SB 60 — Income Tax Rate Amendments

(e) "Employee" means the same as that term is defined in Section 59-10-401.

(f) "Employer" means the same as that term is defined in Section 59-10-401.

(g) "Federal taxable income":

(i) for a resident or nonresident individual, means taxable income as defined by Section 63, Internal Revenue Code;

or (ii) for a resident or nonresident estate or trust, is as calculated in Section 641(a) and (b), Internal Revenue Code.

(h) "Fiduciary" means:

(i) a guardian;

(ii) a trustee;

(iii) an executor;

(iv) an administrator;

(v) a receiver;

(vi) a conservator;

or (vii) any person acting in any fiduciary capacity for any individual.

(i) "Guaranteed annuity interest" means the same as that term is defined in 26 C.F.R.

Sec.

1.170A-6(c) (2).

(j) "Homesteaded land diminished from the Uintah and Ouray Reservation" means the homesteaded land that was held to have been diminished from the Uintah and Ouray Reservation in Hagen v.

Utah, 510 U.S.

399 (1994).

(k) "Income tax rate" means:

(i) 4.45% for the portion of state taxable income that is below the threshold;

and (ii) 5.15% for the portion of the state taxable income that is equal to or above the threshold.

[(k)] (l) "Individual" means a natural person and includes aliens and minors.

(m) "Inflation factor" means a percentage equal to the percentage by which the consumer price index, as calculated by Sections 1(f)(4) and 1(f)(5), Internal Revenue Code, for the preceding calendar year exceeds the consumer price index for the calendar year two years before the current calendar year.

[(l)] (n) "Irrevocable trust" means a trust in which the settlor may not revoke or terminate all or part of the trust without the consent of a person who has a substantial beneficial interest in the trust and the - 4 - SB0060 compared with SB0060S01 interest would be adversely affected by the exercise of the settlor's power to revoke or terminate all or part of the trust.

[(m)] (o) "Military service" means the same as that term is defined in Pub.

L.

No.

108-189, Sec.

101.

[(n)] (p) "Nonresident individual" means an individual who is not a resident of this state.

[(o)] (q) "Nonresident trust" or "nonresident estate" means a trust or estate which is not a resident estate or trust.

[(p)] (r) (i) "Partnership" includes a syndicate, group, pool, joint venture, or other unincorporated organization:

(A) through or by means of which any business, financial operation, or venture is carried on;

and (B) that is not, within the meaning of this chapter, a trust, an estate, or a corporation.

(ii) "Partnership" does not include any organization not included under the definition of "partnership" in Section 761, Internal Revenue Code.

(iii) "Partner" includes a member in a syndicate, group, pool, joint venture, or organization described in Subsection [(1)(p)(i)] (1)(r)(i).

[(q)] (s) "Pass-through entity" means the same as that term is defined in Section 59-10-1402.

[(r)] (t) "Pass-through entity taxpayer" means the same as that term is defined in Section 59-10-1402.

[(s)] (u) "Qualified nongrantor charitable lead trust" means a trust:

(i) that is irrevocable;

(ii) that has a trust term measured by:

(A) a fixed term of years;

or (B) the life of a person living on the day on which the trust is created;

(iii) under which:

(A) a portion of the value of the trust assets is distributed during the trust term:

(I) to an organization described in Section 170(c), Internal Revenue Code;

and (II) as a guaranteed annuity interest or a unitrust interest;

and (B) assets remaining in the trust at the termination of the trust term are distributed to a beneficiary:

(I) designated in the trust;

and (II) that is not an organization described in Section 170(c), Internal Revenue Code;

(iv) for which the trust is allowed a deduction under Section 642(c), Internal Revenue Code;

and (v) under which the grantor of the trust is not treated as the owner of any portion of the trust for federal income tax purposes.

- 5 - SB0060 compared with SB0060S01 [(t)] (v) "Resident individual" means an individual who is domiciled in this state for any period of time during the taxable year, but only for the duration of the period during which the individual is domiciled in this state.

[(u)] (w) "Resident estate" or "resident trust" means the same as that term is defined in Section 75B-2-103.

[(v)] (x) " Service member" means the same as that term is defined in Pub.

L.

No.

108-189, Sec.

101.

[(w)] (y) "State income tax percentage for a nonresident estate or trust" means a percentage equal to a nonresident estate's or trust's state taxable income for the taxable year divided by the nonresident estate's or trust's total adjusted gross income for that taxable year after making the adjustments required by:

(i) Section 59-10-202;

(ii) Section 59-10-207;

(iii) Section 59-10-209.1;

or (iv) Section 59-10-210.

[(x)] (z) "State income tax percentage for a nonresident individual" means a percentage equal to a nonresident individual's state taxable income for the taxable year divided by the difference between:

(i) subject to Section 59-10-1405, the nonresident individual's total adjusted gross income for that taxable year, after making the:

(A) additions and subtractions required by Section 59-10-114;

and (B) adjustments required by Section 59-10-115;

and (ii) if the nonresident individual described in Subsection [(1)(x)(i)] (1)(z)(i) is a service member, the compensation the service member receives for military service if the service member is serving in compliance with military orders.

[(y)] (aa) "State income tax percentage for a part-year resident individual" means, for a taxable year, a fraction:

(i) the numerator of which is the sum of:

(A) subject to Section 59-10-1404.5, for the time period during the taxable year that the part-year resident individual is a resident, the part-year resident individual's total adjusted gross income for that time period, after making the:

(I) additions and subtractions required by Section 59-10-114;

and (II) adjustments required by Section 59-10-115;

and - 6 - SB0060 compared with SB0060S01 (B) for the time period during the taxable year that the part-year resident individual is a nonresident, an amount calculated by:

(I) determining the part-year resident individual's adjusted gross income for that time period, after making the:

(Aa) additions and subtractions required by Section 59-10-114;

and (Bb) adjustments required by Section 59-10-115;

and (II) calculating the portion of the amount determined under Subsection [(1)(y)(i)(B)(I)] (1)(aa)(i)(B)(I) that is derived from Utah sources in accordance with Section 59-10-117;

and (ii) the denominator of which is the difference between:

(A) the part-year resident individual's total adjusted gross income for that taxable year, after making the:

(I) additions and subtractions required by Section 59-10-114;

and (II) adjustments required by Section 59-10-115;

and (B) if the part-year resident individual is a service member, any compensation the service member receives for military service during the portion of the taxable year that the service member is a nonresident if the service member is serving in compliance with military orders.

[(z)] (bb) "Taxable income" or "state taxable income":

(i) subject to Section 59-10-1404.5, for a resident individual, means the resident individual's adjusted gross income after making the:

(A) additions and subtractions required by Section 59-10-114;

and (B) adjustments required by Section 59-10-115;

(ii) for a nonresident individual, is an amount calculated by:

(A) determining the nonresident individual's adjusted gross income for the taxable year, after making the:

(I) additions and subtractions required by Section 59-10-114;

and (II) adjustments required by Section 59-10-115;

and (B) calculating the portion of the amount determined under Subsection [(1)(z)(ii)(A)] (1)(bb)(ii)(A) that is derived from Utah sources in accordance with Section 59-10-117;

(iii) for a resident estate or trust, is as calculated under Section 59-10-201.1;

and (iv) for a nonresident estate or trust, is as calculated under Section 59-10-204.

- 7 - SB0060 compared with SB0060S01 [(aa)] (cc) "Taxpayer" means any of the following that has income subject in whole or part to the tax imposed by this chapter:

(i) an individual;

(ii) an estate, a trust, or a beneficiary of an estate or a trust that is not a pass-through entity or a pass- through entity taxpayer;

(iii) a pass-through entity;

or (iv) a pass-through entity taxpayer.

(dd) "Threshold" means:

(i) for the taxable year beginning on or after January 1, 2026, and beginning before January 1, 2027, $1,000,000;

or (ii) for each taxable year beginning on or after January 1, 2027, the amount calculated by increasing or decreasing the previous taxable year's threshold by the inflation factor and rounding to the nearest whole dollar.

[(bb)] (ee) "Trust term" means a time period:

(i) beginning on the day on which a qualified nongrantor charitable lead trust is created;

and (ii) ending on the day on which the qualified nongrantor charitable lead trust described in Subsection [(1)(bb)(i)] (1)(ee)(i) terminates.

[(cc)] (ff) "Uintah and Ouray Reservation" means the lands recognized as being included within the Uintah and Ouray Reservation in:

(i) Hagen v.

Utah, 510 U.S.

399 (1994);

and (ii) Ute Indian Tribe v.

Utah, 114 F.3d 1513 (10th Cir.

1997).

[(dd)] (gg) "Unadjusted income" means an amount equal to the difference between:

(i) the total income required to be reported by a resident or nonresident estate or trust on the resident or nonresident estate's or trust's federal income tax return for estates and trusts for the taxable year;

and (ii) the sum of the following:

(A) fees paid or incurred to the fiduciary of a resident or nonresident estate or trust:

(I) for administering the resident or nonresident estate or trust;

and (II) that the resident or nonresident estate or trust deducts as allowed on the resident or nonresident estate's or trust's federal income tax return for estates and trusts for the taxable year;

- 8 - SB0060 compared with SB0060S01 (B) the income distribution deduction that a resident or nonresident estate or trust deducts under Section or 661, Internal Revenue Code, as allowed on the resident or nonresident estate's or trust's federal income tax return for estates and trusts for the taxable year;

(C) the amount that a resident or nonresident estate or trust deducts as a deduction for estate tax or generation skipping transfer tax under Section 691(c), Internal Revenue Code, as allowed on the resident or nonresident estate's or trust's federal income tax return for estates and trusts for the taxable year;

and (D) the amount that a resident or nonresident estate or trust deducts as a personal exemption under Section 642(b), Internal Revenue Code, as allowed on the resident or nonresident estate's or trust's federal income tax return for estates and trusts for the taxable year.

[(ee)] (hh) "Unitrust interest" means the same as that term is defined in 26 C.F.R.

Sec.

1.170A-6(c)(2).

[(ff)] (ii) "Ute tribal member" means an individual who is enrolled as a member of the Ute Indian Tribe of the Uintah and Ouray Reservation.

[(gg)] (jj) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray Reservation.

[(hh)] (kk) "Wages" means the same as that term is defined in Section 59-10-401.

(2) (a) Any term used in this chapter has the same meaning as when used in comparable context in the laws of the United States relating to federal income taxes unless a different meaning is clearly required.

(b) Any reference to the Internal Revenue Code or to the laws of the United States shall mean the Internal Revenue Code or other provisions of the laws of the United States relating to federal income taxes that are in effect for the taxable year.

(c) Any reference to a specific section of the Internal Revenue Code or other provision of the laws of the United States relating to federal income taxes shall include any corresponding or comparable provisions of the Internal Revenue Code as amended, redesignated, or reenacted.

Section 4.

59-10-104.59-10-104 .

and {(b) {4.45%.} } (b) the4.45%. income tax rate.

- 9 - SB0060 compared with SB0060S01 [(b) 4.5%.] (3) This section does not apply to a resident individual exempt from taxation under Section 59-10-104.1.

Section 5.4.

Section 59-10-116 is amended to read:

59-10-116.

Tax on nonresident individual -- Calculation -- Exemption.

(1) Except as provided in Subsection (2), a tax is imposed on a nonresident individual in an amount equal to the product of[ the]:

(a) the nonresident individual's state taxable income;

and (b) the income tax rate.

[(b) percentage listed in Subsection 59-10-104(2).] (2) This section does not apply to a nonresident individual:

(a) exempt from taxation under Section 59-10-104.1;

or (b) whose only state source income is wages that are excluded in accordance with Section 59-10-117.5.

Section 6.

Section 59-10-201 is amended to read:

59-10-201.

Taxation of resident trusts and estates.

(1) Except as provided in Subsection (2), a tax [determined in accordance with the rate prescribed by Subsection 59-10-104(2)(b) ]is imposed for each taxable year on the state taxable income of each resident estate or trust in the amount calculated by multiplying the resident estate's or trust's state taxable income by the income tax rate.

(2) The following are not subject to a tax imposed by this part:

(a) a resident estate or trust that is not required to file a federal income tax return for estates and trusts for the taxable year;

or (b) a resident trust taxed as a corporation.

(3) A resident estate or trust shall be allowed the credit provided in Section 59-10-1003, relating to an income tax imposed by another state, except that the limitation shall be computed by reference to the taxable income of the estate or trust.

(4) The property of the Utah Educational Savings Plan established in Title 53H, Chapter 10 Utah Education Savings, and the Utah Educational Savings Plan's income from operations and investments are exempt from all taxation by the state under this chapter.

Section 7.

Section 59-10-205 is amended to read:

59-10-205.

Tax on nonresident estate or trust.

- 10 - SB0060 compared with SB0060S01 (1) Except as provided in Subsection (2), a tax is imposed on a nonresident estate or trust in an amount equal to the product of:

(a) the nonresident estate's or trust's state taxable income as determined under Section 59-10-204;

and (b) the income tax rate.

[(b) the percentage listed in Subsection 59-10-104(2).] (2) The following are not subject to a tax imposed by this part:

(a) a nonresident estate or trust that is not required to file a federal income tax return for estates and trusts for the taxable year;

or (b) a nonresident trust taxed as a corporation.

Section 8.

Section 59-10-1007 is amended to read:

59-10-1007.

Recycling market development zones tax credits.

(1) Subject to other provisions of this section, a claimant, estate, or trust in a recycling market development zone as defined in Section 19-13-102 may claim the following nonrefundable tax credits:

(a) a tax credit equal to the product of [the percentage listed in Subsection 59-10-104(2)] the income tax rate and the purchase price paid for machinery and equipment used directly in:

(i) commercial composting;

or (ii) manufacturing facilities or plant units that:

(A) manufacture, process, compound, or produce recycled items of tangible personal property for sale;

or (B) reduce or reuse postconsumer waste material;

and (b) a tax credit equal to the lesser of:

(i) 20% of net expenditures to third parties for rent, wages, supplies, tools, test inventory, and utilities made by the claimant, estate, or trust for establishing and operating recycling or composting technology in the state;

and (ii) $2,000.

(2) (a) To claim a tax credit described in Subsection (1), the claimant, estate, or trust shall receive from the Department of Environmental Quality a written certification, on a form approved by the commission, that includes:

- 11 - SB0060 compared with SB0060S01 (i) a statement that the claimant, estate, or trust is operating within the boundaries of a recycling market development zone;

(ii) for a claim of the tax credit described in Subsection (1)(a):

(A) the type of the machinery and equipment that the claimant, estate, or trust purchased;

(B) the date that the claimant, estate, or trust purchased the machinery and equipment;

(C) the purchase price for the machinery and equipment;

(D) the total purchase price for all machinery and equipment for which the claimant, estate, or trust is claiming a tax credit;

(E) the amount of the claimant's, estate's, or trust's tax credit;

and (F) a statement that the machinery and equipment are integral to the composting or recycling process;

and (iii) for a claim of the tax credit described in Subsection (1)(b):

(A) the type of net expenditure that the claimant, estate, or trust made to a third party;

(B) the date that the claimant, estate, or trust made the payment to a third party;

(C) the amount that the claimant, estate, or trust paid to each third party;

(D) the total amount that the claimant, estate, or trust paid to all third parties;

(E) a statement that the net expenditures support the establishment and operation of recycling or composting technology in the state;

and (F) the amount of the claimant's, estate's, or trust's tax credit.

(b) (i) The Department of Environmental Quality shall provide a claimant, estate, or trust seeking to claim a tax credit under Subsection (1) with a copy of the written certification.

(ii) The claimant, estate, or trust shall retain a copy of the written certification for the same period of time that a person is required to keep books and records under Section 59-1-1406.

(c) The Department of Environmental Quality shall submit to the commission an electronic list that includes:

(i) the name and identifying information of each claimant, estate, or trust to which the Department of Environmental Quality issues a written certification;

and (ii) for each claimant, estate, or trust, the amount of each tax credit listed on the written certification.

- 12 - SB0060 compared with SB0060S01 (3) A claimant, estate, or trust may not claim a tax credit under Subsection (1)(a), Subsection (1)(b), or both that exceeds 40% of the claimant's, estate's, or trust's state income tax liability as the tax liability is calculated:

(a) for the taxable year in which the claimant, estate, or trust made the purchases or payments;

(b) before any other tax credits the claimant, estate, or trust may claim for the taxable year;

and (c) before the claimant, estate, or trust claims a tax credit authorized by this section.

(4) The commission shall make rules governing what information a claimant, estate, or trust shall file with the commission to verify the entitlement to and amount of a tax credit.

(5) Except as provided in Subsections (6) through (8), a claimant, estate, or trust may carry forward, to the next three taxable years, the amount of a tax credit described in Subsection (1)(a) that the claimant, estate, or trust does not use for the taxable year.

(6) A claimant, estate, or trust may not claim or carry forward a tax credit described in Subsection (1) (a) in a taxable year during which the claimant, estate, or trust claims or carries forward a tax credit under Section 63N-2-213.

(7) A claimant, estate, or trust may not claim a tax credit described in Subsection (1)(b) in a taxable year during which the claimant, estate, or trust claims or carries forward a tax credit under Section 63N-2-213.

Section 9.

Section 59-10-1017 is amended to read:

59-10-1017.

Utah Educational Savings Plan tax credit.

(1) As used in this section:

(a) "Account owner" means the same as that term is defined in Section 53H-10-101.

(b) "Grantor trust" means the same as that term is defined in Section 53H-10-201.

(c) "Higher education costs" means the same as that term is defined in Section 53H-10-201.

(d) "Maximum amount of a qualified investment for the taxable year" means, for a taxable year, the product of the percentage listed in Subsection 59-10-104(2) and:

(i) subject to Subsection (1)(d)(iii), for a claimant, estate, or trust that is an account owner, if that claimant, estate, or trust is other than husband and wife account owners who file a single return jointly, the maximum amount of a qualified investment:

(A) listed in Subsection 53H-10-205(1)(e)(ii);

and (B) increased or kept for that taxable year in accordance with Subsections 53H-10-205(1)(f) and (g);

- 13 - SB0060 compared with SB0060S01 (ii) subject to Subsection (1)(d)(iii), for claimants who are husband and wife account owners who file a single return jointly, the maximum amount of a qualified investment:

(A) listed in Subsection 53H-10-205(1)(e)(iii);

and (B) increased or kept for that taxable year in accordance with Subsections 53H-10-205(1)(f) and (g);

or (iii) for a grantor trust:

(A) if the owner of the grantor trust has a single filing status or head of household filing status as defined in Section 59-10-1018, the amount described in Subsection (1)(d)(i);

or (B) if the owner of the grantor trust has a joint filing status as defined in Section 59-10-1018, the amount described in Subsection (1)(d)(ii).

(e) "Owner of the grantor trust" means the same as that term is defined in Section 53H-10-201.

(f) "Qualified investment" means the same as that term is defined in Section 53H-10-201.

(2) Except as provided in Section 59-10-1002.2 and subject to the other provisions of this section, a claimant, estate, or trust that is an account owner may claim a nonrefundable tax credit equal to the product of:

(a) the amount of a qualified investment made:

(i) during the taxable year;

and (ii) into an account owned by the claimant, estate, or trust;

and (b) the [percentage listed in Subsection 59-10-104(2).] the income tax rate.

(3) A claimant, estate, or trust, or a person other than the claimant, estate, or trust, may make a qualified investment described in Subsection (2).

(4) A claimant, estate, or trust that is an account owner may not claim a tax credit under this section with respect to any portion of a qualified investment described in Subsection (2) that a claimant, estate, trust, or person described in Subsection (3) deducts on a federal income tax return.

(5) A tax credit under this section may not exceed the maximum amount of a qualified investment for the taxable year.

(6) A claimant, estate, or trust that is an account owner may not carry forward or carry back the tax credit under this section.

Section 10.

Section 59-10-1022 is amended to read:

59-10-1022.

Nonrefundable tax credit for capital gain transactions.

(1) As used in this section:

(a) - 14 - SB0060 compared with SB0060S01 (i) "Capital gain transaction" means a transaction that results in a:

(A) short-term capital gain;

or (B) long-term capital gain.

(ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the commission may by rule define the term "transaction." (b) "Commercial domicile" means the principal place from which the trade or business of a Utah small business corporation is directed or managed.

(c) "Long-term capital gain" is as defined in Section 1222, Internal Revenue Code.

(d) "Qualifying stock" means stock that is:

(i) (A) common;

or (B) preferred;

(ii) as defined by the commission by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, originally issued to:

(A) a claimant, estate, or trust;

or (B) a partnership if the claimant, estate, or trust that claims a tax credit under this section:

(I) was a partner on the day on which the stock was issued;

and (II) remains a partner until the last day of the taxable year for which the claimant, estate, or trust claims a tax credit under this section;

and (iii) issued:

(A) by a Utah small business corporation;

(B) on or after January 1, 2008;

and (C) for:

(I) money;

or (II) other property, except for stock or securities.

(e) "Short-term capital gain" is as defined in Section 1222, Internal Revenue Code.

(f) (i) "Utah small business corporation" means a corporation that:

(A) except as provided in Subsection (1)(f)(ii), is a small business corporation as defined in Section 1244(c)(3), Internal Revenue Code;

- 15 - SB0060 compared with SB0060S01 (B) except as provided in Subsection (1)(f)(iii), meets the requirements of Section 1244(c)(1)(C), Internal Revenue Code;

and (C) has its commercial domicile in this state.

(ii) The dollar amount listed in Section 1244(c)(3)(A) is considered to be $2,500,000.

(iii) The phrase "the date the loss on such stock was sustained" in Sections 1244(c)(1)(C) and 1244(c) (2), Internal Revenue Code, is considered to be "the last day of the taxable year for which the claimant, estate, or trust claims a tax credit under this section." (2) For taxable years beginning on or after January 1, 2008, a claimant, estate, or trust that meets the requirements of Subsection (3) may claim a nonrefundable tax credit equal to the product of:

(a) the total amount of the claimant's, estate's, or trust's short-term capital gain or long-term capital gain on a capital gain transaction that occurs on or after January 1, 2008;

and (b) the income tax rate.

[(b) the percentage listed in Subsection 59-10-104(2).] (3) For purposes of Subsection (2), a claimant, estate, or trust may claim the nonrefundable tax credit allowed by Subsection (2) if:

(a) 70% or more of the gross proceeds of the capital gain transaction are expended:

(i) to purchase qualifying stock in a Utah small business corporation;

and (ii) within a 12-month period after the day on which the capital gain transaction occurs;

and (b) prior to the purchase of the qualifying stock described in Subsection (3)(a)(i), the claimant, estate, or trust did not have an ownership interest in the Utah small business corporation that issued the qualifying stock.

(4) A claimant, estate, or trust may not carry forward or carry back a tax credit under this section.

(5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the commission may make rules:

(a) defining the term "gross proceeds";

and (b) prescribing the circumstances under which a claimant, estate, or trust has an ownership interest in a Utah small business corporation.

Section 11.

Section 59-10-1023 is amended to read:

59-10-1023.

Nonrefundable tax credit for amounts paid under a health benefit plan.

(1) As used in this section:

(a) "Claimant with dependents" means a claimant:

- 16 - SB0060 compared with SB0060S01 (i) regardless of the claimant's filing status for purposes of filing a federal individual income tax return for the taxable year;

and (ii) who claims one or more dependents under Section 151, Internal Revenue Code, as allowed on the claimant's federal individual income tax return for the taxable year.

(b) "Eligible insured individual" means:

(i) the claimant who is insured under a health benefit plan;

(ii) the spouse of the claimant described in Subsection (1)(b)(i) if:

(A) the claimant files a single return jointly under this chapter with the claimant's spouse for the taxable year;

and (B) the spouse is insured under the health benefit plan described in Subsection (1)(b)(i);

or (iii) a dependent of the claimant described in Subsection (1)(b)(i) if:

(A) the claimant claims the dependent under Section 151, Internal Revenue Code, as allowed on the claimant's federal individual income tax return for the taxable year;

and (B) the dependent is insured under the health benefit plan described in Subsection (1)(b)(i).

(c) "Excluded expenses" means an amount a claimant pays for insurance offered under a health benefit plan for a taxable year if:

(i) the claimant claims a tax credit for that amount under Section 35, Internal Revenue Code:

(A) on the claimant's federal individual income tax return for the taxable year;

and (B) with respect to an eligible insured individual;

(ii) the claimant deducts that amount under Section 162 or 213, Internal Revenue Code:

(A) on the claimant's federal individual income tax return for the taxable year;

and (B) with respect to an eligible insured individual;

or (iii) the claimant excludes that amount from gross income under Section 106 or 125, Internal Revenue Code, with respect to an eligible insured individual.

(d) (i) "Health benefit plan" is as defined in Section 31A-1-301.

(ii) "Health benefit plan" does not include equivalent self-insurance as defined by the Insurance Department by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.

(e) "Joint claimant with no dependents" means a husband and wife who:

(i) file a single return jointly under this chapter for the taxable year;

and - 17 - SB0060 compared with SB0060S01 (ii) do not claim a dependent under Section 151, Internal Revenue Code, on the husband's and wife's federal individual income tax return for the taxable year.

(f) "Single claimant with no dependents" means:

(i) a single individual who:

(A) files a single federal individual income tax return for the taxable year;

and (B) does not claim a dependent under Section 151, Internal Revenue Code, on the single individual's federal individual income tax return for the taxable year;

(ii) a head of household:

(A) as defined in Section 2(b), Internal Revenue Code, who files a single federal individual income tax return for the taxable year;

and (B) who does not claim a dependent under Section 151, Internal Revenue Code, on the head of household's federal individual income tax return for the taxable year;

or (iii) a married individual who:

(A) does not file a single federal individual income tax return jointly with that married individual's spouse for the taxable year;

and (B) does not claim a dependent under Section 151, Internal Revenue Code, on that married individual's federal individual income tax return for the taxable year.

(2) Subject to Subsection (3), and except as provided in Subsection (4), for taxable years beginning on or after January 1, 2009, a claimant may claim a nonrefundable tax credit equal to the product of:

(a) the difference between:

(i) the total amount the claimant pays during the taxable year for:

(A) insurance offered under a health benefit plan;

and (B) an eligible insured individual;

and (ii) excluded expenses;

and (b) the income tax rate.

[(b) the percentage listed in Subsection 59-10-104(2).] (3) The maximum amount of a tax credit described in Subsection (2) a claimant may claim on a return for a taxable year is:

(a) for a single claimant with no dependents, $300;

(b) for a joint claimant with no dependents, $600;

or (c) for a claimant with dependents, $900.

- 18 - SB0060 compared with SB0060S01 (4) A claimant may not claim a tax credit under this section if the claimant is eligible to participate in insurance offered under a health benefit plan maintained and funded in whole or in part by:

(a) the claimant's employer;

or (b) another person's employer.

(5) A claimant may not carry forward or carry back a tax credit under this section.

Section 12.

Section 59-10-1028 is amended to read:

59-10-1028.

Nonrefundable tax credit for capital gain transactions on the exchange of one form of legal tender for another form of legal tender.

(1) As used in this section:

(a) "Capital gain transaction" means a transaction that results in a:

(i) short-term capital gain;

or (ii) long-term capital gain.

(b) "Long-term capital gain" is as defined in Section 1222, Internal Revenue Code.

(c) "Long-term capital loss" is as defined in Section 1222, Internal Revenue Code.

(d) "Net capital gain" means the amount by which the sum of long-term capital gains and short-term capital gains on a claimant's, estate's, or trust's transactions from exchanges made for a taxable year of one form of legal tender for another form of legal tender exceeds the sum of long-term capital losses and short-term capital losses on those transactions for that taxable year.

(e) "Short-term capital loss" is as defined in Section 1222, Internal Revenue Code.

(f) "Short-term capital gain" is as defined in Section 1222, Internal Revenue Code.

(2) Except as provided in Section 59-10-1002.2, for taxable years beginning on or after January 1, 2012, a claimant, estate, or trust may claim a nonrefundable tax credit equal to the product of:

(a) to the extent a net capital gain is included in taxable income, the amount of the claimant's, estate's, or trust's net capital gain on capital gain transactions from exchanges made on or after January 1, 2012, for a taxable year, of one form of legal tender for another form of legal tender;

and (b) the income tax rate.

[(b) the percentage listed in Subsection 59-10-104(2).] (3) A claimant, estate, or trust may not carry forward or carry back a tax credit under this section.

(4) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the commission may make rules to implement this section.

Section 13.

Section 59-10-1035 is amended to read:

- 19 - SB0060 compared with SB0060S01 59-10-1035.

Nonrefundable tax credit for contribution to state Achieving a Better Life Experience Program account.

(1) As used in this section:

(a) "Account" means an account in a qualified ABLE program where the designated beneficiary of the account is a resident of this state.

(b) "Contributor" means a claimant, estate, or trust that:

(i) makes a contribution to an account;

and (ii) receives a statement from the qualified ABLE program itemizing the contribution.

(c) "Designated beneficiary" means the same as that term is defined in 26 U.S.C.

Sec.

529A.

(d) "Qualified ABLE program" means the same as that term is defined in Section 35A-12-102.

(2) A contributor to an account may claim a nonrefundable tax credit as provided in this section.

(3) Subject to the other provisions of this section, the tax credit is equal to the product of:

[(a) the percentage listed in Subsection 59-10-104(2);

and] (a) the income tax rate;

and (b) the total amount of contributions:

(i) the contributor makes for the taxable year;

and (ii) for which the contributor receives a statement from the qualified ABLE program itemizing the contributions.

(4) A contributor may not claim a tax credit under this section:

(a) for an amount of excess contribution to an account that is returned to the contributor;

or (b) with respect to an amount the contributor deducts on a federal income tax return.

(5) A tax credit under this section may not be carried forward or carried back.

Section 14.

Section 59-10-1036 is amended to read:

59-10-1036.

Nonrefundable tax credit for military survivor benefits.

(1) As used in this section:

(a) "Dependent child" means the same as that term is defined in 10 U.S.C.

Sec.

1447.

(b) "Reserve components" means the same as that term is described in 10 U.S.C.

Sec.

10101.

(c) "Surviving spouse" means the same as that term is defined in 10 U.S.C.

Sec.

1447.

(d) "Survivor benefits" means the amount paid by the federal government in accordance with 10 U.S.C.

Secs.

1447 through 1455.

- 20 - SB0060 compared with SB0060S01 (2) A surviving spouse or dependent child may claim a nonrefundable tax credit for survivor benefits if the benefits are paid due to:

(a) the death of a member of the armed forces or reserve components while on active duty;

or (b) the death of a member of the reserve components that results from a service-connected cause while performing inactive duty training.

(3) The tax credit described in Subsection (2) is equal to the product of:

(a) the amount of survivor benefits that the surviving spouse or dependent child received during the taxable year;

and (b) the income tax rate.

[(b) the percentage listed in Subsection 59-10-104(2).] (4) The tax credit described in Subsection (2):

(a) may not be carried forward or carried back;

and (b) applies to a taxable year beginning on or after January 1, 2017.

Section 15.

Section 59-10-1042 is amended to read:

59-10-1042.

Nonrefundable tax credit for social security benefits.

(1) As used in this section:

(a) "Head of household filing status" means the same as that term is defined in Section 59-10-1018.

(b) "Joint filing status" means the same as that term is defined in Section 59-10-1018.

(c) "Married filing separately status" means a married individual who:

(i) does not file a single federal individual income tax return jointly with that married individual's spouse for the taxable year;

and (ii) files a single federal individual income tax return for the taxable year.

(d) "Modified adjusted gross income" means the sum of the following for a claimant or, if the claimant's return under this chapter is allowed a joint filing status, the claimant and the claimant's spouse:

(i) adjusted gross income for the taxable year for which a tax credit is claimed under this section;

(ii) any interest income that is not included in adjusted gross income for the taxable year described in Subsection (1)(d)(i);

and (iii) any addition to adjusted gross income required by Section 59-10-114 for the taxable year described in Subsection (1)(d)(i).

(e) "Single filing status" means a single individual who files a single federal individual income tax return for the taxable year.

- 21 - SB0060 compared with SB0060S01 (f) "Social security benefit" means an amount received by a claimant as a monthly benefit in accordance with the Social Security Act, 42 U.S.C.

Sec.

401 et seq.

(2) Except as provided in Section 59-10-1002.2 and Subsections (3) and (4), each claimant on a return that receives a social security benefit may claim a nonrefundable tax credit against taxes otherwise due under this part equal to the product of:

[(a) the percentage listed in Subsection 59-10-104(2);

and] (a) the income tax rate;

and (b) the claimant's social security benefit that is included in the claimant's state taxable income for the taxable year.

(3) A claimant may not:

(a) carry forward or carry back the amount of a tax credit under this section that exceeds the claimant's tax liability for the taxable year;

or (b) claim a tax credit under this section for a taxable year if a tax credit under Section 59-10-1019 is claimed on the claimant's return for the same taxable year.

(4) The tax credit allowed by Subsection (2) claimed on a return filed under this part shall be reduced by $.025 for each dollar by which modified adjusted gross income for purposes of the return exceeds:

(a) for a return filed under this chapter that is allowed a married filing separately status, $45,000;

(b) for a return filed under this chapter that is allowed a single filing status, $54,000;

(c) for a return filed under this chapter that is allowed a head of household filing status, $90,000;

or (d) for a return filed under this chapter that is allowed a joint filing status, $90,000.

(5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the commission may make rules governing the calculation and method for claiming the tax credit described in this section.

Section 16.

Section 59-10-1043 is amended to read:

59-10-1043.

Nonrefundable tax credit for military retirement.

(1) As used in this section:

(a) (i) "Military retirement pay" means retirement pay, including survivor benefits, that relates to service in the armed forces or the reserve components, as described in 10 U.S.C.

Sec.

10101.

(ii) "Military retirement pay" does not include:

- 22 - SB0060 compared with SB0060S01 (A) Social Security income;

(B) 401(k) or IRA distributions;

or (C) income from other sources.

(b) "Survivor benefits" means the retired pay portion of the benefits described in 10 U.S.C.

Secs.

1447 through 1455.

(2) Except as provided in Section 59-10-1002.2, a claimant who receives military retirement pay may claim a nonrefundable tax credit against taxes equal to the product of:

[(a) the percentage listed in Subsection 59-10-104(2);

and] (a) the income tax rate;

and (b) the amount of military retirement pay that is included in adjusted gross income on the claimant's federal income tax return for the taxable year.

(3) A claimant may not:

(a) carry forward or carry back the amount of a tax credit that exceeds the claimant's tax liability for the taxable year;

or (b) claim a tax credit under this section for a taxable year if a tax credit under Section 59-10-1019 is claimed on the claimant's return for the same taxable year.

Section 17.

Section 59-10-1403.3 is amended to read:

59-10-1403.3.

Refund of amounts paid or withheld for a pass-through entity.

(1) As used in this section:

(a) "Committee" means the Revenue and Taxation Interim Committee.