Senate and House Reach Tax Bill Agreement

Senate and House tax conference committee members announced Friday, May 11, that they have reached an agreement on a bill to conform Minnesota's tax structure to the new federal tax code. According to Senate Tax Chair Roger Chamberlain, "This proposal as is, ninety-nine-point-eight percent of the citizens in this state, the taxpayers, the filers...will be winners. Either they get money back or they will see no impact. They will be held harmless."

As with Governor Mark Dayton's tax plan, the agreement establishes the federal adjusted gross income as the starting point for determining state income taxes. According to state officials, the change would allow greater flexibility in managing the state tax code. Also, as Governor Dayton proposed, the plan would preserve the major income tax deductions, including the deduction on mortgage interest.

Under the agreement, the tax rate for the first income bracket would be reduced in phases from 5.35 percent to 5.3 percent and then to 5.25 percent in Fiscal Year 2019. Senate Republicans advocated for the lower bracket adjustment. The tax rate for the second income tax bracket would also be reduced in phases from 7.05 percent to 6.95 percent and then to 6.85 percent in Fiscal Year 2019. The House Republican tax plan called for the tax rate reduction in the middle income bracket.

The conference committee will meet the final week of session to hear from the administration on the agreement and to finalize a conference committee report for consideration by the full Senate and House.