Minnesota Senate Republicans are proposing a reduction in the lowest state income tax bracket, from its current rate of 5.35 percent to 5 percent by tax year 2018.
The first bracket covered income up to $37,110 for married joint filers in tax year 2017.
Details of the Senate tax bill released Wednesday show an initial rate reduction to 5.15 percent in tax year 2017 before the full reduction kicks in the following year. The cut would cost $393 million for the next two-year budget cycle, and $402 million for the following biennium.
In presenting the broader bill, Senate Taxes Committee Chair Roger Chamberlain, R-Lino Lakes, said it aims to bring some tax relief to all Minnesotans.
“We made an attempt within the budget limits that we have to have a simpler, more predictable, fair and sustainable – at least go down the path in that direction — tax system in all areas,” Chamberlain said. “We can’t achieve everything in one year, obviously. But that has been our goal.”
The Senate bill, which totals $900 million in tax cuts, also reduces the income tax on Social Security and provides property tax breaks for businesses and farmers.
The bill eliminates automatic increases in the statewide business property tax rate and exempts the first $100,000 of property value. Those changes would have an initial two-year cost of $95.6 million. But the total jumps to $194.6 million in the following biennium.
There are tax credits for college graduates paying off students loans and for donations to entities that provide education scholarships.
Chamberlain’s committee will hear testimony on the bill Thursday.
House Republicans will put their $1.35 billion tax cut bill to a vote Thursday.
Both GOP proposals far exceed the $300 million in tax cuts that DFL Gov. Mark Dayton proposed.