Saint Paul —On Tuesday, May 15, 2018, the House passed the conference committee report for the Omnibus Tax bill agreed to by the Minnesota House and Senate on a bipartisan vote of 78-50. The bill simplifies Minnesota’s tax code to fully benefit from federal tax reform and provides additional tax relief to middle-class Minnesotans. The legislation is highlighted by what would be the first income tax rate cut for Minnesotans in nearly two decades by reducing the first and second tier income tax rates. In total, the bill cuts taxes for 2.2 million Minnesotans, and 99.8% of Minnesotans would see tax reductions or be held harmless by the tax changes.
"This bill targets tax relief squarely at middle-class families through the first income tax reduction in decades and by preserving important deductions Minnesotans rely upon as well as a state personal and dependent exemption," Davids said. "We’ve taken the governor’s input and we are putting on his desk a bill that should earn his signature; we removed a variety or provisions he found objectionable, and incorporated some of his priorities as well."
Without these Republican reforms, conforming to the federal tax code would cause 969,490 filers to pay more.
As a result of the Republican proposal, more than 2.2 million Minnesota filers will benefit from a tax cut in tax year 2018. Highlights include:
Helping middle-class Minnesotans keep more of what they earn by cutting the first tier income tax rate from 5.35% to 5.25% by tax year 2020 and the second tier income tax rate from 7.05% to 6.85% by tax year 2020. This would mark the first income tax rate reduction in Minnesota since 2000.
Protecting families by preserving a state personal and dependent exemption of $4,150.
Preserve the standard deduction, itemized deductions, as well as the personal and dependent exemptions.
Supporting hometown businesses and farmers by reinvesting extra revenue from corporate tax changes into Section 179 conformity and overall rate reductions.
In contrast to the Republican approach that cuts or holds taxes steady for 99.8% of Minnesotans, an analysis conducted by the Minnesota Department of Revenue shows that tax changes proposed in the governor's supplemental budget would raise taxes on Minnesotans of every income level, and make Minnesota's tax code more regressive.
The bill now heads to the Senate, and if approved would head to Governor Dayton's desk.