6 Tax Credits Every Utah Business Owner Should Know About

Utah’s business landscape is as diverse as its stunning natural vistas, ranging from tech startups in Silicon Slopes to family-owned enterprises in rural areas. In this thriving economic environment, savvy business owners understand that effectively managing finances is key to success.

An integral part of this financial acumen is a thorough knowledge of tax credits. Unlike deductions that reduce taxable income, tax credits directly decrease the tax bill, offering significant savings. This article aims to enlighten Utah business owners about various tax credits, enhancing their ability to make informed financial decisions for their business’s growth and sustainability.

Overview of Tax Credits vs. Tax Deductions

Navigating the world of taxes can be perplexing, particularly when differentiating between tax credits and tax deductions. Simply put, tax deductions lower your taxable income, whereas tax credits directly reduce the amount of tax you owe, dollar for dollar.

For Utah business owners, this means that a tax credit can be more valuable than a deduction of the same amount. Understanding this distinction is crucial as it can significantly impact your business’s bottom line.

On that note, let’s take a look at the tax credits Utah business owners can benefit from.

1. Employee Retention Credit

A standout tax credit for Utah businesses, particularly in the post-pandemic world, is the Employee Retention Credit (ERC). The ERC Utah credit is designed to encourage businesses to keep employees on their payroll during challenging economic times. ERC can be a financial lifeline, offering relief to businesses grappling with the economic fallout of COVID-19.

To qualify, businesses need to demonstrate a significant decline in gross receipts or have been subject to government-mandated shutdowns. The credit covers a portion of wages and health insurance costs, providing substantial savings and supporting employee retention.

Moreover, Utah businesses can amplify their financial benefits by participating in the ERC affiliate program. This program rewards individuals and organizations for educating and referring clients to ERC services, leveraging a network of former IRS revenue agents. By actively promoting awareness and engagement with the Employee Retention Credit, affiliates contribute to economic resilience and support businesses in retaining their employees amidst the challenges of the post-pandemic world.

2. Research and Development (R&D) Tax Credit

Businesses in Utah that are involved in innovation and development can benefit from the Research and Development (R&D) tax credit. This credit is intended to encourage companies to invest in new technologies and innovative methods.

To be eligible, businesses must conduct qualified research activities, such as creating new products or software, improving existing products, or developing new manufacturing processes. The R&D credit not only lowers tax liability but also strengthens the culture of innovation that is essential for business growth.

3. Small Business Jobs Act Tax Credit

The Small Business Jobs Act Tax Credit is designed to support small businesses in Utah. This credit encourages businesses to grow their workforce or raise wages by offering tax breaks.

The qualifying criteria are straightforward: a net increase in employment or a significant rise in wages can make a business eligible. This tax credit not only eases the tax burden but also encourages small business owners to create more jobs, which in turn fuels the local economy.

4. Work Opportunity Tax Credit (WOTC)

Utah employers are eligible for a federal tax credit through the Work Opportunity Tax Credit (WOTC) when they hire individuals from targeted groups that face obstacles to employment. These groups can include veterans, ex-felons, or individuals receiving certain types of public assistance.

The WOTC is a win-win for businesses and the community; it provides a financial incentive to employers while facilitating job opportunities for those who might otherwise struggle to find employment. The credit amount varies based on the employee’s target group and the number of hours they work, making it a flexible option for businesses looking to expand their workforce responsibly.

5. Utah Renewable Energy Systems Tax Credit

The Utah Renewable Energy Systems Tax Credit is an initiative that encourages businesses to invest in renewable energy sources. This credit applies to various systems, including solar, wind, and geothermal technologies. By investing in these green technologies, businesses not only contribute to a more sustainable environment but also benefit financially.

The credit covers a significant portion of the installation costs of renewable energy systems, making it an attractive option for businesses looking to reduce their carbon footprint while saving on energy costs.

6. New Markets Tax Credit

The New Markets Tax Credit is designed to spur investment in low-income and economically distressed communities across Utah. By providing financial incentives, this credit encourages businesses to direct their investments towards areas that will stimulate economic growth and generate employment opportunities in underserved communities. Investments can range from real estate projects to funding local startups.

The credit reduces the investor’s tax liability and thus lowers the cost of investment, making it a win-win for businesses and the communities they serve.


As the business environment continues to evolve, staying informed about these tax credits is crucial. Utah business owners who embrace these opportunities are set to lead their enterprises toward a future marked by financial success and meaningful impact. Leveraging these tax credits not only enhances financial performance but also aligns business operations with broader societal and environmental goals.