Taxation in Utah

Updated on Monday 25th March 2019

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The Utah business tax (the income tax) and the franchise tax are two important taxes to consider when opening a business in USA. It is important to know the taxation regime in USA, including in Utah before establishing the business presence, in order to make a business plan and concentrate on further investments. Our company formation specialists in USA are here with support and information if you are a foreign investor who wants to start a business in Utah.

What is the sales tax in Utah?

The standard sales tax in Utah is set at 4.7% for most of the goods and services for sale purposes. In addition, municipalities in Utah can impose their own sales tax rate not exceeding 2%, but combined with the standard sales tax. Properties, motor vehicles, and home appliances are subject to the sales tax. A 3% sales tax is applicable to groceries. As for gasoline and medicines, these are exempt from such a tax. If you would like to open a company in the retail sector, please feel free to ask for more details about the sales tax in Utah.

The registration for sales tax in Utah

Companies with retail activities need to register for tax purposes in UtahLimited liability companies, sole proprietorships and corporations will have to apply for a sellers permit with the local authorities and provide information about the purpose of the business, the name of the owners, the date of incorporation, a certificate of good standing for foreign companies and a brief description of the business activity in Utah. In the case of resale, companies do not need to pay the sales tax and therefore do not need to register for such a tax. Complete information about the registration for taxes in Utah can be offered by our team of consultants in USA. They can also provide accounting services on request, such as payroll, bookkeeping, annual tax filings and many more.

What is the corporate income tax in Utah?

The corporate income tax is the business income tax in Utah and it is imposed on the gross taxable profit of most of the companies with establishments in Utah at a 4.95% rate. This rate is applicable to C corporations and to limited liability companies which are seen as pass-through entities in Utah

The franchise tax in Utah

The 5% tax rate represents the franchise tax imposed on the net income of companies with establishments in Utah. S corporations and limited liability companies in Utah are seen as pass-through entities meaning that the income is distributed to each member in the company and then levied in accordance. In other words, the 5% franchise tax is imposed on the individual profit share. Feel free to get in touch with our company formation agents in USA and find out more about the taxes you need to pay for your business in Utah. Also, if you are a foreign entrepreneur who wants to set up a business in USA, we invite you to read the general guide to company incorporation in Utah.

Are there any tax exemptions in Utah?

Yes, there are special non-profit entities that are exempt from taxation in Utah. Here are a few examples:
  1. Charities are exempt from corporate income taxes, no matter their purposes.
  2. Religious institutions in Utah are not imposed to pay taxes in Utah.
  3. Labor unions and recreational organizations can collect funds without having to consider any taxes.
  4. Scientific and educational institutions are seen as non-profit entities and therefore are exempt from taxation.
  5. If you are interested in establishing a non-profit entity in Utah, it is important to observe the requirements and the conditions imposed by the Utah Department of Revenue.

The capital gains tax in Utah

The regular personal income tax rate of 4.95% is applicable to short-term and long-term capital gains registered in Utah. It is important to know that taxpayers in Utah can claim a credit on 5% of any capital gains if 70% of the gains have been used to buy shares in a small company in Utah.

Other tax facts in Utah

It is good to know that Utah imposed low property taxes and the average tax rate is 0.66%. The cigarette tax, the alcohol tax and the Utah gas tax need to be considered, with the mention that the later one is the 13th-highest in USA. Other important tax facts are related to the inheritance and the estate tax which are not imposed in Utah. Whether you are a foreigner or a local entrepreneur in Utah, it is necessary to observe the taxation regime in this state.

We kindly invite you to get in touch with our team of company formation representatives in USA and solicit complete assistance and information about how to open a company in Utah and about the taxes you need to pay in this state.