ST. PAUL – The Minnesota House on Monday approved legislation authorizing a local sales and use tax in Beltrami County and likely improving returns for income tax filers throughout the state.
Beltrami voters approved a .625% local sales tax last November to fund the design and construction of a new Beltrami County Jail , but legislative approval was required for it to take effect.
“Nearly 97 percent of the local voters supported this local initiative and it’s good the Legislature honored the will of the people,” said Rep. Matt Bliss, R-Pennington, who voted to support the bill. “It’s hard for 97 percent to agree on just about anything these days, so that public vote total sent a rather clear message to the House and I’m glad we responded accordingly with an overwhelming vote of our own, 128-2 in support of the bill.”
The bill also included a provision to fix a problem for taxpayers statewide. During the 2023 session, the Democrat-led legislature approved comprehensive taxes legislation that reduced standard income tax deductions, leading to tax increases for roughly 76 percent of Minnesotans.
“It’s good we addressed this issue before we get into the thick of tax season,” Bliss said. “It is a nice example of how the Legislature can come together and approve a bill with broad, bipartisan support. Good things happen when we put the people first.”
Specifically, the bill correctly inflates the statutory amounts for the standard deduction, additional standard deduction for seniors and blind taxpayers, and standard deduction amounts for dependents. Without this correction, the Department of Revenue (DOR) estimates that an additional $352 million in general fund tax revenue would be raised starting in tax year 2024.
Bliss said he was disappointed the bill did not include agreed-upon language that would provide a technical fix to the Net Operating Loss (NOL) provision. This provision reduced the NOL deduction from 80% to 70 percent of taxable income for corporations. The legislative intent was to make this provision effective for tax year 2024. However, the 2023 Tax Bill contained an effective date of tax year 2023.
“That issue should have been resolved as well, especially since both tax chairs wrote a letter to state officials indicating they would correct the effective date at the earliest possible opportunity,” Bliss said. “It’s disappointing the majority lacked follow-through on that one and it could cost small businesses in our state at a time many can least afford it.”
If the NOL error is not fixed, tax year 2023 filers will be liable for additional tax revenue with a general fund revenue gain of an estimated $14.8 million.
-30-