Protects 99.9% of Minnesota families from tax increase, cuts taxes for 82% of families, and lowers bottom income tax rate

Senator Mark Koran and the Minnesota Senate passed a comprehensive federal tax conformity bill that will prevent unintended tax increases for virtually every Minnesotan and decrease state income taxes for 82% of Minnesota working families. Further, the bill includes a cut to the bottom tax rate, impacting the lowest wage earners most. In total, 2.1 million Minnesota households will keep more of their paychecks due to the state changes.

“This legislation protects the hard-earned wages of every Minnesotan,” said Senator Koran. “Further, nearly every Minnesota family will see a decrease in their state tax burden. More money in the pocketbooks of Minnesotans is something we can all agree on.”

The bill includes a bipartisan provision, championed by Senator Koran, to allow manufactured home park cooperative residents to include 17% of rent paid for their site rental towards claiming a property tax refund. Currently, renters and homeowners can take advantage of a similar credit, however manufactured housing residents are excluded. This would close the loophole and ensure fairness.

“All residents of Minnesota should be treated fairly in their taxation” said Senator Koran. “This change allows for all housing options in Minnesota to be treated equally. Further, just as cutting the bottom tax bracket impacts positively the lowest wage earners most, this change will help those who truly need it.”

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 measure also includes a major reform designed to protect future taxpayers from sending too much of their paychecks to St. Paul. When the November 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.

“Government spending increases automatically every two years, so there is no reason why tax decreases cannot be automatic when government doesn’t need the money,” added Senator Koran.  “This is an innovative, commonsense provision that protects every Minnesotan from excessive taxation.”

Unlike Governor Dayton’s plan, the Senate proposal does not reinstate the sick tax on health care services, which the Governor’s own Department of Revenue called “regressive” after estimating it will increase taxes on Minnesotans at every income level.