The Minnesota Senate today approved a bipartisan $944 million tax bill aimed at jumpstarting the economy and helping workers and small business owners recover from COVID-19.
The bill does not include any of the tax hikes proposed by Gov. Walz or Democrats in the House of Representatives, both of whom proposed raising taxes by over $1 billion, including the creation of a fifth-tier income tax.
“It has been a challenging year for Minnesota workers and small businesses,” said Sen. Jeremy Miller (R-Winona). “The federal government’s Covid assistance programs helped, but many of them are still financially uncertain. Rather than raising taxes, I am glad we reached a bipartisan agreement with the House and Gov. Walz to provide broad tax relief to support these folks through the remainder of the pandemic and beyond.”
The bill empowers Minnesotans and encourages economic growth with two top priorities for workers championed by Senate Republicans all year: full conformity to federal tax rules for the forgivable Paycheck Protection Program loans many businesses used to survive the COVID-19 pandemic, including deductions for expenses, and full conformity for federal pandemic unemployment benefits up to $10,200. Conforming to these federal rules lowers taxes for those affected so they aren’t taxed on money sent by the federal government to help them get by during the pandemic.
Main street businesses will see lower property taxes as a result of this bill through the lowering of the statewide property tax levy, and the state will end a budgeting gimmick that forces businesses to pay sales tax payments for the month of July in June. These provisions will help businesses increase capital to reinvest in their companies and employees.
Other highlights of the bill:
• This establishes the Frontline Workers Grant program working group to make recommendations on the disbursement of $250 million as a direct cash benefit to frontline workers. COVID relief funds from the federal government can be used to benefit those workers who were put at risk as they continued to work during the pandemic. The working group will be tasked with defining eligible workers and the matching benefit, which the full legislature will then adopt.
• Financial support for the Oriented Strand Board (OSB) project in Northern Minnesota to bring hundreds of direct and indirect jobs to the community. The OSB was recently approved to receive $15 million in funding from the Iron Range Resources and Rehabilitation Board.
• The bill extends the Angel Tax Credit by $5 million, which encourages investments in startup companies focused on high technology, new proprietary technology, and other groundbreaking fields.
• The bill extends a provision chief authored by Sen. Miller to extend the Historic Structure Rehabilitation Credit, the hugely successful job-creating tax credit that helps rehabilitate historic buildings. A study found that every $1 spent on the tax credit generates $9.50 in private sector economic activity.
• The bill emphasizes affordable housing and workforce housing with a new tax credit to bring private money into the marketplace.
• The bill provides annual aid payments to counties to address student homelessness.
• The bill eliminates taxation of construction materials for public safety facilities.
• This lowers the Working Family Credit minimum age so more young Minnesotans qualify for this crucial tax relief.