Less than a week after tax filing season began for most Minneosatons, Gov. Mark Dayton signed legislation updating the state's tax code to bring in line with recent federal tax changes that will provide $20 million in tax breaks for school teachers, homeowners paying mortgage insurance and college students.
HF 6 over the weekend became the session's first law. It sailed through the House and Senate as lawmakers raced to get the bill approved for Dayton's signature.
Because tax filing season for most Minnesotans opened Jan. 20, the Legislature acted quickly to avoid forcing taxpayers who have already filed to submit amended state returns.
"We needed quick legislative action to ensure a smooth tax filing season for the thousands of taxpayers who began filing their taxes this week,” said Revenue Commissioner Cynthia Bauerly in a statement. "We applaud lawmakers and the Governor for their timely, bipartisan effort to pass this bill and make filing easier for Minnesota taxpayers.
Known as tax-conformity bills, this legislation comes up frequently at the Capitol. Every time Congress updates the tax code, states must decide whether to conform or leave taxpayers to navigate the difference between their state and federal filings.
Among the changes in the offing for Minnesota’s tax code:
• Teachers could deduct up to $250 in out-of-pocket classroom expenses. This change would affect as many as 60,000 filers.
• Extending the itemized deduction for mortgage insurance premiums that would affect 60,000 returns.
• A deduction for higher education, between $2,000 and $4,000 — depending on income — that would allow Minnesotans to write off college-related expenses. The income threshold for single filers would be $80,000 and $160,000 for joint filers. An estimated 9,000 filers are expected to qualify.