Like the majority of states in the US, Utah has an income tax for employers to consider when they process payroll. With a flat tax rate of 4.65%, Utah’s income tax is lower than neighbors like Idaho. That said, it’s higher than at least two of its neighbors—Nevada and Wyoming—which levy no income tax at all.
Utah also charges various sales and corporate taxes. If you plan to start a business in Utah or are hiring your first Utah-based employee, here’s what you should know.
Utah Payroll Taxes Overview
If you’re hiring your first employee, you’re probably wondering how having payroll will affect the way you manage your business.
That’s what we’re here for. Below, we’ll provide an overview of the basics when it comes to Utah’s payroll and taxes.
Here’s what you need to know:
- State Income Tax: Utah has a flat income tax rate of 4.65%.
- Local Taxes: The Beehive State has a complicated sales tax system with a rate that varies based on multiple factors. Plus, the allowed local tax rates can and often does change throughout the year. You can learn more about it on the state’s Sales & Use Tax Rates page.
- Corporate Tax: Utah has a flat corporate income tax rate of 4.65%.
- Minimum Wage: Utah’s minimum wage is $7.25 an hour. Employers must pay minors the same minimum wage as adults, but they can choose to drop the rate to $4.25 an hour during the first 90 days of employment. Tipped workers have a minimum wage of $2.13 an hour only if the tips and base wage equal the $7.25/hour minimum wage.
- State Unemployment Tax: Employers in Utah must pay into the state’s Unemployment Compensation Trust Fund with unemployment insurance taxes. But for most employers, the tax rate is 0.3%. The state will notify you of your tax rate in November of each year.
- Workers Compensation: Utah employers are required to carry workers’ compensation insurance. You can only apply for an exemption—a Workers’ Compensation Coverage Waiver—if your company is a partnership, LLC, or corporation with no employees.
Like many states, Utah does not require meal breaks for adult employees. Minors, on the other hand, get a 30-minute meal break.
There’s also no law that says private employers must provide leave of any kind in the Beehive State, much less paid leave. But you probably already know how we feel about the benefits of offering PTO.
Now, keep in mind that even though Utah doesn’t have leave laws, the federal government does. If you have 50 or more employees, you must follow the Family Medical Leave Act (FMLA).
The list above doesn’t take federal payroll forms, taxes, and labor laws into account, so make sure you know about those as well.
Registering for Utah State Payroll
If your business is required to withhold and pay sales or payroll taxes to the state of Utah, you’ll need to register with the Utah State Tax Commission.
The easiest way to do this? Register using a UtahID account, also called the OneStop Business Registration System. You can do everything you need to get your business up and running in Utah, including:
- Register with the Utah State Tax Commission
- Register with Utah’s Department of Commerce
- Register with the Utah Department of Workforce Services
- Set up an unemployment insurance account
- Obtain certain city business licenses
At the end of the registration process, you’ll have all the documentation you need to get started. You can also use your Utah State Tax Commission tax account number to create a Taxpayer Access Point (TAP) profile. This platform is where you’ll pay all your payroll- and business-related taxes.
You can pay taxes on TAP using e-checks, debit cards, or credit cards. Having a TAP profile is nice because it gives you a centralized location to view your tax status with the state of Utah. With TAP, you can:
- Set up tax filing and paying reminders that get pushed to your work email
- Amend tax returns
- Edit and update your business information
- View balances
- Receive and view correspondence between you and various Utah government agencies
When it comes to taxes, having a portal like this can be a lifesaver.
Calculating Utah State Payroll Tax
While the tax rate is a flat 4.65%, your employees might have exemptions that dictate how much you withhold. To figure out how much tax to withhold from each employee’s paycheck, you’ll need to look in two places:
- Each employee’s federal W-4 form
- The State of Utah Tax Withholding Guide, which is updated each year
The nice thing is that the tax withholding guide includes mini worksheets to help you figure out how much to withhold. There’s one set of worksheets—one for single and one for married employees—for each type of pay period.
So whether you run payroll every week or every month, there’s a worksheet to help guide your calculations.
All employers must file online using a form TC-941E.
All tax returns must be filed quarterly, but payment due dates vary based on the amount you withhold. For employers that withhold more than $1,000 in taxes each month, taxes are due monthly. Employers who withhold less than $1,000 must pay taxes quarterly.
Remember your unemployment insurance taxes, too.
You’ll pay somewhere between 0.3 and 7.3%. It depends on whether you’re a new employer or not, along with other factors. You can see them all on the Utah Department of Workforce Services Unemployment Insurance page.
The taxable wage base for each employee is $47,000, so you only pay unemployment insurance taxes on up to that amount for each employee.
Utah Paycheck Laws
Like most states, Utah law dictates how often you need to pay your employees.
First, all Utah employers must designate regular paydays in advance of hiring employees. You must pay hourly employees at least twice a month—no monthly payments allowed. All payments must be distributed within 10 days after the close of a pay period.
Salaried employees can receive monthly payments if the scheduled pay date is before the seventh day of the month.
If the payday falls on a weekend or holiday, you must pay employees on the business day before the holiday or weekend.
So, what about deductions and pay stubs?
Well, you can’t deduct anything from the paycheck unless:
- It’s required by state or federal law—i.e., taxes
- You have a court order that says you must take a deduction
- Your employee has provided written consent to a deduction
- An employee’s employment agreement says you will withhold for retirement, life insurance, and the like
Each time you run payroll, you’ll need to provide employees with a pay stub showing any deductions. If your business is licensed under the Utah Construction Trades Licensing Act, however, you’ll need to include:
- Employee’s name
- Base rate of pay
- Pay period dates
- Total amount paid to the employee for the pay period
- Number of hours worked (for hourly employees)
- The amount of and reason for money withheld under state or federal law, including state and federal income tax, Social Security tax, Medicare tax, and court-ordered withholdings
Most payroll services can help you create a detailed pay stub pretty quickly, so you may as well provide one even if you’re not in the construction field.
When an employee leaves your company, you must pay a final paycheck within 24 hours if the employee was fired or laid off.
For employees who resign or quit, you’ll need to pay them their final wages on the next regularly scheduled payday.
New Hire Reporting for Utah Payroll
All new hires in Utah must be reported to the state within 20 days of the hire date.
You’ll need to include your name and federal EIN, along with the employee’s:
- Social Security number
- Date of hire or rehire
- Date of birth
You can report new hires in three ways: online, by phone, or by mail. The State of Utah prefers the online option, which can be done through your Utah ID account. You can learn more about new hire reporting in Utah’s New Hire Reporting Handbook.