On Tuesday, the Minnesota Senate passed its comprehensive tax bill for the upcoming two-year state budget. The bill, which passed with bipartisan support, will hold 96% of Minnesota taxpayers harmless and expands tax relief for seniors, parents, small businesses, and veterans.
“Minnesotans already pay a huge amount in taxes. Our bill is the first income tax rate cut in over two decades – and it’s time that we take steps to ensure our future generations are not burdened by our actions,” said Senator Andrew Lang (R-Olivia). “If we want to encourage economic growth in all areas of the state, tax relief is necessary. We can fund the priorities of Minnesotans without the massive tax increases currently proposed by Gov. Walz and the House.”
The bill includes a rate cut of 0.25% to the second-tier income tax bracket, moving the rate from 7.05% to 6.8% beginning in tax year 2019, and further reducing the rate to 6.67% beginning in tax year 2022. This will be the first income tax cut for Minnesotans since 2000. In addition, the bill expands the ability for businesses and farmers to deduct equipment purchases and reduces the statewide property tax levy by $50 million per year beginning in 2020. Other provisions in the bill makes additional funding available for affordable and workforce housing development and lowers taxes on affordable housing. Additionally, the bill allows charitable gaming organizations to put more money back into the community and reinstates Angel credits to promote investment.
An expansion of the K-12 education tax credit is included in the bill, expanding availability by increasing the income threshold. The innovative Opportunity for All Kids (OAK) scholarship program is created in this tax bill by allowing charitable donations to fund education scholarships for kids of low-income parents. Lastly, additional school district equalization aid is available to help districts with low-tax capacity and funds are available to assist with the Indian Child Welfare Act compliance. Finally, the bill increases the income tax subtraction from $4,500 to $6,150 for Social Security benefits. Minnesota is one of only 13 states to impose a second tax on Social Security benefits.
Senator Lang continued: “These lower tax numbers, will undoubtedly increase wages, inspire investment and grow our economy. We have witnessed this on a national scale over the last couple of years, and it’s time Minnesota follows suit and provides decreased taxes. This is about supporting the hardworking Minnesotans across our state.”
Senator Andrew Lang, of Olivia, represents communities in Chippewa, Kandiyohi, Renville, and Swift counties in the Minnesota Senate.