President Trump’s recent tax reform bill certainly made waves, applying sweeping changes that impacted almost every taxpayer in the nation. One of those widespread changes was the elimination of personal exemptions on tax returns. Previously, you could claim an exemption for yourself and any dependents you had, which would give you a tax break for each exemption. Now, those exemptions have been eliminated.
The loss of these exemptions might have a minimal impact on individual tax filers, but for those with several dependents, the increase in owed taxes can be significant. So, lawmakers voted to implement a new Utah child tax credit to help offset this increase. Here’s what we know about the bill so far.
What Does the Tax Bill Offer?
The details and specifications of the new tax bill have not yet been made public. However, we do know that the new Utah tax bill provides a credit for dependents on your state tax return. So, rather than claiming an exemption for each of your children, you would instead receive a credit to reduce the amount you owe on your return.
Lawmakers voted overwhelmingly in favor of the $30 million tax cut for Utah families, stating that they hoped the credit would help to reduce the strain that federal tax reform could place on larger families. And, in the state with the largest household size in the nation, Utah families would likely see a rather large increase in the state taxes they owe.
Unfortunately, the credit won’t completely offset the impact of federal tax reform; lawmakers estimate that it will only reduce the hit on Utah families by about 45%. However, it’s a big step in the right direction for keeping more of your money in your pocket.
Claiming the Child Tax Credit
Since we don’t have all the details about this new tax credit yet, we’re not yet sure how you will claim this credit, the limitations associated with it, or the amounts provided per dependent. However, we will continue to stay up to date on the Utah child tax credit, and any other changes to state tax laws. Ultimately, we expect that this change will positively impact most Utah taxpayers’ returns, and help to reduce the amount of tax you owe next year.
If you have further questions about the Utah child tax credit, or any other questions about your tax return, reach out to Biesinger & Kofford CPAs to speak to one of our tax professionals.