Senate’s $681 million tax relief bill provides meaningful relief for Minnesota families and businesses

Senate’s $681 million tax relief bill provides meaningful relief for Minnesota families and businesses 

Bill includes full PPP tax relief, exemptions for pandemic unemployment benefits, benefits for childcare, and affordable housing 

(St. Paul) — The Minnesota Senate today approved a $681 million tax relief bill aimed at jumpstarting the economy and helping workers and small business owners recover from COVID-19. The comprehensive legislation delivers tax relief and reform without raising taxes, a  sharp contrast from tax plans from House Democrats and Gov. Tim Walz, both of whom have proposed more than $1 billion in tax hikes.

“The Senate Tax committee has focused on nimble, good tax and fiscal policies that empower Minnesota families and grow economic activity,” said Senator Carla Nelson (R-Rochester), chairwoman of the committee. “The state has a surplus of more than $1 billion, and the federal government is sending us billions more in Covid-19 assistance. Minnesotans have not experienced this level of economic distress in decades; now is not the time to raise taxes and take more money from hardworking Minnesotans. This bill provides millions of dollars in tax relief, so individuals can keep more of their hard-earned dollars and provide a spark to our economy.” 

“The goal of this legislation is to lower property taxes on Minnesotans and provide relief that encourages growth in our economy and makes Minnesota more affordable,” Senator Bill Weber (R-Luverne), Chair of the Subcommittee on Property Taxes, said. “Through targeted relief, we’re helping small businesses expand and survive COVID-19, increasing childcare options for Minnesotans, and working to increase access to affordable and workforce housing.” 

The bill empowers Minnesotans and encourages economic growth. Several key initiatives include full conformity to federal tax rules for the forgivable Paycheck Protection Program loans many businesses used to survive the COVID-19 pandemic, as well as a bipartisan compromise allowing those who need relief most to exclude a portion of their pandemic unemployment benefits from their taxes.  

“There is simply no reason why we should ask folks to pay taxes on this emergency assistance,” Nelson added. “Businesses relied on these loans to keep people employed during the worst of the pandemic, and many of them are still struggling. Individuals were forced off the job through no fault of their own, and they depended on the extra unemployment to help make ends meet. Providing this protection is one of the most important things we can do to help employees and employers recover from pandemic-induced economic hardship.” 

The bill also lowers statewide property taxes for job creators by increasing the statewide property tax exclusion from $100,000 to $150,000. The bill supports Minnesota industries working to emerge from the pandemic including high tech, restaurants, brewers, and ethanol retailers. Relief is also targeted to support affordable and workforce housing, to address the ongoing crises of adequate daycare throughout the state, and to communities seeking to construct public safety facilities. 

  Other highlights of the bill:

  • The bill indexes the K-12 credit and K-12 subtraction to inflation so working families can keep more of their hard-earned money. 
  • The bill extends the Angel Tax Credit by $10 million, which encourages investments in startup companies focused on high technology, new proprietary technology, and other groundbreaking fields.
  • The bill helps struggling hospitality businesses by providing a temporary sales tax exemption to restaurants for materials, supplies, and equipment used to adapt to COVID-19 guidelines, as well as a temporary tax credit for brewers and retailers for liquor spoilage caused by COVID-19 restrictions.
  • The bill extends the Historic Structure Rehabilitation Credit, the hugely successful job-creating tax credit that helps rehabilitate historic buildings. A study found that every $1 spent on the tax credit generates $9.50 in private sector economic activity.
  • The bill establishes a new in-home childcare provider property tax credit to address the childcare shortage in Minnesota and incentivize more people to join the profession. The credit for providers will be equal to 50% of the net tax amount owed on the property for the current tax year.   
  • The bill emphasizes affordable housing and workforce housing with a new tax credit to bring private money into the marketplace. Through various property tax reductions, the bill also incentivizes low-income rental development.
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