Tax relief approved by senators
Minnesotans have been looking for legislation that would lower taxes, increase wages and support the economy. Sound impossible? Well, the Minnesota Senate has come up with just such a proposal. According to Sen. Gary Dahms (R-Redwood Falls), the new bill will, “Lower taxes, increase wages, and grow our economy.”
He indicated, “It helps more parents with education costs, allows small business owners to expand, and assists farmers with their operations. The bill allows seniors to keep more of their social security dollars, gives the middle class an income tax rate cut, and includes tax conformity to make everyone’s lives easier.”
Now that should sound good to everyone. Last week, the Minnesota Senate passed the Tax Bill with bipartisan support.
The bill will directly or indirectly hold 100 percent of Minnesota’s taxpayers harmless and direct benefits to about 50 percent of taxpayers through tax cuts.
“It expands tax relief to seniors, parents, small business owners, and veterans, and encourages affordable housing investment and reduces property tax burdens. Most importantly, it will not increase revenue to the state budget in a time of surplus,” said Sen. Dahms.
Sounding almost “too good to be true,” the area senator indicated it include a middle-class rate cut of .25 percent to the second-tier income tax bracket moving the rate from 7.05 percent to 6.8 percent beginning in tax year 2019 and further reducing the rate to 6.67 percent beginning in tax year 2022.
“This will be the first income tax cut for Minnesotans since 2000.”
Further good news is that the bill expands the ability for businesses and farmers to deduct equipment purchases to grow and invest in their operations and reduces the statewide property tax levy by $50 million per year beginning in 2020. Other provisions make additional funding available for affordable and workforce housing development and lowers taxes on affordable housing.
Additionally, the bill encourages community development by allowing charitable gaming organizations to put more money back into the community and reinstates “angel credits” to promote investment in greater Minnesota businesses.
The K-12 education tax credit is expanded to include pre-school expenses and made available to more parents 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 (ICWA) compliance.
Seniors will get to keep more of their Social Security dollars by increasing the income tax subtraction from $4,500 to $6,150. “Our aging population has been taxed once to earn social security, and Minnesota is just one of 13 states that imposes a second tax on the Social Security benefit,” said Sen. Dahms.
Additionally, the veterans homestead exclusion is extended to benefit more veterans and their spouses. “When the state has a surplus, Minnesota taxpayers deserve some relief,” concluded Senator Dahms. “The Senate’s tax bill provides that relief.”