Proposed deal eliminates MN taxes on Social Security

·2 min read

The Minnesota Legislature appears ready to eliminate all taxes on Social Security benefits while boosting credits for renters and slightly lowering the first tier tax rate.

Those are all included in a tentative proposal posted briefly online Saturday by the bipartisan conference committee of House and Senate members working to finalize how to divide $4 billion in tax breaks. The spreadsheet was quickly removed from the committee web page, but a House staffer confirmed, while it was from Friday night the big changes it included line up with what is in lawmakers’ agreement.

The deal would stretch over the next three years and tap the state’s budget surplus to pay for the loss in revenue. House leaders see the tax changes as leverage to win agreements on other spending and it will likely be one of the last bills the Legislature passes before its deadline at midnight Sunday.

Under the tentative plan, the first tier tax rate would fall to 5.1 percent from 5.35 percent. It would impact the first $28,080 in earnings for single filers and $41,050 for couples.

The quarter-point reduction would cut taxes for individuals by about $70 a year and $103 for couples. People who earn less than the amount at the top of the tier would get less of a tax cut.

Lowering the rate would reduce revenues by an estimated $272 million next year and about $200 million annually.

The plan also eliminates state income taxes on Social Security. Doing so reduces revenue by about $510 million next year and roughly $550 a year going forward.

Renters would also benefit from increased tax credits worth about $373 million annually.

The tax conference committee met briefly Saturday morning to discuss policy provisions and is expected to reconvene this afternoon to talk about tax breaks.

Lawmakers have until midnight Sunday to finalize $4 billion in tax cuts and $4 billion in supplemental spending. With fewer than two days left, deals appear to be coming together, but so far, none have been completed.

This story is developing and will be updated.

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