Utah 2026 Tax Changes — What Residents & Business Owners Must Know
On January 1, 2026, significant federal tax changes take effect as major provisions from the Tax Cuts and Jobs Act (TCJA) expire and updated rules continue under the One Big Beautiful Bill Act (OBBBA).
Utah residents — who pay a flat state income tax based on federal AGI — will be directly affected by these federal shifts.
- W-2 earners in Salt Lake City, Provo, Orem, St. George, Ogden, Logan
- Tech workers in Silicon Slopes
- Contractors, trades, and construction workers
- Small business owners, freelancers, and S-Corps
- Real estate investors and landlords
- Short-term rental hosts
- Families with children
- Retirees drawing taxable income
- Dual-income households
Below is the comprehensive Utah-specific breakdown of the 2026 federal tax changes.
Key Federal Changes Affecting Utah in 2026
Standard Deduction Shrinks
The temporarily increased standard deduction from TCJA expires in 2026.
OBBBA does not extend it.
- Single: ~$8,300
- Married Filing Jointly: ~$16,600
- Head of Household: ~$12,400
This raises federal taxable income significantly.
Because Utah uses federal AGI for its state tax calculation, Utah taxable income rises as well.
Federal Income Tax Brackets Increase
- 12% → 15%
- 22% → 28%
- 24% → 31%
- dual-income families
- tech professionals in the Salt Lake/Provo corridor
- healthcare and education workers
- construction and trades workers
- households earning $60K–$300K
Higher federal taxable income directly increases Utah state taxable income.
QBI Deduction Made Permanent Under OBBBA
OBBBA permanently extended the 20% Qualified Business Income (QBI) deduction.
- LLCs
- S-Corps
- sole proprietors
- contractors
- freelancers
- some rental property owners
- new income thresholds
- SSTB phaseout changes
- stricter documentation requirements
Utah does not have a separate QBI deduction — this applies federally only.
Child Tax Credit Shrinks
- The Child Tax Credit decreases from about $2,000
- To roughly $1,000 per child
- Refundability decreases
Utah’s large family population makes this a significant change statewide.
Marriage Penalty Returns
With the expiration of TCJA’s marriage relief:
- married couples reach higher brackets sooner
- credit phaseouts accelerate
- combined incomes create higher federal and Utah taxable income
Dual-income couples in Utah are among the most affected due to income structure and household size.
Utah–Specific Tax Considerations
1. Utah Uses Federal AGI for State Taxation
- reduced federal deductions
- higher federal taxable income
- fewer federal credits
…all increase Utah state taxable income.
Residents will feel a combined federal and state impact.
2. Real Estate Investors & Rental Owners Will Be Heavily Affected
Utah’s fast-growing real estate markets — including Salt Lake City, Provo, Orem, St. George, and Park City — will be impacted by:
- capital gains changes
- depreciation reductions
- rental loss limitations
- STR participation requirements
- timing strategies for sales and refinances
Strong appreciation in recent years means larger capital gains exposure for many Utah residents.
3. STR Owners Must Prepare for 2026 Federal Rules
- Park City
- St. George
- Salt Lake City
- Provo/Orem
- Moab and tourism regions
- reduced bonus depreciation
- stricter participation tests
- enhanced IRS safe harbor compliance
- tighter limitations on rental losses
STR hosts must maintain detailed records.
4. Utah’s Tech Workforce Faces Notable Changes
- technology
- software development
- SaaS
- engineering
These workers often fall into bracket ranges most affected by the 2026 increases.
Higher AGI increases the Utah tax burden as well.
5. Retirement Income Still Taxable Federally and in Utah
- IRA withdrawals
- 401(k) distributions
- pension income
- taxable investment withdrawals
remain influenced by federal law.
Under the 2026 rules, retirees may face higher combined federal + state tax liability.
Who Is Most Affected in Utah (2026)
- Dual-income families
- Tech professionals in Silicon Slopes
- Contractors and small business owners
- Real estate investors and landlords
- STR operators
- Families with multiple children
- Retirees with taxable income
- Middle- and upper-middle-income earners
What Utah Residents Should Do Before December 31, 2025
- Review federal and state withholding
- Maximize retirement contributions
- Consider Roth conversions
- Verify QBI compliance
- Maintain strong STR and rental records
- Evaluate capital gains exposure
- Time property or business sales strategically
- Build a combined federal + Utah tax plan
Utah 2026 Tax FAQ
Does Utah conform to QBI?
No. QBI is federal-only.
Will Utah taxes increase?
The rate remains the same, but taxable income rises due to federal changes.
Are families affected?
Yes. Child Tax Credit reductions and deduction changes affect refunds.
Are STR owners impacted?
Yes. Participation and depreciation rules tighten.
Are retirees affected?
Yes. Federal bracket increases raise the cost of retirement withdrawals.
Get your 2026 Utah Tax Strategy
Utah residents face substantial changes under the 2026 federal tax law.
Higher taxable income, reduced credits, and updated rental and business rules make advance planning essential.