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Amid concerns of a looming 'silver tsunami,' Governor Cox aims to eliminate the taxation of Social Security income. Will Utah's legislators support this initiative?
2025-03-19 17:00:45
While addressing the Utah Taxpayers Association, Cox emphasized the importance of Utah getting ready for the impending “silver tsunami” in the 2025 legislative session by eliminating taxes on Social Security income.
Upon retiring from her position at the Social Security Administration, Sandy Hunter was fully aware that she would not be entitled to any of the benefits she had dedicated her career to securing.
As a federal employee, Hunter did not contribute to Social Security, whereas her husband did. Now at the age of 73, Hunter emphasizes that the Social Security benefits are a crucial component of her family's combined income.
If Governor Spencer Cox has his way, the vital income for numerous seniors in Utah could see an increase this year. However, before that can happen, the Legislature must come to a consensus on the governor's proposal.
Eliminating income tax on Social Security benefits is a key pillar of the governor’s $30.6 billion fiscal 2026 budget proposal, and “easily the most popular proposal” he’s made in four years, Cox told the Utah Taxpayers Association Tuesday morning at its legislative outlook conference. It’s what Utah needs to do to prepare for the “silver tsunami,” he said.
Abolishing the state social security tax could result in savings of nearly $1,000 annually for Hunter's family, along with approximately 150,000 other households in Utah.
“It could truly have an impact,” Hunter remarked. “We would be quite pleased with that.”
Close to 450,000 Utahns receive some Social Security benefits, according to U.S. Census Bureau data and the AARP, but senior citizens in lower-income households — those who earn $75,000 or less as a couple, or $37,000 or less as an individual — qualify for full tax credits.
According to the tax commission, Cox's proposal is expected to affect approximately 152,000 taxpayers.
During his presentation to the Utah Taxpayers Association on Tuesday, Cox described the proposal as “one of those rare instances” where “even those who won’t receive any benefits are enthusiastic” about it. The Legislature, responsible for formulating and approving Utah’s yearly budget, will determine in this session whether to fulfill Cox’s request in the fiscal 2026 budget.
Although the concept might be deemed "politically appealing," certain legislators, including Riverton Republican Sen. Dan McCay, have expressed doubts about the initiative. McCay conveyed to the tax association his concerns regarding plans that set aside funds for "specific groups" and those that could lead to a higher tax load for other residents of Utah.
“Throughout my career, I have maintained that a wider tax base coupled with reduced rates is the way to go,” McCay stated at the conference on Tuesday. “This approach benefits both the economy and taxpayers, while also promoting transparency. That’s why I have some reservations about the movement to entirely eliminate taxes on Social Security.”
In contrast, certain legislators have suggested lowering tax rates and increasing income limits for eligibility of tax credits.
One proposal for the upcoming 2025 general legislative session, HB130, looks to change the income threshold to qualify for a full income tax credit on Social Security from $45,000 to $54,000 for single people, and from $75,000 to $90,000 for couples. Another bill, HB106, wants to cut the state income tax rate from 4.55% to 4.45%, which would cost roughly $160 million, said Utah State Tax Commission Chair John Valentine.
Cox told the crowd Tuesday he supports additional tax cuts “if we can fit it in the budget,” and reminded attendees that his administration approved the largest tax cuts in the state’s history — a total of around $1.2 billion in four years.
Cox, a former lieutenant governor, remarked, “Our ability to achieve this stems from the choices made by earlier administrations and legislative bodies, but even more crucially, it's due to the private sector's investment in our state and the dedication of the hardworking individuals who live and work here.”
The legislative session for 2025 is set to commence on Tuesday, January 21.
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