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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.


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