On Wednesday, Jan. 11, the Senate passed a tax conformity bill, bringing Minnesota in line with recent federal tax changes and cutting tax collections by more than $100 million. The bill was passed with bipartisan support and Governor Walz signed the bill into law on Thursday.

“The Senate’s tax conformity bill is an important, bipartisan achievement that will bring much-needed relief to many taxpayers,” said Senator Gary Dahms (R-Redwood Falls). “Minnesota ranks as one of the most heavily taxed states in the nation, and lowering our taxes is essential to ensuring we are competitive. With the state’s historic surplus, we have an even great opportunity to enact permanent tax relief.” 

The bill aligns the Minnesota tax code with Federal tax changes that resulted in many tax changes, including: The Coronavirus Aid, Relief, and Economic Security (CARES) Act from 2020, The American Rescue Plan (ARPA) Act from 2021, and The Inflation Reduction Act (IRA) from 2022. 

Notable provisions in the bill:  

• Expand eligible expenses to college savings accounts through Section 529 plans 
• Exclude shuttered venue operator grants from being counted as income 
• Allows for student loan payments by employers 
• Increases the amount a business can provide for employee child care benefits 

Missing from the bill is the elimination of the tax on Social Security or any reduction in personal income taxes. Senate Republicans tried to amend these changes to the bill, but Democrats opposed the move through parliamentary procedure.