The Utah Legislature’s most recent session, culminating on March 7, 2025, introduced significant updates to state tax credits and incentives programs, impacting businesses across industries. Below are the five most salient changes that could affect companies operating in Utah.
New Tax Credit
Employer Childcare Tax Credit: A new nonrefundable income tax credit allows businesses to claim 10% of childcare service costs or 20% of expenses for onsite childcare facilities, promoting workforce retention and support. This credit has a five-year carryforward period.
High-Cost Infrastructure Tax Credit (HCITC) Income/Severance Tax Credit
Amendment for Severance Tax Inclusion: This amendment allows a taxpayer to claim the HCITC against severance tax liability instead of income tax liability, including allowing a taxpayer to claim the HCITC against severance tax liability during the 2025 taxable year for costs incurred during the 2024 taxable year.
Expansion to District Energy Systems: This amendment expands the HCITC to include district energy systems as qualifying energy delivery projects. These projects must meet new investment thresholds to qualify, promoting the development of an efficient energy distribution infrastructure.
Restrictions on Solar Projects on Farmlands: HCITC eligibility would not be allowed for large solar projects built on “productive farmlands” designated by the Utah Department of Agriculture and Food.
Renewable Energy and Clean Tech Incentives
Hydrogen Production Tax Credit: This is a new refundable credit of $0.12 per kilogram of hydrogen produced (capped at 5,600 metric tons per year).
Energy Storage Requirement for Large Renewables: Commercial wind and solar projects exceeding 660 kilowatts must include energy storage to qualify for state tax credits.
Sunset for Renewable Energy Tax Credits: State-level credits for solar, wind, and other renewable energy projects will phase out after January 1, 2032.
Energy Storage Manufacturing Tax Exemption: A new sales tax exemption applies to facilities that manufacture energy storage equipment (e.g., batteries).
Data Center Incentives
Sales Tax Exemption for Data Centers: Qualifying data centers can now purchase machinery and equipment tax free.
Economic Development Reforms
Repeal of the Mega-Project Tax Credit: The state eliminated the underutilized 35% tax credit for mega-projects, focusing instead on smaller, traditional incentive programs.
Economic Development Governance Changes: The Unified Economic Opportunity Commission (UEOC) was repealed, streamlining incentive approvals under the Governor’s Office of Economic Opportunity.
Utah’s tax policy adjustments in 2025 provide new opportunities and challenges for businesses, including expanded credits for energy and manufacturing, continued tax relief, and stricter requirements for renewable energy incentives. Ryan’s experts are here to help. Our team supports eligibility verification for these tax credits and ensures compliance with updated regulations to maximize benefits.
TECHNICAL INFORMATION CONTACTS:
Melissa Munoz
Principal
Ryan
505.312.4665
melissa.munoz@ryan.com
Savannah Jermance
Director
Ryan
505.312.4411
savannah.jermance@ryan.com
Meghan Sproule
Senior Consultant
Ryan
760.885.3287
meghan.sproule@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.