The following are income subtractions you may claim on your Utah state return.
Interest from Utah municipal bonds and U.S. Government Obligations
Municipal bond interest is usually excluded from federal adjusted gross income. In this case, do not subtract municipal bond interest.
Some municipal bond interest is included in federal adjusted gross income, (e.g., Build America Bonds, etc.). In these cases, deduct Utah municipal bond interest from Utah taxable income. Enter the non-taxable subtraction on TC-40A, Part 2, using code 71.
Interest earned on U.S. Government obligations is exempt from Utah income tax. You may only deduct interest or dividend income that is included in your federal adjusted gross income.
These obligations include:
- Treasury bills
- Treasury notes
- E, EE, H, HH, and I bonds
Native American Income
A member of Native American tribes in Utah, who lives and works on the reservation on which he or she is an enrolled member is exempt from Utah income tax on the reservation income.
Railroad Retirement Income
Railroad benefits are not taxed on your Utah return. Railroad retirement pensions are generally only deductible if they have been taxed on your federal return.
Equitable Adjustments
Enter any qualified equitable adjustment needed to prevent paying double tax.
Note: Do not use this subtraction to deduct income of a nonresident spouse.
Nonresident Active Duty Military Pay
Nonresident service members do not pay Utah income tax on active duty military pay. Deduct the amount of active duty military pay included in your federal adjusted gross income.
State Tax Refund Distributed to Beneficiary of Trust
Enter any state tax refund distributed to you by a resident trust if the refund was used to compute federal income of the resident trust for the year.
Nonresident Military Spouse Earned Income
The income of a service member's spouse is exempt from Utah tax if the spouse meets the following conditions:
- Not a resident of Utah
- Not also a service member, and
- In Utah solely to be with the service member serving under military orders.
(This income may still be taxable for federal purposes and may be taxed in the state of residence.)
FDIC Premiums
You may subtract FDIC premiums from income paid that were not allowed as a deduction on your federal return under IRC 162(r).
Qualified Retirement Plan Distributions
Enter the amount of any distribution from a qualified IRC Section 401(a) retirement plan distribution if included in your federal adjusted gross income, if when paid into the plan the amount was:
- taxed by another state, the District of Columbia, the United States or a US possession; and
- was not included in your federal adjusted gross income
Where do I enter the subtractions?
To make these manual entries within the program, go to:
- State Section
- Begin on Subtractions from Income
- Begin on Subtractions from Income (again)
- Enter amount and choose appropriate subtraction description from the drop-down menu
For additional information regarding these subtractions, please click here.