gross income, and nothing on the Utah return removes them: there is no age-based exclusion and no dollar cap to track. Qualified Roth withdrawals are not in federal adjusted gross income and so never reach the Utah return. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

A Roth conversion is added to federal AGI and taxed by Utah like any other income. The additional cost comes from the credits, because each dollar of conversion above the Social Security threshold removes 2.5 cents of that credit. For the couple in our second example a $10,000 conversion would raise Utah tax by $825, which is 8.25% of the amount converted, once the 1.3 cents per dollar lost from the Taxpayer Tax Credit is counted as well. (Utah Code 59-10-1042, Nonrefundable tax credit for social security benefits)

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Interest, dividends and capital gains are taxed at the flat rate

Interest, dividends and capital gains are part of federal adjusted gross income and are taxed at the same 4.45%, with no lower rate for long-term gains or qualified dividends. Interest on U.S. government obligations such as Treasury bills, Treasury notes and savings bonds is subtracted from income. Interest and dividends from Fannie Mae and Ginnie Mae securities are not exempt. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

Interest on Utah municipal bonds is exempt. Interest on bonds of other states and their local governments, if acquired after January 1, 2003 and not included in federal AGI, must be added to Utah income, unless the issuing state has no income tax or does not tax Utah’s bonds. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

Utah taxes income at one flat rate. Senate Bill 60 of the 2026 General Session lowered it from 4.5% to 4.45% of state taxable income, with retrospective operation for taxable years beginning on or after January 1, 2026, so the lower rate applies to all of 2026. The same bill cut the corporate rate to 4.45%. (Utah Legislature, S.B. 60 Income Tax Rate Amendments (2026 General Session), enrolled copy)

Utah taxable income is federal adjusted gross income plus Utah additions and minus Utah subtractions (line 7 of the redesigned 2026 TC-40). No standard deduction or personal exemption is taken at that stage, so the 4.45% is applied to a figure close to federal AGI. For all three example households on this page, Utah taxable income equals federal AGI. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

Deductions are recognized through the Taxpayer Tax Credit instead. The credit is 6% of the federal standard deduction, or of federal itemized deductions other than state and local income tax, plus 6% of the Utah personal exemption, which is allowed only for dependents. It is then reduced by 1.3 cents for each dollar of state taxable income above a base amount that the Tax Commission adjusts for inflation every year, and any unused credit cannot be carried to another year. (Utah Code 59-10-1018, Nonrefundable taxpayer tax credits)

The Tax Commission’s draft 2026 instructions, dated October 20, 2026 and subject to change until marked final, set the base amount at $18,696 for single filers and married people filing separately, $28,045 for heads of household and $37,392 for joint filers, and the personal exemption at $2,167 per dependent. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

The federal standard deduction for 2026 is $16,100 for a single filer and $32,200 for a joint return, plus $2,050 for an unmarried person 65 or older or $1,650 for each married spouse 65 or older. A single 68-year-old therefore starts with a credit of 6% of $18,150, or $1,089, and a couple who are both 65 or older with 6% of $35,500, or $2,130. (Internal Revenue Service, Revenue Procedure 2025-32 (2026 standard deduction and additional amounts))

The age-65 additions count because the Utah line takes the deduction from line 12e of the federal return. The separate $6,000 federal deduction for seniors is claimed on federal Schedule 1-A and is not part of that line. After the phase-out, the single retiree’s credit is $1,089 less 1.3% of the $51,804 by which income exceeds $18,696, leaving $416, and the first couple keep $838 of $2,130. The credit is gone for a single filer of that age above about $102,500 and for such a couple above about $201,200. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

From 2026 a filer is exempt from Utah income tax altogether when Utah taxable income is no more than the basic federal standard deduction ($16,100 single, $32,200 joint, without the additions for age) plus any federal enhanced deduction for seniors claimed on Schedule 1-A. The 2025 Legislature changed this test to use Utah taxable income in place of federal adjusted gross income. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

Retirement credit: up to $450 for each person born on or before December 31, 1952, less 2.5% of modified adjusted gross income above $25,000 (single) or $32,000 (joint). The birth-date cutoff is fixed, so no one younger ages into it, and it cannot be combined with the Social Security or military retirement credit on the same return. (Utah Code 59-10-1019, Nonrefundable retirement tax credit)

Utah has no separate age-65 exemption. Age is recognized only through the larger federal standard deduction that feeds the Taxpayer Tax Credit: at 6%, the 2026 addition is worth up to $123 for a single filer and $99 for each married spouse, before the phase-out. (Utah Code 59-10-1018, Nonrefundable taxpayer tax credits)

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Utah's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which is the same wherever they live. The tax bracket calculator and the guide to taxes in retirement cover that side.

Property tax is assessed and collected by counties. Tax Foundation figures drawn from Census data put Utah property taxes at 0.48% of owner-occupied home value in 2024, 48th among the states. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

Utah law exempts 45% of the market value of a qualifying primary residence, so the home is taxed on 55% of its fair market value. A primary residence is a dwelling occupied as a primary domicile for at least 183 consecutive days in a calendar year, and only one exemption may be claimed per household in the state. A home that loses the exemption is taxed on 100% of its market value. (Utah State Tax Commission: Primary Residential Exemption)

The Tax Commission’s rate charts show a state rate of 4.85%, made up of a 4.70% state sales and use tax and a 0.15% state Medicaid expansion rate. Counties, cities and transit districts add their own rates. On the chart effective October 1, 2026, combined rates run from 6.35% in places such as Beaver County to 7.45% in Provo and Ogden, 8.45% in Salt Lake City and 9.55% in Park City. (Utah State Tax Commission: Sales and Use Tax Rates (2026 quarterly rate charts))

Groceries are taxed, but at a reduced rate: the statewide grocery food sales tax rate is 3%, the same in every jurisdiction. The Tax Commission publishes a food and non-food matrix to sort borderline items; prepared food does not qualify for the lower rate. (Utah State Tax Commission: Grocery Food Sales and Use Tax)

Prescription drugs are exempt. The sales tax statute exempts amounts paid for a drug intended for human use when a prescription was issued for it, along with syringes and stoma supplies on the same terms. (Utah Code 59-12-104, Sales and use tax exemptions)

For comparison with other states, the Tax Foundation counts 1.25 points of mandatory local tax as part of the Utah state rate, which it gives as 6.10%, and puts the average combined state and local rate at 7.42% as of January 1, 2026, the 20th highest in the country. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

Utah has no estate tax and no inheritance tax. Its former tax was a “pick-up” tax equal to the federal credit for state death taxes, and when federal law removed that credit the Utah tax ceased to apply after December 31, 2004. Utah inheritance tax returns do not need to be filed and the state does not require an inheritance tax waiver. (Utah State Tax Commission: Inheritance Tax)

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

Senate Bill 60, signed by the governor on March 23, 2026, set the individual and corporate income tax rates at 4.45%. It took effect on May 6, 2026 and operates retrospectively for taxable years beginning on or after January 1, 2026. Because the Social Security and military retirement credits are defined as the tax rate multiplied by the qualifying income, they moved to 4.45% automatically. (Utah Legislature, S.B. 60 (2026) bill status)

Senate Bill 71 of 2025 raised the income thresholds for the Social Security benefits credit from $45,000 to $54,000 for single filers and from $75,000 to $90,000 for joint filers and heads of household, and from $37,500 to $45,000 for married people filing separately, for taxable years beginning on or after January 1, 2025. Those are the thresholds in force for 2026. (Utah Legislature, S.B. 71 Social Security Tax Revisions (2025 General Session), enrolled copy)

The 2026 return looks different. The TC-40 and its schedules have been redesigned and many line numbers have changed; credit and subtraction codes have gone from two characters to seven (the Social Security credit is now AN005PT); the credit worksheets have moved to a new Form TC-150 that is attached to the return; and filers must report dates of birth for themselves and a spouse. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

Utah decides residency by domicile, and the statute spells out how it is found. A person is domiciled in Utah if they or their spouse voted in Utah during the year without being registered or voting in another state, or enrolled as a resident student at a Utah state college. Otherwise domicile exists where the person or spouse has a permanent home in Utah to which they intend to return, judged on the preponderance of the evidence from a closed list of facts. The list includes a Utah driver license, the residential property tax exemption, vehicle registration, and maintaining a place of abode while spending 183 or more days of the year in the state. (Utah Code 59-10-136, Domicile)

A spouse’s Utah domicile generally carries over to the other spouse, unless the couple are legally separated or divorced or both file federal returns as married filing separately. A resident is a person domiciled in Utah for any period of the year, for the duration of that period. A part-year resident files Schedule TC-40_B, is taxed on everything received while resident and on Utah-source income otherwise, and prorates apportionable credits, the Social Security benefits credit among them. (Utah State Tax Commission, 2026 TC-40 Individual Income Tax Instructions (draft dated October 20, 2026))

Federal law (4 U.S.C. 114) bars a state from taxing the retirement income of someone who is not its resident or domiciliary. A Utah Retirement Systems pension or a 401(k) built during a Utah career is therefore taxed only by the state where the retiree lives when it is paid, and a pension earned elsewhere becomes Utah income once the retiree is domiciled in Utah. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)