Updated: 03/27/2014 1:01 PM
Created: 03/21/2014 6:33 PM KSTP.com
By: Cassie Hart
Big news from the State Capitol Friday, as Governor Mark Dayton signed the bill approving $508 million in tax cuts for middle class Minnesotans and businesses.
The house passed it after the senate did. Many Minnesotans will see immediate tax savings during the current tax filing season. The cuts also apply to taxes for 2014.
$150 million goes to the budget reserve and the remaining is a $600 million budget surplus.
So now what? The best thing to do is wait.
Virginia Harn, a tax partner with CliftonLarsonAllen, says the Minnesota Department of Revenue will review each tax return and determine whether adjustments and refunds can be made automatically. The Department will contact any taxpayer who will need to file an amended return to receive these new tax benefits.
Reducing Taxes for Middle Class Minnesotans ($230M)
By conforming Minnesota’s tax code to the federal government’s, the bill signed today by Governor Dayton will simplify taxes and provide tax cuts for middle class Minnesotans.
Tax Cuts for Married Couples. More than 650,000 married couples will save an average $115 per year through the elimination of the “marriage penalty.” This tax cut begins next year, for the 2014 income tax filing season.
Tax Cuts for Working Families. Over 16,000 more middle class families will qualify for the Working Family Tax Credit, and everyone who qualifies for the credit will receive an increase.
Tax Cuts for Parents. More than 25,000 families who qualify for child care tax credits will see an average increase in their tax credit of $74 per year.
Tax cuts for Students. More than 285,000 recent college graduates could save up to $190 per year by deducting their student loan interest. Another 40,000 current college students and parents will receive a tuition deduction of $140 per year, on average.
Tax Cuts for Small Employers. Small businesses will be able to offer their employees tax-free tuition and adoption assistance. The tax bill signed by Governor Dayton today also simplifies small business taxes by eliminating requirements to maintain separate records for federal taxes.
Additional Tax Cuts. These middle class tax cuts will also help seniors, teachers, and homeowners. More information about these tax cuts is available on the Governor’s website.
Reducing Business Sales Taxes ($232M)
All three business-to-business taxes have been repealed.
Electronic, Farm and Commercial Equipment Repair Tax. The sales tax on repair and maintenance of electronic and commercial equipment has been repealed. This includes repair and maintenance of farm equipment.
Warehousing and Storage Services Tax. The warehousing sales tax that was set to take effect on April 1, 2014, has been repealed.
Telecommunications Equipment Tax. The sales tax on telecommunications equipment has been repealed.
Tax Credits for Innovation and Jobs ($3M)
The bill signed Friday provides additional tax credits to fuel innovation and create jobs.
Angel Investor Tax Credit. Another $3 million in Angel Investor Tax Credits will be available for startup businesses and entrepreneurs this year. This measure also provides $15 million for the program in 2015, and $15 million in 2016. A recent report showed this tax credit has already created 500 new jobs and spurred over $100 million of new private investment in Minnesota’s economy.
Additional Business Tax Relief. Businesses large and small would benefit from additional business tax reductions and credits included in this tax plan. More details about which businesses would benefit from additional tax cuts is available on the Governor’s website.
Simplifying the Estate Tax & Eliminating the Gift Tax ($43M)
New tax law enacted today simplifies the estate tax and eliminates the gift tax, providing millions of dollars in additional tax relief for Minnesotans.
Eliminating the Gift Tax. The gift tax has been eliminated.
Simplifying the Estate Tax. The estate tax has been simplified, raising the exemption from $1 million to $2 million – the first exemption increase enacted in over a decade.
Revenue Commissioner Myron Frans will hold a press conference Monday to discuss how the tax bill could affect 2013 income tax returns. Frans will offer guidance to the more than 1 million taxpayers who still need to file. More than half of Minnesota taxpayers have already filed.