ST. PAUL – The House on Thursday approved a bill providing $1.35 billion in tax relief over the next two years, including a $270 million reduction on the state social security income tax.
It is the first House omnibus finance bill to receive a floor vote this session, something Rep. Joe McDonald, said is indicative of the House Republicans’ commitment to providing tax relief. The House’s proposed tax reduction in H.F. 4 is larger than plans offered by either the Senate or Gov. Mark Dayton.
“The reason the state has a surplus is because taxpayers has overpaid," McDonald said. “The plan we put forward would benefit everyone from families with young ones in child care, to senior citizens, Main Street businesses, farmers, college students and beyond. Our taxpayers have been clobbered by the state for too long. They deserve some breathing room and the House proposal provides it.”
Other provisions in the bill include one that would benefit middle-class families with $35 million going toward modifying the child and dependent care credit. A family of four with childcare expenses would be estimated to receive $660 in relief.
More than $125 million would go toward addressing college affordability. Families saving for college using 529 Savings Plans will benefit from expanded subtractions and credits. In addition, 77,500 students will receive, on average, a $640 reduction in their taxes through a first-in-the-nation tax credit for student loan payments.
Hometown businesses would see $203 million to reduce the extra state property tax on businesses, exempting the first $200,000 in property value from the extra tax on businesses and freezing its automatic inflator.
Farmers also would receive significant relief, with $42 million to reduce the burden agriculture land owners pay for school bond referendums. Farms also would benefit from a measure conforming the state death tax to the federal exclusion.