ST. PAUL, MN – Senator Julia Coleman today joined Senate Republicans in proposing major changes to the state’s tax code. The proposal reduces the first-tier income tax rate, impacting every Minnesotan, 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 billion in tax relief to taxpayers over the next three years.
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 over $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.
“While every family is facing its own unique challenges, we know they need relief, and they need it now,” said Sen. Julia Coleman (R-Waconia) who serves as the Vice-Chair of the Senate Tax Committee. “Families don’t need some big government program that picks winners and losers – they need relief. That’s what’s so great about this tax bill. It delivers meaningful tax relief, not a gimmick check, every year going forward.”
Coleman, a mother of three boys under the age of three, continued, “On top of that, we want to see our seniors stay in our communities. There are too many ‘little Minnesota’ communities in lower-tax states like Florida, Texas, or Arizona. We want them to stay here and be part of our communities. I want them to spend time with their grandchildren and not have to count days on a calendar to qualify as a resident of a state with a better tax climate.”
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, Feb 28th.