Dayton Would Devote Half of Surplus to Tax Breaks
Updated: 03/06/2014 12:47 PM
Created: 03/06/2014 10:57 AM KSTP.com
By: Scott Theisen
Gov. Mark Dayton is proposing to use half of Minnesota's projected $1.2 billion surplus to cut taxes, with another big chunk going to fill reserve accounts.
Dayton outlined his supplemental budget plan Thursday, the day the House was planning to vote on a slightly smaller tax bill.
Dayton's proposal would extend $300 million in tax deductions and exemptions available at the federal level to state income tax filers. The most significant, a change to the standard deduction for married couples, wouldn't take hold until next year. Another $230 million would compensate for the repeal of new business taxes.
Dayton also recommends upping the state reserve by $455 million.
The remaining $162 million could go to new spending lawmakers classify as essential.
Key points from Dayton's tax proposal
Tax Relief for Married Couples
More than 650,000 married couples would save an average $115 per year under Dayton’s plan to eliminate the “marriage penalty.”
Tax Relief for Working Families
Under Dayton’s tax plan, 13,000 more middle class families would qualify for the Working Family Tax Credit, and 40,000 would receive an increased credit. These families would save an average $334.
Tax Relief for Day Care
By expanding tax credits for child care, the number of families benefiting would increase from 36,000 to 170,000. The average tax benefit would increase $430 per year.
Tax Relief for Students
Dayton’s tax plan would provide 285,000 recent college graduates up to $190 per year by deducting their student loan interest. Another 40,000 current college students and parents would receive a tuition deduction of $140 per year, on average.
Tax Relief for Small Employers
Small businesses would be able to offer their employees tax-free tuition and adoption assistance. Dayton’s tax plan would also simplify small business taxes by eliminating requirements to maintain separate records for federal taxes.
Additional Tax Relief
Dayton’s plan for middle class tax relief would also help seniors, veterans, teachers, and homeowners.
Read more about Dayton's proposal here.
The Associated Press contributed to this report.