ST. PAUL — The Minnesota House of Representatives on Wednesday, May 4, passed a tax plan that would offer credits to families, workers and seniors, as well as major property tax relief and substantial increases to student loan debt tax write-offs.
A proposal sponsored by Rep. Paul Marquart, DFL-Dilworth, that passed 69-62 on party lines would provide $3.25 billion in tax cuts into 2025, though it is a substantially smaller cut than a proposal approved by the Republican-controlled Senate in early April. But Marquart said the House tax bill seeks to provide relief to those who need it the most.
“The premise of this tax bill is very Minnesotan. It’s very Minnesota nice,” he said. “It looks at our families, it looks at our seniors and asks: How can we be of the most help?”
Under the House proposal, state taxes on Social Security income would be eliminated for joint filers earning up to $75,000 and $58,600 for individual taxpayers. That contrasts with the Senate proposal to eliminate the tax on Social Security income for all filers. Democrats have said the Republican push to eliminate all state Social Security taxes would largely benefit the highest earners.
For families, the House plan would provide a one-time tax rebate of $325 per child age 16 or younger. A child care credit would provide $3,000 for each child under the age of 5 and provide up to a maximum of $7,500 each year.
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The proposal also includes $275 million in direct dollar-for-dollar property tax cuts, which would be the biggest cuts in 20 years, Marquart said. Student loan debt relief tax credits would also grow under the Democratic-Farmer-Labor-led plan, increasing from the current maximum of $500 to $1,400. Marquart said 42,000 filers would be eligible.
The Senate tax bill passed on April 7 would do away with state taxes on Social Security payments and decrease the rate of the state’s lowest income tax bracket. That proposal, sponsored by Sen. Carla Nelson, R-Rochester, passed 42-24 with some DFL support.
Now that the House tax plan has passed, the House and Senate will likely hash out differences and negotiate a final proposal in a conference committee before they can vote on anything they can send to the governor’s desk. DFL proposals to provide tax credits and rebates to seniors, families and others will need to be reconciled with Senate Republicans’ proposal to cut the lowest income tax bracket rate from 5.35% to 2.8% and eliminate state Social Security income tax.
The clock is ticking. The legislative session must wrap up by May 23, and Gov. Tim Walz said he does not have any interest in calling lawmakers back for a special session.
During roughly five hours of House floor debate Wednesday, Republican representatives said the House proposal did not go far enough, and that lawmakers should use the state’s historic $9.25 billion budget surplus as an opportunity to provide significant tax cuts. Rep. Glenn Gruenhagen, R-Glencoe, pointed to potential indications that the economy could get worse in the next few years as the country grapples with inflation and higher interest rates.
“There are storm clouds on the horizon,” he said. “We also have higher electricity costs, higher food costs — in almost every area. Give these people a break, cut taxes dramatically and you will cushion yourself from the next recession.”
