Senate Republicans proposed major changes to state tax law today. The proposal reduces the first tax rate from 5.35% to 2.8% and removes the tax on social security. If the changes are passed, the changes will be the largest tax cut ever in Minnesota, giving taxpayers $ 8.51 billion in tax breaks over the next three years.
“Every single Minnesotan will benefit from our plan,” Eichorn said. “Minnesotans deserve a reduction in their taxes after paying some of the highest rates in the country. This includes removing the unfair tax on social security, which has been a goal for me for a long time, and this year we can make it possible. . “
According to the National Tax Foundation, Minnesota’s lowest tax rate is higher than the highest tax rate in 17 other states. Under the Republican proposal, a family in Minnesota earning $ 100,000 would see a tax savings of $ 1,000 each year. A typical person earning $ 37,000 would receive about a $ 500 annual reduction. According to the governor’s tax proposal, the same family would receive a $ 375 check, and an individual branch would receive a $ 175 check with no long-term savings or reductions.
The proposal also removes the tax on social security and disability income, something Republicans have been advocating for for years. Minnesota is one of just 13 states that tax social security benefits and is partially surrounded by states that do not tax this benefit – Iowa, Wisconsin, Michigan and South Dakota. Estimates show that for the 410,900 Minnesota residents who pay this tax, the average relief will be $ 1,313. Removing the social security tax would put $ 539 million back in the hands of the recipients.
Last December, the state budget forecast included a $ 7.7 billion surplus. An updated budget forecast is scheduled for Monday, February 28thth.