Waning Days of Legislative Session, Tax Agreement Reached, and more

The Committee on the Tax Omnibus bill reached an agreement late Wednesday evening. The tax bill will include limited tax rebates, childcare tax credits, some exemptions for social security tax, and higher taxes for corporations. In total, the bill provides $3 billion in tax cuts, and raises taxes by $1 billion.

Single Minnesotans who made $75,000 or less this year will be eligible for a $260 tax rebate, or $520 for married couples earning $150,000 or less. Those with children will also receive a $260 tax rebate per child, for up to three children. Families could also see tax credits for child care, starting at $1,750 and phasing out for higher incomes.

A total elimination of Social Security taxes won’t be coming this session. Individual filers with incomes of $100,000 or less (or joint filers with incomes of $140,000 or less) will be completely exempted from paying taxes on their Social Security Income.

The highly controversial worldwide combined reporting provision has been dropped from the tax proposal after Senate Tax Chair Ann Rest announced the Senate does not have the votes to support it. The Tax Conference Committee agreed to implement GILTI (global intangible low-taxed income) increase tax revenues from multinational corporations, raising $240 million for the biennium.

The final deal from the conference committee also directs $300 million in one-time funding to local law enforcement agencies and other community-based public safety efforts. It also allocates $80 million for local government aid and county aid, and $35 million in tribal aid over the biennium.

Still up in the air is a list of authorized local option sales taxes. More detailed information on that list will be included in next week’s edition of Ewald at the Capitol.

The proposed 75-cent delivery fee, a potential gas tax, and sales tax in the Twin Cities area are all being considered by the Transportation Conference Committee.

The bonding or cash-only capital investment bill discussion has come back to life in the last days of the legislative session. As a reminder, the $1.9 billion bonding infrastructure bill (HF 669) was passed with bipartisan support by the House earlier this session but hit a roadblock when it failed in the Senate. Bonding bills require a three-fifths majority to pass, it was not able to achieve in the Senate where Republicans opposed the measure until several concessions, including a full elimination of the social security tax, had been met.

On Wednesday, the Senate Rules Committee sent the $1.3 billion cash-only version of the bill to the floor for a vote. This bill requires only a simple majority, and no Republican support to pass. Notably, this bill also leaves out several Greater Minnesota projects that are included in the $1.9 billion bonding bill.

Only time will tell which version of the bill goes to Governor Walz for his signature. Minnesota has gone without a bonding bill for nearly three legislative sessions in a row, though a last-minute bonding deal is still possible before the deadline on Monday.