FOX 9 – Minnesota lawmakers have agreed to eliminate state tax on Social Security income, cut personal income taxes and expand renter’s credit as part of a end of session agreement.
The lower bracket of state income tax will be reduced from 5.35% to 5.10%. Filers pay the minimum rate on the portion of their income up to $41,050 for married couples and $28,080 for singles in the 2022 tax year.
The Social Security exemption will benefit retirees with significant investment or retirement income, since Social Security is already exempt from state taxes for low-income retirees. The tenant credit will become refundable, which means Minnesota tenants who do not owe income tax will still be eligible for the credit.
Together, the three changes represent $3.4 billion of the $4 billion in the tax bill. Both House and Senate lawmakers and aides confirmed key elements of the deal.
A conference committee is scheduled to discuss the changes Saturday night. The Legislative Assembly faces a Sunday night deadline to pass the bills.
But there is no guarantee that the tax cuts and credits will materialize. Passage of the bill will force lawmakers to accept several spending measures that have stalled: K-12 education, public safety, health and social services.
Disagreements over $1 billion in new funding for public schools have been particularly public. On Saturday, Senate Education Chairman Roger Chamberlain ended a conference committee meeting on questions from his House counterpart, State Rep. Jim Davnie.
“I don’t know what else to do. We don’t have days and days. We barely have hours,” said Chamberlain, R-Lino Lakes.
The Senate supports using $59 million for literacy programs and $941 million to fill a funding gap for mandatory special education services. In addition to these measures, the House wants to add mental health services and a provision that makes hourly school employees eligible for unemployment benefits.
Walz has pledged not to call a special session, but it is becoming increasingly unlikely that lawmakers will be able to settle the many outstanding issues in time. The divided legislature faces a 11:59 p.m. deadline on Sunday.
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