ST. PAUL – Simplifying Minnesota’s tax code and providing additional tax relief to middle-class Minnesotans is the goal of legislation being sponsored by State Representative Greg Davids (R-Preston), who chairs the powerful Minnesota House Taxes Committee.
Davids said the bill is necessary in order to prevent headaches for tax filers next year, and offers a rare opportunity to make the first income tax cut in nearly 20 years.
“That’s historic, and I’ve yet to meet a Minnesotan that doesn’t support paying less to state government,” Davids said.
As a result of House Republicans’ proposal, more than 2.1 million Minnesota filers will benefit from a tax cut in tax year 2018.
Highlights include:
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Helping middle-class Minnesotans keep more of what they earn by cutting the second tier income tax rate from 7.05% to 6.75% by tax year 2020. This would mark the first income tax rate reduction in Minnesota since 2000.
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Lowering taxes for people at all income levels by increasing the standard deduction from $13,000 to $14,000.
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Protecting families by preserving a state personal and dependent exemption of $4,150.
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Encouraging affordable homeownership by allowing a state-itemized deduction of up to $30,000 in property taxes.
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Supporting hometown businesses and farmers by reinvesting extra revenue from corporate tax changes into Section 179 conformity and overall rate reductions.
In contrast to House Republicans’ proposal to simplify and reduce taxes, an analysis conducted by the Minnesota Department of Revenue shows that tax changes proposed in the governor's supplemental budget would raise taxes on Minnesotans of every income level, and make Minnesota's tax code more regressive.
“Governor Dayton understands the urgency of conformity, and while we disagree on his tax increases and will not accept them, we did approve a number of other items he wanted in this legislation,” Davids said. “I’m confident we’re going to get this done.”