Income tax

Social Security taxes eliminated, tax cut included in Minnesota deal but no Walz checks – Reuters

ST. PAUL – Minnesotans could stand to see an income tax cut, the elimination of state tax on Social Security benefits and a change to make more people available for a tax credit for tenant as part of a compromise plan to be reviewed at the Capitol.

But that’s only if lawmakers can fast-track a $4 billion spending slate and the $3.9 billion tax plan the next day.

Conference committee chairs released their tax deal on Saturday, May 21, which included a 0.25% income tax cut in Minnesota’s lower tax bracket and the elimination of the Social Security tax. of State. The committee was due to consider the proposal on Saturday evening and legislative leaders said they expected the plan to move forward.

“This is the largest tax cut in state history – by far – and for the first time in nearly 40 years, seniors will not pay a dime in tax on their benefits. Social Security,” House Tax Committee Chairman Paul Marquart, DFL-Dilworth, said as members of the conference committee announced details of the plan.

For days, lawmakers have been meeting mostly privately to bridge the gaps between proposals put forward by the Republican-controlled Senate and the DFL-led House of Representatives. And they reached this provisional agreement with only a few hours left in the legislative session.

Under the plan, the lowest state income tax rate would drop from 5.35% to 5.1%, providing permanent tax relief to anyone who pays income taxes as soon as possible. that employers will update their payroll deductions. Minnesotans could also benefit from increased child and dependent tax credit rates, additional credits to offset the cost of child care, enhanced credits for renting a home and property tax relief.

“It is our duty to put these resources back into the hands of the people of Minnesota to help them better support themselves,” said Senate Taxation Committee Chair Carla Nelson, R-Rochester.

Minnesota Rep. Paul Marquart, DFL-Dilworth, and Senator Carla Nelson, R-Rochester, Saturday, May 21, 2022, shake hands after announcing they had reached an agreement on a $3.9 billion tax plan of dollars.

Dana Ferguson / Forum News Service

The plan did not include the one-time rebate checks Governor Tim Walz had proposed, likely indicating they are out of order this year. Lawmakers said there was not enough money in their budget target to account for checks this year along with all the other tax changes they have proposed.

Although the committee’s agreement marked a step forward for the proposal, it did not ensure passage of the bill through the divided Capitol.

A day earlier, House Speaker Melissa Hortman, DFL-Brooklyn Park, said legislative leaders and the governor remained confident lawmakers could pass a range of laws, including new government spending. state and proposed tax cuts and credits before they’re ready to adjourn the legislative session on Sunday at 11:59 p.m. And she said House leaders would wait to pass the tax bill until that several other spending plans went through the Capitol first.

Tax committee leaders urged fellow lawmakers to quickly strike deals in those areas to get a tax bill across the finish line on Sunday.

“We must not let this historic and transformative tax bill be held hostage by a lot of these other things,” Nelson told reporters. “It would be shameful if this got lost in further negotiations.”

Key issues and billions of dollars in limbo

Priority issues for both chambers, including additional funding for K-12 schools, long-term care facilities, health care programs and public safety, remained in limbo on Saturday as that lawmakers were at a standstill in negotiations.

By Saturday evening, few state government spending bills had been made public. And only a plan to increase funding for higher education had reached either chamber for a vote.

Lawmakers passed a budget last year that runs through 2023, so they have nothing to do in the hours remaining before their deadline. But legislative leaders and the governor announced May 16 that they had reached a broad agreement to spend about $8 billion of the state’s $9 billion budget surplus on tax cuts and credits, as well as $4 billion in new spending for various state programs.

And they sent committee chairs spending targets that should guide their negotiations in the final week of the session.

For some, these goals helped secure deals. But for the majority, the trade-off remained elusive, leaving additional spending on public schools, police departments, health and social services programs, and the transportation departments in question with an increasingly short time to do their jobs. .

“I don’t know what else to do,” said Sen. Roger Chamberlain, R-Lino Lakes, before kicking off a committee discussion on K-12 education spending on questions from Rep. Jim Davnie, DFL- Minneapolis. “We don’t have days and days. We barely have hours.”

Senate Majority Leader Jeremy Miller, R-Winona, told reporters on Saturday that negotiations on several spending bills were still ongoing, but the deadline to get them across the finish line was getting tighter. shorter and shorter.

“It’s critical right now,” Miller said. “If it has to be done, it has to be done as soon as possible.”

Miller said the leaders of each chamber stepped in to begin resolving issues during the negotiations. And he remained hopeful lawmakers could pass additional money bills and the tax bill before Monday.

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