On Wednesday, January 11, the Minnesota Senate passed a tax conformity bill bringing Minnesota in line with recent federal tax changes and cutting tax collections by more than $100 million. The bill passed with bipartisan support and Governor Walz signed the bill into law on Thursday.
Senator Gary Dahms of Redwood Falls said, “The Senate’s tax conformity bill is an important, bipartisan achievement that will bring much-needed relief to many taxpayers. Minnesota ranks as one of the most heavily taxed states in the nation, and lowering our taxes is essential to ensuring we are competitive. With the state’s historic surplus, we have an even greater opportunity to enact permanent tax relief.”
The bill ensures that federal coronavirus, economic stimulus and other aid passed in recent years that’s exempt from federal taxation won’t be subject to state taxes. That means a retroactive state tax break for numerous businesses that got grants to keep them afloat while they were shut down during the height of the pandemic.
The bill aligns Minnesota tax code with Federal tax adjustments that resulted in many tax changes including The Coronavirus Aid, Relief, and Economic Security (CARES) Act from 2020, The American Rescue Plan (ARPA) Act from 2021, and The Inflation Reduction Act (IRA) from 2022.
Officials said it needed to be signed into law by Friday so that tax forms and software could be updated in time for the filing season, which opens Jan. 23. Missing from the bill is the elimination of the tax on Social Security or any reduction in personal income taxes.