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House Sends Middle-Class Tax Cuts to Governor Dayton to be Signed Into Law

St. Paul, Minnesota — Today, the Minnesota House passed legislation to cut taxes for more than 1 million middle class families and to repeal business-to-business taxes. House passage sends the bill to Governor Dayton to be signed into law. The bill would reduce taxes for hundreds of thousands of Minnesotans, largely by conforming to federal tax changes. State Representatives John Persell (DFL – Bemidji) and Roger Erickson (DFL – Baudette) voted for the bill.

“These tax cuts will help a lot of families and businesses in our area,” said Persell. “For working families, these tax savings will be significant.”

“Our projected budget surplus really puts us in a good position to offer some relief for folks around the state,” said Rep. Erickson. “These tax cuts will help our hardworking families and businesses do well this year and down the road.”

Last session the House included federal tax conformity for tax year 2013 and beyond, but it did not end up in the final budget signed into law. More than one million middle-class Minnesotans will see $225 million in tax cuts due to federal conformity and boosting the state’s Working Family Credit. The tax cuts through federal conformity include:

• $111 million for middle income married families by eliminating the “marriage penalty”

o 650,000 families will see an average tax decrease of $115

o The vast majority of families claiming the standard deduction make less than $75,000

• $36 million for low income working families by matching the state’s Working Family Credit with the federal Earned Income Tax Credit (EITC)

o 54,000 working families will see an average tax decrease of $300

• $7.2 million for homeowners that refinanced or had a short sale

• $3.9 million for new homeowners through deduction of mortgage insurance premiums

o 80,000 new homeowners will see an average tax cut of $60

• $26.4 million for students and parents paying for college and students paying off loans

• $1.9 million for Minnesota families with dependents

o 26,000 families with household incomes below $38,570 will see a $80 tax decrease

• $400,000 for adopting parents who receive adoption assistance from employers

• $1.1 million for 60,0000 teachers with the classroom expense deduction for educators

• $4 million for charitable contributions

• $6.7 million for businesses - to make tax filing simpler for businesses

(Source: Non-partisan House Research)

An additional $30.2 million will be spent to increase the Working Family Credit above and beyond federal conformity, providing a total of $66.2 million to 331,000 claimants earning less than $49,103. The average family will see a $146 tax cut.

The final bill also repeals three business-to-business taxes (warehousing and storage services, commercial equipment repair (including farm machinery) and telecommunications equipment that were passed as part of the 2013 budget. Last year those taxes were part of a Senate package that paid for an upfront capital sales exemption for businesses and provided property tax relief by eliminating sales taxes for cities and counties.

 

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