Senate Tax Chair Carla Nelson Proposes Biggest Tax Cut Ever
ST. PAUL, MN — Senate Tax Committee Chairwoman Carla Nelson (R-Rochester) and Senate Republicans proposed the largest tax cut in state history today. The proposal reduces the first-tier income tax rate from 5.35% to 2.8% and eliminates the state’s tax on Social Security benefits. If passed, the changes would be the biggest tax cut ever and provide $8.51 billion in tax relief to taxpayers over the next three years.
“A massive government surplus at a time when people are hurting calls for us to pass tax relief that helps everyone across the board. As one of the highest taxed states in the country, the most valuable thing we can do to help Minnesotans struggling with inflation is to deliver immediate and permanent tax relief,” Sen. Nelson said.
Nelson continued, “We continue to see surplus after surplus and our budget reserves are full. Indeed, we have done what is needed to prepare our state for a rainy day. Now it is time to right-size Minnesota’s taxes by lowering the tax burden for all income tax filers and by eliminating the double taxation on social security benefits. We can empower Minnesotans and got our state on the right track with this immediate permanent tax relief. Minnesota taxpayers will be glad to know that the Senate tax bill will give them a savings in every paycheck, month after month and year after year.”
According to the National Tax Foundation, Minnesota’s lowest tax bracket is higher than the highest tax bracket in 17 other states. Under the Republican proposal, a Minnesota family making $100,000 would see a tax savings of $1,000 each year. A typical individual making $37,000 would receive about a $500 annual reduction. Under the Governor’s tax proposal, the same family would receive one $375 check, and an individual filer would receive a $175 check, with no long-term savings or reductions.
The proposal also eliminates the tax on Social Security and Disability Income, something Republicans have advocated for years. “This is really a no-brainer,” Nelson said. “Minnesota seniors deserve better than harmful taxes on their fixed incomes. We have been chipping away at this for years and it’s time to end the tax on social security.” Minnesota is one of just 13 states who tax Social Security benefits and is partially surrounded by states who do not tax this benefit — Iowa, Wisconsin, Michigan, and South Dakota. Estimates show for the 410,900 Minnesotans who pay this tax, the average relief would be $1,313. “Those on fixed incomes are being hit hardest by inflation, and this is one thing we can do to help them. With a massive budget surplus, we have the opportunity to be the 38th state to eliminate the taxation on Social Security benefits,” Sen. Nelson concluded. Eliminating the Social Security tax would put $539 million back into the hands of beneficiaries. Bills introduced to eliminate the Social Security tax in the legislature have had bipartisan support.
Last December, the state’s budget forecast included a $7.7 billion surplus. An updated budget forecast is planned for Monday, Feb 28th.
