Dayton signs $21 million tax cut bill

Gov. Mark Dayton signed the first bill of the new legislative session Friday, approving about $21 million in tax cuts that include deductions for teachers, college students and some homeowners.

The bill, passed unanimously in the House and Senate, brings Minnesota in line with the federal tax code. Dayton said it's a heartening early example of bipartisan cooperation, calling it a "great way to start the session." He praised his fellow DFLers and Republicans alike for acting quickly to approve the reforms before the start of tax filing season.

"To get the Legislature to act on anything, especially a tax bill, at this early stage is an achievement," he said.

The state last approved a similar tax bill in 2015.

Tax cuts in the bill are expected to reach more than 200,000 Minnesota taxpayers. That includes approximately 70,000 teachers, who will be able to deduct up to $250 spent on classroom supplies. About 35,000 college students will be able to deduct up to $4,000 of their tuition, depending on their income. Cuts will also benefit people who refinance their homes or underwent a short sale.

A much smaller sector that will benefit: Minnesota Olympians and Paralympians, whose prize money for winning medals won't be included in their taxable income.

The bill also includes provisions meant to simplify the process for people who file taxes on paper, reducing the number of forms they need to turn in. The state will update electronic documents before filing season begins so the changes will be ready for people filing 2016 returns. Some people will also see refunds for their 2015 tax bills, which will be taken up after the current filing season.

The bill Dayton signed Friday contained some of the provisions in a larger, $300 million tax bill that he proposed last year. That plan would have affected an estimated 450,000 people.

While Dayton and legislators cheered the quick passage of the tax bill, the governor said other bills may face more challenges. Chief among them are the Senate and House bills on health care premium relief that could reach the governor's desk as soon as next week but are still hung up in disputes between the two parties.