Tencap has been helping high-income earners create tax saving strategies since inception. Why has that been one of the primary services we offer? Because as you examine how much our clients are paying in taxes on their last dollars earned, it’s astonishing and in my opinion, atrocious. Between State and Federal taxes many high-income owners are paying nearly 50 cents on their last dollar earned, in taxes.
Tencap unabashedly asserts that we spend ample time reviewing each of our clients tax returns, each year, looking for ethical yet strategic and intelligent ways to reduce your tax bill.
Tencap works with over 6 different CPA firms that are a part of our tax planning team. That means we have access to many brilliant minds, and tons of experiance when it comes to tax planners.
To preserve your hard-earned money, we would submit to you that you need to be involved and active in the tax planning space. Tencap has assembled a guide coaching on rebates, incentives, and tax credits available in 2024.
Let’s discuss Utah’s tax credits for 2024, plus some you can avail of at the federal level.
Utah Rebates, Incentives, and Tax Credits for 2024
The following credits can help maximize your savings and preserve wealth more efficiently.
Utah Earned Income Tax Credit
Utah’s Earned Income Tax Credit (EITC) is a tax break equal to 20% of your federal EITC. It provides financial assistance to low to moderate-income individuals by reducing the amount they owe on state taxes. However, unlike the federal EITC, Utah’s policy is non-refundable.
You must be eligible for and claim your federal credit in the same tax year to qualify. You should also report your Utah income via a Wage and Tax Statement (W-2).
Utah Child Tax Credit
Utah’s Child Tax Credit (CTC) alleviates the financial burden of raising children by offering a credit worth up to $1,000 per child each year against your state income taxes. Like the EITC, this tax credit is non-refundable, so it won’t help if your tax liability is zero.
Only children ages 1 to 3 on the last day of your taxable year qualify for Utah’s CTC. You must also earn $54,000 or less as a couple or $43,000 or less as a single parent.
Special Needs Adoption Credit
You may claim a refundable credit worth $1,000 for adopting children with special needs. This policy supports the adoption process, encouraging prospective foster parents to adopt kids who require additional care and who are often less likely to be adopted.
The child you adopt must meet any of the following criteria:
- At least 5 years old
- Under 18 years old with a physical, emotional, or mental disability
- Someone placed together with their siblings for adoption
Agricultural Off-Highway Gas/Undyed Diesel Credit
Do you have an agricultural business in Utah? The state offers a refundable credit for the motor fuel taxes you pay for motor or undyed diesel fuel, provided that you bought these products within the state and paid taxes at the time of purchase. Also, you can only use it to operate stationary farm machinery for non-highway agricultural purposes.
If you meet these criteria, you may claim a credit worth 36.4 cents per gallon of motor and undyed diesel fuel.
Farm Operation Hand Tools Credit
Similarly, the sales and use tax on any hand tool you own primarily and directly for farming in Utah is subject to a refundable tax credit. However, it’s only applicable to tools you purchase within the state and if the tool’s price is over $250.
Renewable Energy Systems Tax Credit
Also known as the Utah Solar Tax Credit, the Renewable Energy Systems Tax Credit (RESTC) applies a tax credit of 25% of the system’s cost. However, the maximum tax credit depends on the year of installation:
- 2023: $400
- 2022: $800
- 2021: $1,200
- 2018 to 2020: $1,600
- 2017: $2,000
Unfortunately, home battery installations and solar energy systems installed in 2024 aren’t eligible.
Federal Rebates, Incentives, and Tax Credits for 2024
The previous section names the credits you can include in Utah’s tax return. Meanwhile, the rebates, incentives, and tax credits listed below may apply to your federal tax return.
Federal Earned Income Tax Credit
The EITC reduces your federal taxes, and the best part is that it’s refundable. You can earn up to $7,430 in tax credit, depending on your tax filing status, income, and number of dependents, by meeting the following criteria:
- Have an ordinary income under $63,398 and an investment income below $11,000
- Have a valid Social Security number
- Be a US citizen or resident alien all year
- Not filing Foreign Earned Income (Form 2555)
- Meet certain rules if you’re separated from your spouse and aren’t filing a joint tax return
Federal Child Tax Credit
This tax credit is the federal counterpart of Utah’s Child Tax Credit. Eligibility is more stringent, as your child must meet the following requirements:
- Be younger than 17 at the end of the year
- Be your child, step-child, foster child, sibling, step-sibling, grandchild, nephew, or niece
- Provide no more than half of their financial needs during the year
- Have lived with you for over six months
- Be your dependent
- Not file a joint return with your spouse for the tax year or file it only to claim a withheld income tax or estimated tax paid refund
- Be a US citizen, national, or resident alien
Also, your annual income mustn’t exceed $200,000 or $400,000 for joint filing. Otherwise, you may qualify for partial credit. Moreover, you may be able to claim this tax credit even if you don’t typically file a tax return.
Federal Adoption Tax Credit
The Adoption Tax Credit covers adoption fees, court and attorney fees, traveling expenses, and other costs of adopting an eligible child. In this context, an “eligible child” is someone under 18 years old who is physically or mentally incapable of taking care of themselves.
The maximum credit you’ll receive for adoptions finalized in 2023 and tax returns claimed in 2024 is $15,950 per adopted child.
Credit for Other Dependents
You may claim Credit for Other Dependents if you don’t qualify for Utah’s or the federal government’s CTC. It benefits dependents of any age so long as they have Social Security or Taxpayer Identification numbers. Even those unrelated to you are eligible, provided they live with you.
The maximum credit amount you can receive for each qualifying dependent is $500, which phases out as soon as your income exceeds $200,000 or $400,000 for joint tax returns.
EV Tax Credit
Are you driving an electric vehicle (EV)? If so, you’d be glad to know that new EVs may be eligible for a non-refundable tax credit of up to $7,500, while used vehicles qualify for up to $4,000. However, your vehicle must’ve had final assembly in North America and meet the following manufacturer’s suggested retail price (MSRP) limits:
- Vans, SUVs, and pickup trucks: $80,000
- Sedans and passenger cars: $55,000
Finally, eligibility also depends on your modified adjusted gross income (MAGI). The following thresholds apply for the EV tax credit eligibility.
- $300,000 for joint filers
- $225,000 for head-of-household filers
- $150,000 for all other filers
Premium Tax Credit (Under the Affordable Care Act)
Healthcare is more affordable by availing of the refundable Premium Tax Credit (PTC), which covers policies from the Health Insurance Marketplace.
Qualification is relatively simple. Your household must earn at least 100% but no more than 400% of the federal poverty line. You mustn’t file a tax return under Married Filing Separately and be a dependent of another person. Lastly, you must meet the following criteria in the same month:
- Maintain health insurance through the Health Insurance Marketplace and pay the share of premiums not covered by advance credit payments by the due date of your tax return
- Can’t avail of affordable coverage through a qualified employer-sponsored plan providing minimum value
- Aren’t eligible for a government health program
American Opportunity Tax Credit
If you need help getting through college, the American Opportunity Tax Credit (AOTC) covers the expenses you pay for the first four years. It has a maximum annual credit of $2,500 per student, while 40% of the remaining credit for up to $1,000 is refundable.
To qualify for the AOTC, you must pursue a degree and enroll for at least half the time for at least one academic period. Moreover, you mustn’t have claimed the AOTC or Hope Credit for over four tax years and be without a felony drug conviction.
Lifetime Learning Credit
The Lifetime Learning Credit (LLC) expands the AOTC’s scope by qualifying student expenses for undergraduate, graduate, professional degree, and upskilling courses. The credit, worth up to $2,000 per return, has no cap on how many years you can claim it.
You, your dependent, or a third party must pay for an eligible student’s higher education expenses to claim the LLC. Also, the eligible student must be you, your spouse, or a dependent on your tax return.
Work Opportunity Tax Credit
Are you an employer? This tax credit is available when hiring jobseekers from certain groups who have historically faced employment barriers, such as veterans and former felons.
The Work Opportunity Tax Credit (WOTC) equals 40% of up to $6,000 of wages paid to an employee from the targeted group. The employee must also be in their first employment year and have performed at least 400 hours of service. Meanwhile, those who have rendered fewer than 400 but at least 120 hours of service can receive a 25% rate. The WOTC excludes rehired employees.
Renewable Energy Investment Tax Credit
The Renewable Energy Investment Tax Credit (ITC) is the federal counterpart of Utah’s RESTC and covers rooftop solar purchase and installation costs. In addition, fuel cells, small wind energy, and even energy storage are eligible for ITC. Furthermore, it doesn’t have a dollar cap, so you get a 30% tax break regardless of how much you spend on these systems.
To qualify for credits, the renewable system must be new, legally yours, and operating in your US residence.
Energy-Efficiency Tax Credit
Under the Energy-Efficiency Tax Credit, home improvements to boost energy efficiency may be eligible for a tax break of up to 30%, with a cap of $1,200 annually. Meanwhile, heating and cooling system improvements have a yearly maximum of $3,200. It covers the following upgrades:
- Skylights, insulation, doors, and windows
- Home energy audits
- Electrical panels
- Heating and cooling systems
R&D Tax Credit
Are you looking to minimize your research and development costs? The R&D Tax Credit incentivizes your research and those conducted on your behalf. However, the expenses must qualify as research or experimental expenditures per I.R.C. §174. Furthermore, the R&D process must undergo experimentation, be technological, and improve or overhaul your business.
Improve Tax Efficiency with Tencap
The extensive array of rebates, incentives, and tax credits available in Utah and the federal government presents valuable opportunities for individuals and businesses to cut expenses and maximize savings. However, the details discussed in this article only scratch the surface—given their complexity, it’s no wonder many find tax planning and management daunting.
With a Tencap advisor, you don’t have to navigate these opportunities alone. Tencap Wealth Coaching offers a wide range of services, from tax strategy to financial management solutions, to help you maximize your savings and profits.
The path to financial independence and really being solvent during retirement will require highly intentional, strategic and wise decisions that will help you build and secure your wealth.
Get in touch with a financial advisor of Tencap, today to get started on your tax strategy and building out your financial plan.
Joe Griffin
Joe has been building and managing financial planning firms for the past 13 years. He loves the financial planning space and is very proud of the success and growth that has come from his proprietary marketing and leadership. Joe spent years being involved with the bright minds of the investment committee at Utah’s 529 college savings plan – a plan managing over 20 billion. Joe only works with firms that are stated fiduciaries on a client relationship. Joe is committed to leading a financial planning firm with ethics and integrity. The money management philosophy that Tencap subscribes to is built on strong academics and is supported by a highly impressive academic board. We can't wait to coach you on the excellence that Tencap stands for.
