Tax rebates, breaks coming in bill that also raises some taxes
ST. PAUL, Minn. (FOX 9) - Big tax changes are coming to Minnesota, headlined by about a billion dollars in tax rebates.
The final version of a tax bill includes smaller rebates than Governor Tim Walz — and also Republicans — requested.
Those tax rebates got whittled down a little smaller Wednesday night, but there are a few other significant tax breaks in the bill. The checks aren’t quite in the mail, but the amount is finally written in ink.
"I, for one, am very pleased with the amount of tax relief we are providing to Minnesota taxpayers," said Sen. Ann Rest, DFL-New Hope, the chair of the conference committee.
The DFL majority agreed to one-time rebates totaling about $1 billion. That’s $260 per person, up to $1300 per family. The rebates phase out at adjusted gross income levels above $75,000 or $150,000 for a couple.
Republicans opposed the governor’s original idea of $1000 per person rebates, but recently asked for more during negotiations on other bills.
"We’ve been trying to help this process along," said Sen. Jim Abeler, R-Anoka. "Could you double the rebate and give $200 million to nursing homes? No. Refuse to negotiate. What?"
The bill adds taxes on investment earnings like stocks and on businesses with global earnings, as well as an already approved Metro area sales tax increase.
But the new tax bill did not create a fifth income tax tier for people earning more than $1 million.
And it offers more than $1 billion in Social Security income tax relief over the next four years, and $1.6 billion in child tax credits over the same timeframe. There’s also about $12 million in property tax relief through an increased homestead exemption starting in 2025.
Bar and restaurant owners may bristle at the bill’s elimination of the open-all option for electronic pull tabs.
"There are some changes made in pull tabs, but then there is considerable tax relief for the service organizations and the charities," said Sen. Rest.
In addition to the tax bill, DFL leaders said Thursday the details are still being finalized on a transportation plan that'll likely increase the gas tax and include a delivery fee, or "road maintenance fee" as Senate Majority Leader Kari Dziedzic called it Thursday.
At a time when Minnesota has a record 17.5 billion dollar budget surplus, the Republicans question the DFL's tax increases. The GOP believes despite the tax relief, the math won't add up.
"At the end of the day, they're still going to charge the taxpayers in Minnesota more money than they're getting back," said Sen. Bill Weber, R-Luverne.
House Speaker Melissa Hortman defended the proposals, after what she called "decades of underinvestment," particularly in K-12 education.
"I don't think people are surprised that Democrats want to invest in education and health care and taking care of people," she said.
The bill is expected to get House and Senate approval before the legislative session ends Monday.