Bill protects 99.8% of Minnesotans and cuts taxes for 82% of families

Senator Carla Nelson and the Minnesota Senate passed a comprehensive tax conformity bill to align Minnesota’s state tax code with the new federal tax code laid out in Washington after the recent federal tax cut. The Republican State Senate majority then delivered a tax cut of their own for middle-class families by lowering our state’s bottom tax rate. Due to the Republican efforts in St. Paul, 2.1 million Minnesota families will keep more of their hard-earned money.

“Our Republican Congress in Washington started the job by passing the Tax Cuts & Jobs Act, and for Minnesotans we have completed the job by passing this bill,” said Senator Nelson. “Every hardworking Minnesotan deserves to keep more of what they earn, and I’m excited to say that this bill allows them to do just that.”

The bill includes a provision, championed by Senator Nelson, to increase the estate tax exclusion to $5 million beginning in tax year 2020, an increase of $2 million over current state law. This especially impacts family farmers in Minnesota who are often forced to leave the profession due to excessively high estate taxes.

“Minnesota’s farms feed our nation and they must be protected,” said Senator Nelson. “This change allows for family farmers to keep their businesses and property for generations to come and continue Southern Minnesota’s farming heritage.”

The legislation includes provisions that will: preserve the state personal and dependent exemption of $4,150, and the state standard deduction of $13,000; protect popular deductions for mortgage interest, state and local taxes, home equity loan interest, and charitable donations; and encourage agriculture and Main Street business investment by conforming fully to Section 179 of the IRS tax code, allowing an immediate deduction of the entire cost of equipment.

The bill also includes a major reform designed to protect future taxpayers from sending too much of their paychecks to St. Paul. When the November state budget forecast projects a significant surplus, individual income tax rates will be automatically reduced one-tenth of one percent beginning in the next calendar year. If a healthy budget surplus continues in subsequent years, reductions could build each year until rates have been reduced by one percentage point.

“There is no reason why government should automatically keep money it doesn’t need,” added Senator Nelson.  “This guarantees that the hard-earned wages of Minnesotans will be protected.”