Does Utah Have State Tax? Income, Sales, and Property Tax

Utah does levy several state-level taxes, the most significant of which are income and sales taxes. The state’s tax structure is an important consideration for individuals and businesses residing or operating within its borders.

Utah State Income Tax

Utah employs a flat individual income tax system, which means all taxpayers pay the same rate regardless of their income level. For tax years starting on or after January 1, 2025, the rate is set at 4.5%. This single rate applies to a broad range of taxable income, including wages, salaries, bonuses, and income from self-employment. It also extends to investment earnings such as interest, dividends, and capital gains, as well as most retirement and pension income.

The requirement to file a Utah state income tax return, Form TC-40, depends on residency status and income source. Full-year residents are taxed on all income earned, regardless of where it was generated. Part-year residents and non-residents must file and pay tax on any income derived from Utah sources, such as wages earned from a Utah-based job or from a business operating in the state.

While the flat tax simplifies calculations, the state offers certain mechanisms to reduce the final tax liability. Utah provides a taxpayer tax credit, which helps ensure that individuals under a certain income threshold do not pay state income tax. Additionally, credits are available for specific circumstances, such as for those receiving Social Security benefits, certain retirement income, or for parents with young children at home.

Utah Sales and Use Tax

The state of Utah imposes a statewide sales and use tax. The base statewide rate is 4.85%. This rate, however, is not the final amount most consumers pay at the point of sale. Counties, cities, and special transit or resort districts have the authority to levy their own local option sales taxes on top of the state base rate.

For example, the total rate in Salt Lake City is 8.25% as of early 2025, while in other areas it can be higher or lower depending on the specific local additions. The tax applies to the retail sale of most tangible personal property, such as vehicles, furniture, and clothing, as well as some services. There are no special exemptions for clothing purchases.

A notable distinction in Utah’s sales tax system is the treatment of food. “Unprepared food,” commonly referred to as groceries, is taxed at a reduced, uniform statewide rate of 3%. This lower rate does not apply to prepared foods, like those sold in restaurants or the deli section of a grocery store, which are subject to the full combined sales tax rate. A use tax, equal to the sales tax rate, applies to taxable items purchased out-of-state for use in Utah if no sales tax was paid at the time of purchase.

Other Notable Taxes in Utah

The state has a corporate franchise and income tax for businesses. For tax years beginning in 2025, this tax is applied at a flat rate of 4.5%, mirroring the individual income tax rate.

The state’s gasoline tax is 38.5 cents per gallon as of January 1, 2025. This tax is built into the price paid at the pump and is dedicated to transportation infrastructure funding.

Property tax is a major tax paid by Utah residents and businesses, but it is important to note that it is primarily a local tax, not a state one. County governments assess and collect property taxes, which fund local services like public schools, police, and fire departments. Finally, for individuals concerned with estate planning, Utah does not impose a state-level estate or inheritance tax, though federal estate taxes may still apply for very large estates.