Senator Nelson Legislative Update: The Tax Bill

Senator Carla Nelson
4 min readJun 1, 2023

Friends and neighbors,

On Monday, we reflected on the millions of brave men and women who gave what President Lincoln called the “last full measure of devotion” in service of the United States of America and the values that we treasure. To those heroes and their families: we are forever grateful for your sacrifice.

As I do every Memorial Day, I want to share with you this wonderful tribute video created by Champion Forest Baptist Church in Texas: https://www.youtube.com/watch?v=arSiv9PRo04&ab_channel=ChampionForest

In this week’s newsletter, I will break down the tax bill that passed this session. While there were notable provisions included, there were also some large clunkers in the bill that prevented me from being able to support them on the Senate Floor.

Read on for the breakdown.

Working for you,

Carla

Tax Bill

The Tax Conference Committee Report, the final agreement between the House and Senate was passed off the Senate floor on Sunday, May 21st on a party-line vote of 34 (D) — 33 (R).

There were notable provisions that I supported but it was troubling to see $2.2B of tax increases at this time of historic $19B surplus.

I supported and worked towards ongoing, permanent tax relief for Minnesotans including the FULL elimination of the tax on Social Security benefits. With a $19 Billion surplus in hand, it is unconscionable that the legislature did not achieve either of these goals.

Further, it is concerning that Minnesota continues to be a high-tax island compared to our neighboring states and has doubled down on even more tax hikes.

Here is a breakdown of the bill:

What I supported:

One-time Tax Rebate: I supported giving the surplus back to the families that paid into it, however I pushed for permanent tax relief and/or a bigger rebate. The Majority Party’s leaders and the Governor walked back their promise to return most of the surplus to Minnesotans. Instead we got:

  • $260 for single filers
  • $520 for married joint filers
  • $260 per dependent (up to 3)
  • Max rebate of $1,300
  • Read More

This may cover a few gas station fill ups for working families, but it is not real tax relief that will benefit families struggling with inflation and high taxes.

Expands Social Security Subtraction: Starting Tax Year 2023 to allow 100% Social Security subtraction for

  • Married taxpayers with Adjusted Gross Income (AGI) of $100,000 or less
  • Single taxpayers with AGI of $78,000 or less

Creates a Child Tax Credit

  • $1,750 per child to households making $35,000 per year
  • Phases out at 12% of income in excess of $35,000

Property Tax Relief through expansion of the market value exclusion (MVE)

  • The MVE reduces the taxable market value of homestead properties thus reducing net property taxes.
  • The new MVE exclusion equals 40% of the first $95,000 of market value.
  • For homesteads valued between $95,000 and $517,200, the MVE equals $38,000 minus 9% of the value over $95,000.

Increased Property Tax Refund

  • Reduces homeowner copays by 3% for the Homestead Credit State Refund (PTR)
  • One-time $20.6 boost in PTR payments
  • Targeting PTR: One-time threshold in the increase in property tax reduced from 12% to 6% and the max refund is increased to $2,500

Historic Tax Credit and Film Tax Credit reauthorized and improved

Rochester Local Sales Tax (I chief authored)

Authorizes the City of Rochester to go to its voters with a referendum asking to continue the .05% local sales tax. To fund:

  • Economic vitality fund
  • Street reconstruction
  • Flood control & water quality projects
  • Regional Community & Recreation Complex
  • Unfortunately the $10M provision for economic development shared equally between Rochester and the Rochester Metropolitan Statistical Area outside Rochester was rejected by the House in conference committee.

All of these tax relief provisions were part of the $4B in tax relief that was agreed to by the Tax Conference Committee that Rep. Paul Marquart (D-Dillworth) and I chaired in 2022. Unfortunately the House refused to take up that agreement for passage.

Clunkers: Not in the 2022 tax bill agreement but present on the 2023 bill signed into law.

Harms our local charities: Changes e-pull tabs

  • The definition of e-pull tab games change to require the player to manually activate each ticket to be opened and manually activate the reveal of each row of symbols as a separate and distinct action
  • The effects of this law change will cripple our local charities and the local bars and restaurants they partner with.

· $2.2 Billion Tax Increases

  • $739.7 M increased income taxes for individuals
  • $1,494 average increased tax burden per tax return
  • Affecting 116,300 tax returns
  • Over $1B in business tax increases: modifies treatment of net operating losses, reduces the current law dividends received deduction, and increases business taxes through the treatment of taxing global intangible low-taxed income (GILTI).

Minnesota already has some of the highest business tax burdens in the nation, making it harder to attract and retain businesses. If we lose these businesses and their headquarters in Minnesota we lose them from our tax base. In future Sessions, I fear we may need to either cut state programs, or shift that burden from businesses onto families.

Watch my Tax Bill floor comments here:

https://www.youtube.com/watch?v=8j-pqwJOe_4&ab_channel=CarlaNelson

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