It depends. It may be there but disguised. Instead of reducing your Utah AGI, Utah gives a tax credit for military retirement income and it is calculated on form TC-40A. The credit is listed in part 3 of form TC-40A and is labeled AJ. This is the code for military retirement.
The credit is calculated and then transfers to line 24 of TC-40. This is a non-refundable credit. Let me explain how that works.
- Utah accounts for all AGI including military retirement pensions. Based on total income, a tax liability amount is assessed in Form TC-40
- Then credits such as military retirement pension credit is applied reducing the tax liability to zero or close to it. Once the tax liability is zero, then no more credit is applied. This is a non-refundable credit.
- I worked this out in a mock return and the credit is applied correctly in the Utah return.
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