ST. PAUL – The Minnesota House on Thursday approved a bill providing $1.35 billion in tax relief over the next two years, including a $270 million reduction on the state Social Security income tax.
It is the first House omnibus finance bill to receive a floor vote this session, something Rep. Jeff Howe, R-Rockville, said reflects the importance of passing tax relief this session. The House’s proposed tax reform in H.F. 4 is larger than plans offered by either the Senate or Gov. Mark Dayton.
“The Social Security reduction would help right a wrong in our state,” Howe said. “Minnesota is one of just a handful of states that fully taxes social security income and that puts even more pressure on our seniors living on fixed incomes. This bill would give them some much-deserved breathing room and make life in the twilight years just a little easier to manage. It is good to see this bill get through House early in the session so we have time to engage the governor and reach agreement before adjournment in May.”
Other provisions in the bill include one that would benefit middle-class families with $35 million going toward modifying the child and dependent care credit. A family of four with childcare expenses would be estimated to receive $660 in relief.
More than $125 million would go toward addressing college affordability. Families saving for college using 529 Savings Plans will benefit from expanded subtractions and credits. In addition, 77,500 students will receive, on average, a $640 reduction in their taxes through a first-in-the-nation tax credit for student loan payments.
Hometown businesses would see $203 million to reduce the extra state property tax on businesses, exempting the first $200,000 in property value from the extra tax on businesses and freezing its automatic inflator.
Farmers also would receive significant relief, with $42 million to reduce the burden agriculture land owners pay for school bond referendums. Farms also would benefit from a measure conforming the state death tax to the federal exclusion.
“The tax relief we are proposing in the House is larger than what either the Senate or the governor are offering, so we will see how the process unfolds,” Howe said. “The bottom line is Minnesotans have been overtaxed and House bill provides relief for virtually all Minnesotans in one way, shape or form.”
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