Updated October 5, 2026. Quick answer: Yes. Utah taxes interest and dividends at one flat rate, and Utah Code 59-10-104, effective 1/1/2026, sets it at 4.45%. Interest on Utah municipal bonds and on U.S. Government obligations is exempt; most other states’ bonds acquired after January 1, 2003 are added back.
How Utah treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxed at the flat rate |
| 2026 rate | 4.45%, lowered from 4.5% for 2025 by S.B. 60 |
| 2025 instructions | “Multiply line 9 by 4.5 percent (.045).” |
| Utah bonds | “Interest earned on Utah municipal bonds is exempt from Utah income tax.” |
| Other states’ bonds | Added to income: “non-federal government entities outside Utah (municipal bonds) acquired after Jan. 1, 2003” |
| U.S. obligations | “Interest earned on U.S. Government obligations is exempt from Utah income tax.” |
| FNMA and GNMA | “Interest or dividends from Federal National Mortgage Association (FNMA)” and GNMA are not exempt |
A $20,000 example
Taxable dividends and interest of $20,000 add $20,000 x 4.45% = $890 of Utah tax at the 2026 rate.
What changes in 2026
S.B. 60 lowers the rate from 4.5% to 4.45%, and the bill says “This bill has retrospective operation for a taxable year beginning on” or after January 1, 2026.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether Utah taxes capital gains, whether Utah taxes pensions, how Utah taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- Utah Code 59-10-104 Tax basis, tax rate, exemption (effective 1/1/2026): https://le.utah.gov/xcode/Title59/Chapter10/C59-10-S104_2026050620260506.html
- S.B. 60 Income Tax Rate Amendments (2026 General Session, enrolled): https://le.utah.gov/Session/2026/bills/enrolled/SB0060.pdf
- 2025 TC-40 Utah Individual Income Tax Instructions: https://files.tax.utah.gov/tax/forms/current/tc-40inst.pdf
Sources: the primary documents linked above, read on October 5, 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.