Minnesota student loan borrowers, business owners would see tax breaks from fast-tracked bill

Lawmakers considering tax breaks early in session

$100 million in tax breaks have already cleared the House as lawmakers hope to get relief to restaurants, small business and student loan borrowers done early in the legislative session.

ST. PAUL, Minn. (FOX 9) - More than $100 million in tax breaks for restaurants, small business owners, and student loan borrowers passed Monday in a unanimous, quick vote in the Minnesota House.

The bill now heads to the Senate, where DFL leaders are planning a Wednesday vote. Officials with the state Revenue Department have said lawmakers need to pass the legislation by Friday to give tax preparers and agency staff enough time to make changes in time for the upcoming tax filing season.

"That's why we're proceeding with the urgency that we are today," said state Rep. Aisha Gomez, DFL-Minneapolis and the House Taxes committee chair. Gov. Tim Walz has said he'll sign the measure into law once lawmakers get it to him.

The bill wipes away Minnesota's tax liability for student loan forgiveness if the U.S. Supreme Court allows President Joe Biden's debt relief plan to take effect. Oral arguments are scheduled for February.

Without legislative action, borrowers would owe state income tax on the forgiven loan amount. For certain borrowers who stand to receive $20,000 in debt relief, they could owe more than $1,000 in state tax.

The legislation also says restaurants and small business owners that got federal relief during the COVID-19 pandemic won't owe state tax on those benefits.

Republicans and Democrats agreed not to seek amendments, including more controversial proposals to grant rebate checks to Minnesotans and exclude Social Security income from state taxes, in the name of speed.

"There will be plenty of things for us to fight about later on, but I hope this is a sign of things to come that for the items we do agree on," said state Rep. Pat Garofalo, R-Farmington.