Below is a list of Utah's subtractions from income:
Interest from Utah municipal bonds and U.S. Government Obligations
Municipal bond interest is generally 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, you can deduct Utah municipal bond interest from Utah taxable income. Enter the non-taxable subtraction on TC-40A, Part 2, using code 71.
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.
Enter any qualified equitable adjustment needed to prevent suffering a double tax.
Nonresident Active Duty Military Pay
Active duty military service pay that was received by a nonresident is not taxable on the Utah return.
State Tax Refund Distributed to Beneficiary of Trust
Enter any state tax refund distributed to a beneficiary of a resident trust to the extent the tax was included in computing federal income of the resident trust for the year.
Nonresident Military Spouse Earned Income
All Utah income of the nonresident spouse of a nonresident active duty military service member may be exempt from Utah tax if the following conditions are met:
- The nonresident spouse had the same domicile as the nonresident service member prior to moving to Utah.
- The nonresident active duty service member in Utah is under military orders.
- The nonresident spouse is in Utah to be with their military spouse.
If the nonresident military spouse qualifies for this exemption, all their income is exempt from Utah tax. (This income may still be taxable for federal purposes and may be taxed in the state of residence.)
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 from a qualified IRC Section 401 retirement plan distribution if included in your federal adjusted gross income, if when paid into the plan the amount was:
- taxed by another state or US possession; and
- was not included in your federal AGI
COVID-19 Utah Grant Funds included in AGI
Enter the amount of federally-funded COVID-19 grant money or forgiven loans you obtained from the state or local government of Utah that is included in your adjusted gross income.
To make these manual entries within the program, go to:
- State Section
- Subtractions from Income
- Subtractions from Income (again)
- Add New
- Enter amount and choose appropriate subtraction from the drop-down menu
For additional information regarding these subtractions, please click here.