SF2867

Purpose of the Bill

This bill aims to modify the individual income tax system in Minnesota by establishing a new, fifth tier of income taxation. The primary goal is to generate sufficient state revenue to counterbalance any potential loss of federal Medicaid funding.

Main Provisions

• Fifth Tax Tier: Introduces a fifth tax tier for higher-income individuals.
• Tax Rate Determination: The rate for this new tax tier will be calculated based on the estimated revenue needed to replace any losses from changes in federal Medicaid policies.
• Applicability: The new tax provisions are set to apply to tax years starting after December 31, 2024, and before January 1, 2027.

Significant Changes

• Income Brackets: The bill amends current tax brackets, adding a new top rate applied to income exceeding certain thresholds, depending on filing status.
• Adjustment for Federal Policy Changes: The tax rate established will specifically address revenue shortfalls resulting from federal policy changes affecting Medicaid.

Relevant Terms

individual income tax, fifth tax tier, Medicaid funding, revenue replacement, tax brackets, nonresident income tax, commissioner of revenue.