AI Generated Summary
This bill, Minnesota Senate File No. 1968, proposes modifications to the first-tier income tax rate for individuals in Minnesota. Specifically, it seeks to reduce the first-tier tax rate from 5.35% to 2.8% for various filing statuses, including married individuals filing jointly, unmarried individuals, and heads of households.
Key Changes:
Reduction of First-Tier Tax Rate:
- The first taxable income bracket for all filing types (married, single, head of household) would have its tax rate reduced from 5.35% to 2.8%.
Income Brackets Adjustments:
- The bill appears to adjust the tax brackets for different filing statuses while maintaining the existing second-tier (6.8%), third-tier (7.85%), and fourth-tier (9.85%) tax rates.
Nonresident Tax Calculation Update:
- The bill makes adjustments to how nonresidents compute Minnesota income tax, ensuring that calculations consider Minnesota-source income and applicable subtractions/additions.
Pass-Through Entity Election:
- The legislation also clarifies how pass-through entity owners who elect to pay tax under Minnesota Statute 289A.08, Subdivision 7a must calculate their tax liability.
Impact:
- If passed, this bill would lower income taxes for lower-income taxpayers by cutting the first-tier tax rate by nearly half.
- The state would likely experience a reduction in tax revenue, which could impact budget allocations for public services.
This bill is currently in the Senate Taxes Committee after its introduction and first reading.
Bill text versions
- Introduction PDF file
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| February 27, 2025 | Senate | Action | Introduction and first reading | ||
| February 27, 2025 | Senate | Action | Referred to | Taxes |
Citations
[
{
"analysis": {
"added": [
"Introduces different income brackets and rate adjustments for married, unmarried, and head of household filings."
],
"removed": [
"Previous income brackets and rates applicable for tax year 2023."
],
"summary": "This bill modifies the tax rates for individual incomes under section 290.06.",
"modified": [
"Adjusts first-tier rate for individuals from a fixed percentage to detailed income brackets."
]
},
"citation": "290.06"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "References additional income inclusions for non-residents.",
"modified": [
"Includes additions required under this section for income computation adjustments."
]
},
"citation": "290.0131"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "References reduction items for federal adjusted gross income.",
"modified": [
"Subtractions specified under this section considered for both numerator and denominator adjustments in tax computations."
]
},
"citation": "290.0132"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Applies to allocation and assignability provisions related to tax.",
"modified": [
"Applies allocation and assignability clarification for computation."
]
},
"citation": "290.081"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Considered for allocation and assignability in tax computations.",
"modified": [
"Provides allocation and sourcing rules referenced in the modifications."
]
},
"citation": "290.17"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Involves tax election by qualifying entities.",
"modified": [
"Provision for electing tax computation methods for qualifying entities."
]
},
"citation": "289A.08"
}
]Progress through the legislative process
In Committee