District 16 Sen. Gary Dahms of Redwood Falls joined his Senate colleagues in passing legislation aimed at cutting taxes and conforming to federal law.
The bill brings Minnesota’s tax code into conformity with the federal tax overhaul passed by Congress last year and protects nearly all Minnesotans from a tax increase.
An estimated 82 percent of Minnesota residents will see a tax reduction under the bill.
“I am so pleased to see this bill pass the Senate with bipartisan support. Minnesotans are already reaping the benefits of the historic tax overhaul passed by Congress. This legislation makes sure those benefits are felt at the state level, too,” said Dahms. “This plan protects the wages of nearly every Minnesotan, ensures simplicity when filing your taxes and actually cuts the income tax rate for millions of Minnesota familiess."
The legislation drops the lowest income tax rate by a quarter of a percent and allows Minnesotans to keep popular tax deductions for mortgage and home equity loan interest, property taxes and charitable donations. In total, nearly 2.1 million Minnesota households will benefit from these changes.
In addition to an income tax rate reduction, the legislation maintains the state personal and dependent exemption of $4,150 and the state standard deduction of $13,000, extends the $5 million angel investor tax credit, fully conforms to Section 179 of the Internal Revenue Service (IRS) tax code and uses the FAGI model to separate the state tax code from the federal tax code.
Finally, the legislation includes an automatic reduction of individual income tax rates when a significant projected budget surplus exists.
“Our state is losing to our more tax-friendly neighbors, something we feel particularly in our rural communities,” said Dahms. “This legislation is about making sure more Minnesota families can keep more of their hard-earned money.”
Dahms is in his third term representing Senate District 16, which includes communities in Brown, Lac qui Parle, Lyon, Redwood, Renville and Yellow Medicine counties.
He also serves as chair of the Senate commerce and consumer protection finance and policy committee and is an assistant majority leader.