Payroll tax in Utah: What employers need to know [2024]

Navigating the world of payroll taxes can be complex, especially when balancing both federal and state regulations. In Utah, understanding state-specific tax requirements is crucial for employers to remain compliant.

Utah's payroll tax structure is more straightforward than states with more intricate systems—though it still requires careful attention. As an employer, you’ll encounter a mix of federal FICA taxes (like Medicare and Social Security), state unemployment insurance, and state income tax withholding. 

Regardless of your business size, you need to be on top of your payroll tax requirements—or you could face steep penalties and fines. Follow along as we dive into the specifics of payroll taxes in Utah, including the different tax types, who pays them, their due dates, filing procedures, and more. 

The 3 Utah payroll taxes

In Utah, the administration of payroll taxes is handled by the Utah State Tax Commission (responsible for state income tax) and the Utah Department of Workforce Services (responsible for unemployment insurance tax). Employers in Utah must withhold and remit these taxes, with the obligation typically kicking in as soon as they hire their first employee. 

Additionally, Utah employers must adhere to new hire reporting requirements, which mandate that they report any new or rehired employee to the Utah New Hire Registry within 20 days of their start date.

Let's dive into each of these taxes to get a clear picture of their rates, limits, and maximums.

Unemployment insurance tax

The unemployment insurance tax in Utah provides temporary financial assistance to eligible employees who are jobless through no fault of their own. This tax is administered by the Utah Department of Workforce Services and paid for by the employer. 

New employers receive a special tax rate. After a few years, the rate is adjusted based on the employer's experience rating. This rating is determined by the number of unemployment claims filed by former employees. A higher number of claims can lead to a higher tax rate.

Here are the key details regarding Utah's unemployment insurance tax:

Employers should regularly consult with the Utah Department of Workforce Services or refer to their annual tax rate notice to stay updated on the annual rate.

Income tax withholding in Utah

The Utah State Tax Commission administers the withholding tax. Employers must use the information provided by employees on Form W-4 to determine the correct amount to withhold. This includes considering the employee's filing status, allowances claimed, and any additional withholding specified. 

Utah has a flat income tax rate, meaning all taxpayers are subject to the same percentage, regardless of their income level. Here are the specifics:

FICA taxes in Utah

Social Security and Medicare taxes, collectively known as FICA taxes, are federally mandated. These taxes fund Social Security and Medicare, split between employer and employee. Social Security taxes have a wage limit, while Medicare taxes don’t. The collected funds support retirees, people with disabilities, and families of deceased workers.

Dealing with the intricacies of Utah's payroll tax system, from income tax withholding to FICA and unemployment insurance taxes, can be overwhelming. Rippling simplifies the process for you. Rippling’s payroll software accurately calculates your taxes and automatically submits your tax forms and payments, ensuring compliance with federal and state tax laws. Rippling’s PEO service takes it a step further by managing your state tax accounts for you—automating the payroll process even more.

Payroll tax due dates in Utah

In Utah, employers need to adhere to specific due dates for payroll taxes to ensure compliance and avoid penalties. Unemployment insurance tax is usually due quarterly. The due dates are as follows: 

• First quarter (January-March): Due April 30
• Second quarter (April-June): Due July 31
• Third quarter (July-September): Due October 31
• Fourth quarter (October-December): Due January 31

Income tax withholding deadlines vary based on the amount withheld. For monthly filers (generally small businesses), the payments are due by the 15th of the following month. Larger businesses are usually semi-weekly filers. The specific days for depositing align with the federal tax deposit schedule, which typically requires deposits a few days after payroll is processed.

Employers who fail to pay on time can be subject to late payment penalties. The specific percentage varies depending on the tax type and the length of the delay. Typically, the penalty rate ranges from 2% to 10% of the unpaid tax amount. 

How to submit payroll taxes in Utah

Now that you have a grasp on the payroll tax types and due dates in Utah, the next step is learning how to submit payroll taxes. Utah offers several methods for employers to file and pay taxes.

Enroll in Utah's online tax services

Utah's Taxpayer Access Point (TAP) offers a comprehensive online service for managing payroll taxes. Through TAP, employers can:

• Make tax payments
• File returns and adjustments
• Register, close, or update business tax accounts
• Report new hires
• Manage tax credits

Instructions for registration and account management are available on the TAP website.

Electronic Funds Transfer (EFT)

Employers can also opt for Electronic Funds Transfer (EFT) for payroll tax payments. This method allows for:

• ACH debit: Authorize the state to withdraw funds directly from your bank account.
• ACH credit: Instruct your bank to transfer funds to the state's account.

Submit by mail

Utah allows payroll tax submissions via mail for those who prefer traditional methods or require specific accommodations. However, electronic filing is generally encouraged for its efficiency and reliability.

Businesses can mail their payments to:

Utah State Tax Commission
210 North 1950 West
Salt Lake City, UT 84134-0266

Special payment options

In addition to the standard methods, Utah provides other options like:

• Credit card payments: You can pay by credit card through the Utah State Tax Commission website, although this may involve processing fees.

• Check payments: For those who aren't using electronic methods, check payments are accepted, following the specific guidelines provided by the Utah Department of Workforce Services.

Rippling’s full-service payroll software

Looking for something even easier? Rippling’s payroll software simplifies the process of payroll tax compliance in Utah. Rippling automatically handles tax calculations, form submissions, and payments to the relevant agencies. Rest assured, you’ll always be compliant with federal and state tax regulations.

FAQs about Utah payroll taxes

Are there local tax laws in Utah?

In Utah, local tax laws primarily revolve around sales taxes, not payroll taxes. 

Can your tax returns be audited in Utah?

Yes. The Utah State Tax Commission can audit income tax returns, but only those within three years of the income tax return due date or the date filed, whichever is later. 

Are nonprofit organizations subject to payroll taxes in Utah?

Nonprofit organizations in Utah are generally subject to the same payroll taxes as other businesses. However, certain types of nonprofits, especially those with 501(c)(3) status, may have different requirements or exemptions, particularly regarding unemployment insurance taxes.

What is the state income tax rate for payroll in Utah?

Utah has a flat state income tax rate. The rate is set at 4.65%, regardless of the employee's income level. Employers should consistently check the current rate at the Utah State Tax Commission's website or consult with a tax professional to stay updated.

Is there a minimum wage requirement for payroll calculations in Utah?

Yes. Utah has a set minimum wage of $7.25 per hour, which employers must comply with when calculating payroll. This rate is subject to change, so employers should stay up-to-date about the current minimum wage requirements.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.