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. Chris Swedzinski, R-Ghent, said underscores tax relief as a top priority for the Republican majority. The House’s proposed tax reform in H.F. 4 is larger than plans offered by either the Senate or Gov. Mark Dayton.
“Eliminating the tax on Social Security has been a battle we’ve been fighting as long as I’ve been in the Legislature,” Swedzinski said. “We’re one of the few states to fully tax Social Security and it really leaves us at a disadvantage in terms of keeping seniors in our state with dollars in their pockets. I am pleased this provision is in the bill.”
Other provisions in the bill include $203 million to reduce the extra state property tax on small businesses, exempting the first $200,000 in property value from the extra tax on businesses and freezing its automatic inflator.
Another measure 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.
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.