Updated October 4, 2026. Quick answer: Yes. Utah taxes 401(k) and IRA withdrawals as part of federal adjusted gross income, at a flat 4.5% for 2025. The TC-40 instructions print no subtraction for them; the one retirement item for older filers is a credit, and the military retirement credit does not include “401(k) or IRA distributions”.
State retirement-income forms, line by line: Utah retirement credit.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Utah tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Utah tax 403(b) and 457(b) withdrawals.
What Utah does with 401(k) and IRA withdrawals
The instructions start from federal income: “Enter your federal adjusted gross income (FAGI) from line 11a”. For people born on or before December 31, 1952, “you may take a retirement credit of up to $450”, reduced by 0.025 times modified adjusted gross income over $25,000 for a single filer and $32,000 for joint filers.
| Item | What the documents say |
|---|---|
| Treatment | Taxable; the retirement credit is a credit, not an exclusion, and is age- and income-limited |
| State rate | 4.5% for 2025; 4.45% from January 1, 2026 |
| Source | Utah State Tax Commission, 2025 TC-40 instructions; Utah Code 59-10-104 |
A $40,000 withdrawal
A $40,000 withdrawal adds $1,800 of Utah tax at the 2025 rate (computed as $40,000 times 4.5%), before any credit. The retirement credit does not apply to a filer born after December 31, 1952.
What changes in 2026
Utah Code 59-10-104, effective January 1, 2026, sets the rate at 4.45%, down from 4.5%.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether Utah taxes pensions, how Utah taxes retirement income, whether Utah taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- 2025 Utah TC-40 Instructions (individual income tax): https://files.tax.utah.gov/tax/forms/current/tc-40inst.pdf
- Tax Rates (2025 Utah Income Tax): https://incometax.utah.gov/file-pay/tax-rates/
- Utah Code 59-10-104 Tax basis: Tax rate: Exemption: https://le.utah.gov/xcode/Title59/Chapter10/C59-10-S104_2026050620260506.html
- Utah Code 59-10-1043 Nonrefundable tax credit for military retirement: https://le.utah.gov/xcode/Title59/Chapter10/C59-10-S1043_2022032320220323.html
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.