Bills would expand credits for renters, homeowners and farmers

This is a tale of three tax credits. One would make life more bearable for renters, another would reduce the property tax burden for farmers. And the third would lower the tax bill for many homeowners.

So Monday’s House Property and Local Tax Division hearing had a little something for almost everyone. In laying the three bills, as amended, over for possible inclusion in the division’s report to the House Taxes Committee, the division spread tax credits around to folks in a variety of living situations. Here’s a look at how your taxes might change, depending upon where you live.

For renters: In moving HF2349, the division chair, Rep. Diane Loeffler (DFL-Mpls), pointed out there have been no changes to the state’s renter’s credit since 2015, despite rent bills climbing significantly since. The bill would reduce “co-payments” by 5 percent for all but the lowest eligible range, which would go down 2.5 percent. It also would make the renter’s credit available to anyone with income of $90,000 or less, up from the current maximum level of $62,900.

The Department of Revenue estimates that the changes would affect 320,000 current filers, increasing their refund by an average of about $40, and would reward about 49,000 newly eligible filers with a refund averaging $430. It would also cost the state’s General Fund $34.5 million in Fiscal Year 2021.

For homeowners: Another bill sponsored by Loeffler, HF2348, would increase the maximum refund amounts for the homestead property tax refund program by $500 for all income ranges.

Loeffler said that the maximum refund amounts have not been adjusted since 2013. “Since that time, property taxes for residential homesteads have gone up by 20 percent,” she said. “The average increase under this proposal would be an additional $330 per household. … And 44 percent of the increases would go to seniors and those with disabilities.”

The Department of Revenue estimates that state-paid property tax refunds to homeowners would increase by $23.1 million in Fiscal Year 2021.

For farmers: To hear Rep. Paul Marquart (DFL-Dilworth) tell it, school building bonds aren’t very fair to farmers.

“In our rural school districts,” Marquart said, “even though only 2 percent of the population live on farms, they contribute about 34 percent of the tax base because of the amount of land devoted to agriculture. There are some districts in which that goes up to 90 percent.”

Currently, the school building bond agricultural tax credit is available on 40 percent of a farmer’s land. Under HF1391 sponsored by Marquart, that number would be expanded to 100 percent, basically eliminating school levy property taxes on land devoted strictly to farming. The proposal would cost the state’s General Fund $66.8 million in Fiscal Year 2021.

While neither HF2349 nor HF2348 has a companion bill in the Senate, HF1391’s companion is SF1512, sponsored by Sen. Kent Eken (DFL-Twin Valley). It awaits action in the Senate Taxes Committee.