Omnibus Tax Bill

Senate target:    ($591 million) ’22-23 | ($142.9 million) ’24-25

Global target:     ($754 million) ’22-23 | ($180 million) ’24-25*

*This includes full PPP and UI conformity, which costs $643.9 million/$47.5 million

Remaining target after PPP and UI: ($110.1 million) ’22-23 | ($134.3 million) ’24-25

The Tax Conference Committee met all but two days between its inception and the end of regular session, spending most of the time discussing provisions but adopting only non-controversial, no-cost items.

The global budget targets include an agreement to fully conform to federal tax changes regarding PPP forgiven loan amounts received in 2020 or 2021, and unemployment benefits received in 2020. The total cost is $643.9 million this biennium and $47.5 million in the next, which takes much of the tax target.

PPP loan federal conformity

Senate bill:         Full conformity ($409.1 million) – the full amount of forgiven PPP loans may be excluded

               from income, and business expenses supported with PPP loans also may be deducted

from income.

House bill:           Partial conformity ($240.6 million) – PPP loan amounts up to $350,000 may match

               federal tax treatment; remaining amount subject to current MN tax law.

Agreement:        Full conformity ($409.1 million)

Unemployment benefits federal conformity

Senate bill:         Partial conformity ($28.5 million) – up to 18% of unemployment benefits received in

               2020 may be subtracted from income

House bill:          Full conformity ($234.8 million) – up to $10,200 of unemployment benefits received in

               2020 may be subtracted from income

Agreement:        Full conformity  ($234.8 million). This will provide about 553,900 Minnesota returns an

               average tax reduction of $486 for Tax Year 2020.

Communicating with constituents affected by UI or PPP

Monday, May 17 was the deadline for filing and paying Minnesota income taxes. Since no tax changes were passed before that date, many Minnesotans may have faced large tax bills that could be reversed considering the global budget agreement.

The Department of Revenue’s website will be updated with guidance once the Legislature passes a tax bill: That page also directs constituents how to sign up for instant email alerts. In the past, the Department has been able to automatically adjust many tax returns without additional taxpayer action required.

For individuals who may have been unable to file or pay by May 17 due to extenuating circumstances, the Department of Revenue’s COVID-19 page offers advice for requesting penalty abatements:

Major outstanding items in the tax budget

Once the PPP and UI changes are adopted, the global targets reserve $110.1 million this biennium for additional tax expenditures, and $134.3 million next biennium.

A sampling of major items included in the House and Senate omnibus tax bills that will need to be negotiated in the coming days: HF 991

                              Major House items                                                           Major Senate items

County grants for business relief ($70m)Child care provider property tax credit ($24m)
Working Family Credit expansion ($59m)Housing Tax Credit ($20m)
Historic Rehab credit ($19m ongoing)Historic Rehab Credit ($14m one year)
Student loan credit changesK12 subtraction, credit increase ($5.2m)
Tobacco Cessation ($15m ongoing)Tobacco Cessation ($5m one year)
Statewide business property tax exclusion up to $150,000Statewide business property tax exclusion up to $150,000
Angel Investment Tax Credit extension ($10m)Angel Investment Tax Credit extension ($10m)
Homeless Prevention Aid to Counties ($25m)Liquor spoilage credit for brewers, retailers ($3.4m)
Increase in Homestead and Renters’ refunds ($31m)C-option filing (SALT cap relief)
Sales tax exemption – public safety facility constructionSales tax exemption – public safety facility construction
Workforce and Affordable Homeownership Development ProgramEthanol retailer tax credit ($5.3m)
Film production credit ($20m)Restaurant PPE sales tax exemption ($9.5m)
4d low-income housing study4d low-income housing rate change