On Thursday, Senate Republicans proposed significant changes to the state’s tax code. The proposal reduces the first-tier income tax rate from 5.35% to 2.8% and eliminates the tax on Social Security. If passed, the changes would be the biggest tax cut ever and provide $8.51 in tax relief to taxpayers over the next three years. 

“My number one priority has always been to empower Minnesotans and make our state the best place to live, work and play,” Senator Paul Gazelka (R-East Gull Lake) said. “We know that recently families and our seniors have been struggling with a shaky economy and record inflation. Unlike Walz, we want to fix that. The best way we can do that is to provide serious permanent tax relief that Minnesotans can count on for years to come.”

According to the National Tax Foundation, Minnesota’s lowest tax bracket is higher than the highest tax bracket in 17 other states. Under the Republican proposal, a Minnesota family making $100,000 would see a tax savings of $1,000 each year. A typical individual making $37,000 would receive a $500 annual reduction. Under the Governor’s tax proposal, the same family would receive one $375 check, and an individual filer would receive a $175 check, with no long-term savings or reductions. 

The proposal also eliminates the tax on Social Security and Disability Income, something Republicans have advocated for years. 

Minnesota is one of just 13 states who tax Social Security benefits and is partially surrounded by states who do not tax this benefit – Iowa, Wisconsin, Michigan, and South Dakota. Estimates show for the 410,900 Minnesotans who pay this tax, the average relief would be $1,313. 

 Eliminating the Social Security tax would put $539 million back into the hands of beneficiaries. Bills introduced to eliminate the Social Security tax in the legislature have had bipartisan support.

Last December, the state’s budget forecast included a $7.7 billion surplus. An updated budget forecast is planned for Monday, February 28.