SAINT PAUL, MN – State Senator Alice Johnson (DFL-Spring Lake Park) supported the bipartisan tax relief bill today that provides $443 million in tax cuts, including an elimination of the marriage penalty–saving married couples an average of $115/year–and a greatly expanded a tax credit for lower income working families. The bill passed by a vote of 58 to 5.
In addition, the bill repeals the business taxes enacted last session and increases incentives for startups and entrepreneurs to help bring private investment and new jobs across the state.
These tax cuts were balanced with a significant $150 million investment in the state’s budget reserve account, which will provide stability though any future economic downturns.
“It was important to provide targeted tax relief to build on our economy’s momentum while ensuring the state budget has adequate revenue in future years will position Minnesota for continued progress in the years ahead,” Sen. Johnson said. “This bill provides fiscally responsible tax relief that builds on our economy’s momentum while ensuring the state budget has adequate revenue in future years to support our schools and other essential services.”
Specific tax relief for Minnesota individuals and families include:
· Marriage Penalty: Getting rid of the marriage penalty will allow married couples in Minnesota to an average of $115 starting next year. This is targeted middle-class tax relief, as more than 80 percent of those eligible have an annual household income under $100,000.
· Working Family Credit: This provision expands the Working Family Tax Credit to reach 16,000 new Minnesotans. This provides an average of benefit of $334 per household. To qualify, a family of four would need to earn less than $44,000/year.
· Dependent Care: Increasing the dependent care credit will help low- and middle-income families with daycare expenses. This provision helps taxpayers with household incomes under $40,000 afford daycare so they stay employed.
· College Debt Relief: Recent graduates and parents will see additional tax relief by being able to deduct interest paid on student loan payments.
· Adoption/Tuition Credits: Minnesotans whose employers have helped pay for adoption expenses or tuition will be able to exclude a portion of those benefits from their taxable income for 2013 – a big change for those working to build their families or expand their knowledge.
· Teachers: Minnesota’s teachers will be able to deduct up to $250 of out of pocket expenses that they invest in their classrooms each year.
A large component of the bill also provides tax relief for Minnesota businesses. Some of the specific tax relief for Minnesota businesses include:
· Sales Taxes: Eliminating sales tax on commercial and farm equipment repair, warehousing storage and telecommunications equipment will reduce costs for thousands of Minnesota businesses.
· The Angel Investment Tax Credit: This is a proven job-creation tool that has spurred millions of dollars in investment in Minnesota. Expanding that credit will make sure more Minnesota businesses have a better chance at benefitting from these investments.
“The balanced and responsible budget passed by the legislature last year has resulted in a projected $1.2 billion positive budget balance, giving lawmakers the opportunity to keep our state moving in the right direction by putting more money in the pockets of working families and thousands of Minnesota businesses.,” said Sen. Johnson. “In addition to tax relief, it is important to remember the tax bill includes $150 million to bolster the state’s budget reserve account to protect the state against future economic downturns.”