Short answer: URS benefits are generally taxable, federally and in Utah. URS withholds tax and sends a 1099-R. Utah's $450 retirement tax credit applies only to people born on or before December 31, 1952, and it phases out as income rises; Utah also has a credit for Social Security benefits (see Social Security). A refund is taxed too: see leaving teaching and the partial lump sum. Estimate your monthly benefit in the calculator.
URS benefits are generally taxable. Federal and Utah income tax can be withheld from your check (and is, unless you tell URS otherwise). If you made after-tax contributions, part of each payment is excluded from tax. You get a 1099-R each January. Nonresidents should check their own state's rules. Tier 1 Highlights (2026-27), p. 21; Tier 1 Retirement Guidebook (Sept. 2026), p. 18
URS benefits are exempt from state and local tax except benefits subject to federal income tax, which are subject to Utah individual income tax. Utah Code 49-11-611
An additional 3% may be added to your Tier 1 monthly benefit if you had retirement service in your account on Jan. 1, 1989 (it offsets state income tax on benefits). If you refund and later reinstate withdrawn contributions you forfeit the 3%. Tier 1 Highlights (2026-27), p. 21; Utah Code 49-11-701; URS Actuarial Valuation (Jan. 1, 2025), App. 2, p. 100, item 18
Utah's retirement tax credit
Utah's nonrefundable retirement tax credit is $450 per eligible claimant born on or before Dec. 31, 1952 (retired or not), reduced by 2.5 cents for each dollar of modified adjusted gross income over $16,000 (married filing separately), $25,000 (single) or $32,000 (head of household or joint). It can't be carried forward or back, and can't be claimed in the same year as the Social Security benefits credit. Utah Code 59-10-1019
| Filing status | Phase-out starts |
|---|---|
| Married filing separately | $16,000 |
| Single | $25,000 |
| Head of household | $32,000 |
| Married filing jointly | $32,000 |
Our arithmetic on the statute, not an official example: a single filer born in 1950.
| Modified AGI | Over $25,000 | Credit |
|---|---|---|
| $20,000 | $0 | $450 |
| $30,000 | $5,000 | $325 |
| $45,000 | $20,000 | $0 |
Social Security benefits credit
Utah also has a nonrefundable credit for Social Security benefits included in state taxable income, phased out by 2.5 cents per dollar of modified AGI over $45,000 (married separate), $54,000 (single) or $90,000 (head of household or joint). You can't claim it and the retirement credit in the same year. Utah Code 59-10-1042
- URS benefits are generally taxable. Federal and Utah income tax are withheld unless you tell URS otherwise, and you get a 1099-R each January. Utah exempts URS benefits from state tax except what's federally taxable.Tier 1 Highlights (2026-27), p. 21; Utah Code 49-11-611
- Utah's $450 retirement tax credit only applies if you were born on or before Dec. 31, 1952. It's reduced by 2.5 cents per dollar of modified AGI over $25,000 (single), $32,000 (joint or head of household) or $16,000 (married filing separately).Utah Code 59-10-1019
- Utah has a separate credit for taxable Social Security benefits (phasing out over $54,000 single, $90,000 joint). You can't claim both credits in the same year.Utah Code 59-10-1042, 59-10-1019(3)(b)
This isn't tax advice. Check with a tax professional or the Utah State Tax Commission. Taxes on refunds: see leaving.
Questions
Is a URS pension taxed in Utah?
Yes, to the extent it's subject to federal income tax. Utah law exempts URS benefits from state tax except the federally taxable part.
Who gets Utah's retirement tax credit?
People born on or before December 31, 1952: up to $450 each, reduced by 2.5 cents per dollar of modified adjusted gross income over a limit set by filing status.
Source: URS Tier 1 Noncontributory and Tier 2 Public Employees Retirement System Highlights, 2026-27, effective July 1, 2026, Tier 1 pp. 7, 21; Tier 2 p. 7. Also: Tier 1 Retirement Guidebook (Sept. 2026); URS Actuarial Valuation (Jan. 1, 2025); Utah Code §§ 49-11-611, 49-11-701, 59-10-1019, 59-10-1042. Last reviewed .