UT
Does Utah tax tips and overtime?
The federal deduction and the Utah deduction are separate questions. Here is where Utah actually lands, and why.
How Utah builds its tax base
Utah starts from your federal adjusted gross income. Both deductions are below-the-line — they reduce federal taxable income but leave AGI untouched — so neither reaches this state's return automatically. Anything you get here had to be legislated separately.
Tips in Utah
Still taxedUtah's rolling IRC conformity is irrelevant here because of where Utah's base starts. Form TC-40 line 4 is 'federal adjusted gross income (FAGI) from line 11a of your federal return' — a number IRC Sec. 224 never touches. The one place Utah reuses a federal deduction is the taxpayer tax credit: TC-40 line 12 says 'Enter your federal standard or itemized deduction from line 12e of your federal return.' On the 2025 Form 1040, line 12e is standard-or-itemized deductions ONLY; the Sec. 224 tips deduction sits on line 13b ('Additional deductions from Schedule 1-A'), which Utah does not pull. TC-40A Part 2 contains no tips subtraction code (codes are 71, 77, 78, 79, 82, 85, 88, 89, 90). CAUTION: several secondary trackers assert Utah conforms via rolling conformity; they rest on the false premise that Secs. 224/225 reduce federal AGI.
Source: Utah State Tax Commission, TC-40 Line-by-Line Instructions (Line 4 and Line 12) and TC-40A Part 2 subtraction codes; IRS 2025 Form 1040 line 12e vs. 13b · last reviewed
Overtime in Utah
Still taxedIdentical mechanism. IRC Sec. 225 is below-the-line and does not reduce the federal AGI that Utah imports on TC-40 line 4. Utah's taxpayer tax credit draws only Form 1040 line 12e (standard/itemized), while the overtime deduction is reported on line 13b via Schedule 1-A, so it never enters the Utah credit either. No overtime subtraction code exists on TC-40A Part 2. Verified against the current TY2025 Utah instructions; I was unable to run an additional search for any 2026 Utah session bill, so a later-enacted Utah subtraction would not be captured here.
Source: Utah State Tax Commission, TC-40 Line-by-Line Instructions (Line 4 and Line 12); IRS 2025 Form 1040 (line 12e = standard/itemized only; line 13b = Schedule 1-A additional deductions) · last reviewed
Whatever your state does, your payroll taxes do not change
Both deductions reduce income tax only. Social Security and Medicare are still charged on the same wages, in every state.