ST. PAUL – The Minnesota House on Monday passed bipartisan tax legislation which aims to simplify Minnesota’s tax code and provide additional tax relief to middle-class Minnesotans. The legislation also delivers the first income tax rate cut for Minnesotans in nearly two decades by reducing the second tier income tax rate.
“This is a good tax bill, as you can see by the bipartisan support it is generating,” said Rep. Joe McDonald, R-Delano. “The first income tax rate reduction in two decades is very attractive, especially when the governor’s alternative approach to a supplemental budget would raise taxes on households of all income levels. Our main mission in the House is to both simplify and reduce taxes and this bill helps accomplish those benefits.”
Without the House reforms, conforming to the federal tax code would cause nearly 970,000 filers to pay more. Instead, the House bill delivers the first income tax cut in nearly 20 years and more than 2.1 million Minnesota filers will benefit from a tax cut in tax year 2018.
Highlights include:
- Helping middle-class Minnesotans keep more of what they earn by cutting the second tier income tax rate from 7.05 percent to 6.75 percent by tax year 2020. This would mark the first income tax rate reduction in Minnesota since 2000.
- Lowering taxes for people at all income levels by increasing the standard deduction for all filers.
- Protecting families by preserving a state personal and dependent exemption of $4,150.
- Encouraging affordable homeownership by allowing a state-itemized deduction of up to $30,000 in property taxes.
- Supporting hometown businesses and farmers by reinvesting extra revenue from corporate tax changes into Section 179 conformity and overall rate reductions.
In contrast to the House’s legislation to simplify and reduce taxes, an analysis conducted by the Minnesota Department of Revenue shows that tax changes proposed in Gov. Mark Dayton’s supplemental budget would raise taxes on Minnesotans of every income level, and make Minnesota's tax code more regressive.
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