Senator Mike Goggin (R-Red Wing) and Minnesota Senate Republicans proposed the largest tax cut in state history today. The proposal reduces the first-tier income tax rate from 5.35% to 2.8% and eliminates the state’s tax on Social Security benefits. If passed, the changes would be the biggest tax cut ever and provide $8.51 billion in tax relief to taxpayers over the next three years.  

“Our historic budget surplus makes it clear that the state is taking way, way more than it needs from taxpayers,” said Sen. Goggin. “We are going to give it back with the biggest tax cut in state history. That means permanent, ongoing tax relief, not election-year gimmicks. If you pay taxes, every single paycheck will be bigger under our plan.”

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 about a $500 annual reduction. Under the Governor’s tax proposal, the same family would receive one $350 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. 

“Our plan fully eliminates the tax on Social Security income,” added Sen. Goggin.  “This is a pledge I’ve made and something I’ve worked on for years. I am confident it will pass the Senate, and I am optimistic Gov. Walz and the House will be on board.”

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