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Hello from the State Capitol,
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Minnesotans who are working on their income taxes received some good news last week, thanks to legislation being approved that will lower their tax obligations.
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Last session, the Democrat-led legislature approved comprehensive taxes legislation that reduced standard income tax deductions, leading to tax increases for roughly 76% of Minnesotans.
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Last Monday, I helped approve legislation that will cleanup these errors and prevent many from paying higher tax bills. Hopefully, the quick action taken on this bill will prevent many Minnesotans from being forced to file amended tax returns.
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Specifically, the bill correctly inflates the statutory amounts for the standard deduction, additional standard deduction for seniors and blind taxpayers, and standard deduction amounts for dependents. Without this correction, the Department of Revenue (DOR) estimates that an additional $352 million in general fund tax revenue would be raised starting in tax year 2024.
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I was disappointed the bill did not include agreed-upon language that would provide a technical fix to the Net Operating Loss (NOL) provision. This provision reduced the NOL deduction from 80% to 70% of taxable income for corporations. The legislative intent was to make this provision effective for tax year 2024. However, the 2023 tax bill contained an effective date of tax year 2023. This is unfortunate because this provision is important to small businesses across the state. Hopefully, this problem will be addressed very soon.
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In other session news, committees are now back in full swing in the Minnesota House. We are hearing a good number of bills. Most of them are either to correct mistakes made in bills approved last year or are policy provisions. Very few are finance, or spending, bills.
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This week, Minnesota?s fiscal officials are expected to release an updated economic forecast. More on that in an upcoming update.
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Have a good week,
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John
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