Saint Paul, Minnesota – Fresh off the success of passing $443 million in tax cuts for more than one million Minnesotans, House Democrats passed their “Tax Bill 2” in the Ways and Means committee today. Tax Bill 2 includes $103 million in further tax cuts for Minnesota homeowners, farmers, renters and businesses. The House is expected to take up their supplemental budget bill on Thursday and could take up Tax Bill 2 on Friday.
“We were pleased that we moved forward so quickly this session to cut taxes for more than one million Minnesotans, but we have more work to do this session to continue making progress,” said Rep. Ann Lenczewski, House Taxes Committee Chair. “Our second tax bill focuses on ways to make further reductions in property taxes for homeowners, renters and farmers. We believe this is a responsible way to continue expanding our economy from the middle-out while maintaining our stable budget into the future.”
The tax bill signed into law last week by Governor Dayton made reduction to middle-class income taxes, largely through federal tax conformity. This second tax bill will cut taxes largely through further property tax relief. The bill includes $45 million in targeted property tax relief to Minnesota homeowners, renters, and farmers:
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Farmers: This provision builds off the effort to restore the Homestead Credit by enhancing the market value credit for homesteaded farms. The result is an immediate $18 million in property tax relief to more than 90,000 homesteaded farms. An average family farmer in Minnesota will see $460 in property tax relief.
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Homeowners: A one-time increase for all Homestead Credit Refunds paid in 2014. Each and every homeowner receiving a refund will see a 3% increase, providing an additional $12.1 million in property tax relief to 500,000 Minnesota homeowners. This comes on top of the $133 million in direct property tax relief passed in 2013 for homeowners and renters.
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Renters: A one-time increase for all Renters’ Credit Refunds paid in 2014. Each and every renter receiving a refund will see a 6% increase, providing an additional $12.5 million in property tax relief to 350,000 Minnesota renters. This comes on top of the $133 million in direct property tax relief passed in 2013 for homeowners and renters.
In addition to property tax relief, the House tax bill includes tax relief for Minnesota small businesses. The bill provides a property tax cut for small businesses with property value less than $1.1 million by excluding all commercial and industrial property value less than $150,000 from the statewide general property tax. The bill also includes sales tax reforms that provide additional sales tax relief to small businesses.
The bill also provides tax relief to our active military members. The bill extends our active military income tax subtraction to National Guard service members in the Active Guard Reserve.