Updated October 16, 2026. Quick answer: Utah gives an IRA withdrawal no exclusion in the documents read and does not mention inherited IRAs: the TC-40 instructions say “Enter your federal adjusted gross income (FAGI) from line 11a”, and its retirement credit of up to $450 per person is tested on the filer’s own birth date.
Utah at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income, starting from federal adjusted gross income; the retirement relief printed is a credit, and no general subtraction for IRA distributions is printed |
| Do the state’s documents address beneficiaries? | Not addressed for inherited IRAs; the beneficiary wording covers trust distributions and military survivors |
| Retirement exclusion or credit | Retirement Credit of up to $450 per person ($900 if both spouses take it) for a filer, or spouse on a joint return, born on or before Dec. 31, 1952; reduced as income rises |
| Rate in the documents read | 4.5 percent on the 2025 return; Utah Code 59-10-104 prints 4.45% effective January 1, 2026 |
| State inheritance or estate tax | Not mentioned in the documents read |
| Changed for 2026? | Utah Code 59-10-104, effective 1/1/2026, prints a rate of 4.45%; the 2025 return uses 4.5 percent |
What the Utah documents say
The TC-40 instructions start with “Enter your federal adjusted gross income (FAGI) from line 11a”. Tax is then computed by the line that says to “Multiply line 9 by 4.5 percent (.045)”. The statute effective January 1, 2026 prints the rate as “(b) 4.45%”.
The Retirement Credit applies if you, or your spouse on a joint return, were born on or before December 31, 1952; then “you may take a retirement credit of up to $450”. It is a credit that is reduced as income rises, cannot be carried forward or back past the tax liability, and cannot be claimed together with the Social Security Benefits Credit or the Military Retirement Credit.
The Military Retirement Credit covers retirement pay including pay received by a survivor of a deceased service member, and the instructions say of it: “It does not include Social Security income, 401(k) or IRA distributions”.
The federal 10-year rule and your Utah tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For Utah’s own death taxes, see inheritance tax by state.
What the documents do not say
- The documents read do not mention inherited accounts or beneficiaries of retirement accounts.
- They do not say whether a beneficiary can claim the Retirement Credit, which is tested on the filer’s own birth date.
- They say nothing about a deduction or credit for estate tax or income in respect of a decedent.
Common mistakes
- Assuming Utah’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with an Utah preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether Utah taxes 401(k) and IRA withdrawals, Utah retirement taxes, inheritance tax by state, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- 2025 Utah TC-40 Instructions: https://files.tax.utah.gov/tax/forms/current/tc-40inst.pdf
- 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
- Tax Rates (2025 Utah Income Tax): https://incometax.utah.gov/file-pay/tax-rates/
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.