Utah Passes Bill Lowering Income Tax Rate For 2025

At A Glance

• Utah reduces the 2025 individual income tax rate to 4.50%.
• The new 4.50% rate goes into effect June 1, 2025.

Summary

On March 26, 2025, Utah Governor Spencer J. Cox signed HB 106, which includes a plan to reduce the individual income tax rate beginning tax year 2025. The income tax rate is reduced from 4.55% to 4.50% for payroll periods starting June 1, 2025.

Unlike federal withholding rates, Utah doesn't treat supplemental wages differently. All income is subject to the same flat rate, and no separate calculation is required for supplemental pay (e.g., bonuses, commissions, etc.). Therefore, the revised rate will apply to all wages paid. 

Utah uses the federal Form W-4 for state withholding, and has no state equivalent withholding exemption form. Thus, no action is needed by employees as a new W-4 form is not required for this specific change. 

Employers and payroll providers are expected to implement the change starting June 1 to ensure accurate withholding moving forward. 

Next Steps

Paylocity will update the 2025 Utah withholding rate moving forward. This reduction won't require any adjustments to withholding amounts in payroll, as any excess tax collected will be refunded to individuals for their 2025 personal income tax filing.