With inflation at 40-year highs and working Minnesotans being squeezed more every day by soaring prices for gas, groceries, and energy, Minnesota Senate Republicans today made good on an early session promise to give back Minnesota’s historic $9 billion budget surplus with the largest permanent tax cut in state history.

The Senate approved a landmark tax bill that reduces the first-tier tax rate for all filers from 5.35% to 2.80%, and fully eliminates the state income tax on all Social Security benefits. The bill provides taxpayers with a much-needed $8.43 billion in relief over the next three years.

“Minnesota has a $9.25B surplus and fully topped off reserve funds. At a time when Minnesotans are facing 40-year record high inflation, it’s imperative to provide permanent, ongoing relief to all taxpayers,” Tax Committee Chairwoman Carla Nelson (R-Rochester) said. “We are working to ease their financial burdens, right size Minnesota’s tax structure, and provide a boost in every single paycheck from here on out. We can empower Minnesotans and get our state on the right track with this immediate, permanent tax relief.”

“In 2021, the legislature passed a bipartisan, $51 billion two-year budget. Less than a year later, the state has a massive budget surplus of over $9 billion. This surplus simply means the state government is over-collecting from the taxpayers and we have heard loud and clear from Minnesotans – send the money back,” Senate Majority Leader Jeremy Miller (R-Winona) said. “Our permanent, ongoing tax relief package will put more money in the pockets of senior citizens and working Minnesotans every single paycheck, week after week, month after month, year after year.”

• Reducing the first-tier tax rate: Minnesota’s lowest tax bracket is higher than the highest tax bracket in 24 other states. Over 2.4 million filers would benefit from the historic Republican tax rate cut, with an average annual savings of $759. A typical family making $100,000 would see a savings of $1,064 every year.

• Full elimination of the tax on Social Security income: Minnesota is one of just 13 states that tax Social Security benefits. Impacting taxpayers starting at $25,000 in income, the Social Security Income tax hits more than 407,000 Minnesota filers. None of the states that border us — Iowa, Wisconsin, Michigan, and South Dakota — tax Social Security income. Eliminating the Social Security tax would put $1.6 billion back into the hands of beneficiaries, with an average benefit of $1,254 every year.

In the last five years, Republicans passed billions in tax cuts, stopped Gov. Walz’s massive tax increases, and passed the first income rate tax cuts in 20 years. Senate Republicans will continue the fight for meaningful and permanent tax relief.