SF3132

Purpose of the Bill

The bill aims to modify the individual income tax rates and brackets for residents of Minnesota. It focuses on amending existing legislation to redefine how income taxes are calculated for different groups, including married couples, unmarried individuals, heads of households, and estates and trusts.

Main Provisions

• Revised Tax Rates for Married Couples Filing Jointly: The updated tax bracket begins with a rate of 5.35% on income up to $47,620, increasing to 12.45% for income over $500,000.
• Tax Rates for Unmarried Individuals: For single filers, the first $32,570 is taxed at 5.35%, with income over $250,000 taxed at 12.45%.
• Rates for Heads of Households: Heads of households begin at a 5.35% tax rate on the first $40,100, with a maximum rate of 12.45% for income above $400,000.
• Alternative Tax Calculation: For those with smaller taxable incomes, a simplified tax table will be used, prepared by the commissioner of revenue. Tax calculations will disregard fractions of a dollar unless they are 50 cents or more.
• Non-Residents’ Tax Computation: Individuals who do not reside in Minnesota for the entire year have specific guidelines for calculating their state tax based on the portion of their income sourced from Minnesota.

Significant Changes to Existing Law

• The bill changes the income brackets for each tax rate, generally raising the income levels that each rate applies to.
• It adjusts the calculations to include various components of an individual's income, particularly for part-year residents and those with incomes sourced both within and outside of Minnesota.

Relevant Terms

income tax, tax rates, tax brackets, married filing jointly, single filers, head of household, non-resident tax, tax computation, Minnesota State Tax Code, income brackets.