The state budget passed at the end of the 2023 legislative session containing $3 billion in tax cuts and credits aimed primarily at low-to-middle income Minnesotans with children. This is a historic step toward rebalancing the tax code, with tax increases targeted only at higher-income residents and corporations.

 

“We were really focused on who it is who needs help the most in this moment,” [Rep. Aisha] Gomez said in a MN House Publication written by Ron Hubbard. “The centerpiece of this bill is the governor’s child tax credit. According to the Center on Poverty and Social Policy at Columbia University, this will cut child poverty by one-third.”

 

In addition to this ground-breaking tax credit, many other provisions in the final tax legislation that Prepare + Prosper staff testified for ultimately passed and will greatly affect our customers. These include the Renter’s Credit changes and simplification, and updates that allow ITIN holders access to Homestead Credit. Additionally, the state revenue recapture program can no longer be applied to debts owed to private companies for medical debt.

And last but not least, $1.13 billion of the state’s surplus will be mailed as direct payments to taxpayers. The amounts will be $260 per filer and dependent (up to three dependents), if household’s income is $75,000 or less a year or $150,000 for those married filing jointly.

 

The following are some details and links to more information, as shared directly from our partners at the Minnesota Budget Project. (note: links will take you to detailed articles on the MN Budget Project website)

Unleashing the power of the tax code to advance economic security and equity:
  • A game-changing new tax policy is the Minnesota Child Tax Credit, which builds on the lessons of the successful federal expanded Child Tax Credit and is aimed at reducing child poverty and increasing economic security for families across the state. The Child Tax Credit will boost qualifying families’ incomes, making it easier to pay for things like diapers, food, rent, or other basic necessities.
  • Policymakers also simplified and expanded Minnesota’s Renters’ Credit, which reimburses folks for some of the property taxes they pay through their rent. This is another way to address the rising costs of housing.
  • This year’s tax bill ends a number of arbitrary barriers keeping some Minnesotans from accessing positive features of the tax code, especially for those who use an Individual Taxpayer Identification Number (ITIN) for tax purposes.
  • One of the more harmful tax proposals at play this session was an unlimited tax exemption for Social Security benefits, which would have given the largest tax cuts to high-income seniors and drained resources from public services that seniors, their children, grandchildren, and neighbors count on. We shared the facts about full exemption, and ultimately policymakers took a targeted approach to expanding this income tax exemption.