Dear Neighbor,
Much of the $2.1 billion in tax increases and hundreds of millions more in fee increases Gov. Mark Dayton and his fellow Democrats in the Legislature passed in the 2013 session take effect July 1.
Higher fees on driver’s licenses and vehicle registration are coming. New taxes on Internet purchases are, too. There also is a fourth-tier income tax rate, increased cigarette taxes and more business taxes.
Here’s a look at some of what is going into effect July 1:
Income tax
The new 9.85 percent rate on the state’s high-income earners will impact:
-
married people who file jointly with a taxable income of more than $250,000;
-
married people who file separately with a taxable income of over $125,000;
-
heads of household with a taxable income of over $200,000; and
-
single filers making over $150,000.
Cigarette tax
Taxes on a pack of cigarettes will rise by $1.60 (from the current $1.23 to $2.83).
-
Other tobacco products will also be taxed at higher rates, including taxing “little cigars” as cigarettes and taxing each container of “moist snuff” at the same rate as a pack of cigarettes or 95 percent of the wholesale sales price, whichever is higher.
Vikings stadium bail-out tax
Part of the revenue from the first year of the cigarette tax increase will be used to help fund the all-out failure of e-pulltabs to generate the amount of revenue projected to pay for the state's portion of a new Vikings stadium.
-
To prevent retailers and wholesalers from stockpiling product before that date, a one-time new cigarette tax equal to the tax increase will be imposed on current inventories. That is expected to raise $32.4 million, of which $26.5 million will go to the special fund used for the stadium.
Internet purchase tax
A sales tax also will be added for online purchases such as ringtone downloads, music, videos, books and online computer games.
-
Digital college textbooks will receive exemptions.
Business tax
Businesses will have to pay new sales taxes on warehousing and storage (not including mini-storage); electronic and commercial equipment repair and maintenance; and through repealing the current sales tax exemption on telecommunications equipment purchases.
-
These taxes will result in higher consumer costs for ALL of us, even the lowest earners.
-
The warehousing and storage services taxes have received wide criticism because they would make our state less competitive in the business world. They are scheduled for implementation in April of 2014.
DMV fees
New fee increases will be added to driver’s licenses and vehicle registration.
-
The option of a $5 wheelage tax has been expanded to include all 87 counties in Minnesota, with the amount increased to $10 in 2014 followed by up to $20 beginning in 2018.
-
New law also increases a flat amount charged for some older model collector vehicles (from $90 to $150).
-
Starting in 2017, fees for new vehicle titles will increase from $6.25 to $8.25, while a $5.50 title transfer fee is eliminated.
-
The filing fee for a new or renewed driver’s license or state identification card is increased from $5 to $8.
You can click here to find more information on these tax increases, along with all the other laws that take effect July 1. One note: The text at that above link includes some language that comes across as salesmanship from the majority party, not just straight public information.
The Minnesota Dept. of Revenue is hosting a conference call July 18 so citizens can learn more about these tax changes and ask questions. Click here for more information or click here to receive email notices from the Dept. of Revenue, including more about the conference call.
Sincerely,
Tom