On Thursday, May 3, Senator Paul Utke (R-Park Rapids) voted in support of a comprehensive tax plan that will cut income tax rates for the majority of Minnesotans. The legislation also brings the state’s tax code into conformity with the federal tax overhaul and protects 99.9% of all Minnesotans from a tax increase.

“Today Senate Republicans came together to support a comprehensive tax bill that will give Minnesota families, individuals and businesses more freedom to create, innovate, and grow,” said Sen. Paul Utke. “Since being elected last year one of my key priorities has been to make sure Minnesotans can keep more of their own money. By working with the federal tax overall, we have developed a plan that will protect 99.9% of all Minnesotans for a tax increase. While Minnesota still has a long way to become a truly tax-friendly state, our work in the Senate over these past two years has started to move us in the right direction.”

The Senate’s tax plan will:

• Reduce Minnesota income taxes for 82% of working families and prevent a tax increase for 99.9% percent of the taxpayers.
• Drop the bottom tax rate a quarter of a percent, from 5.35% to 5.1% beginning in tax year 2018.
• Preserve the state personal and dependent exemption of $4,150 and the state standard deduction of $13,000.
• Protect popular deductions for mortgage interest, state and local taxes, home equity loan interest, and charitable donations.
• Extend the $5 million angel investor tax credit to help tech-focused startups.

• Encourage Main Street business and agriculture investment by conforming fully to Section 179 of the IRS tax code, allowing an immediate deduction of the entire cost of equipment.
• Gives Minnesotans more control over our tax code by separating the state tax code from the federal tax code – also known as the FAGI model.

Unlike Governor Dayton’s plan, the Senate Republican proposal does not reinstate the “sick tax” on health care services, which the Department of Revenue called “regressive” after estimating it will increase taxes on Minnesotans at every single income level.

The bill also includes a major reform designed to protect future taxpayers from sending too much of their hard-earned income to St. Paul. When the November forecast projects a significant surplus, all of the individual income tax rates will be automatically reduced one-tenth of one percent beginning in the next calendar year. If a healthy budget surplus continues in subsequent years, reductions could build each year until rates have been reduced by one percentage point.