Minnesota’s legislature will head into complicated waters as it figures out what the Tax Cuts and Jobs Act will mean to the state’s tax collections.
If Minnesota fully conforms to the new federal tax law tax collections are projected to increase by about $459 million in the 2018-19 budget cycle, according to the Minnesota Department of Revenue.
According to Minnesota House Taxes Committee Chair Rep. Greg Davids, the federal act removed and limited deductions and exemptions on personal income that raised revenue. This in turn, increased the state’s standard deduction, and increased other programs like the doubling of the per-child tax credit which reduced revenue.
The federal act’s complexities along with Minnesota’s current tax policy mean that Minnesotans could see as high as a $1.1 billion tax increase in fiscal years 2020-2021 if the legislature simply conformed to all the federal changes and made no corrective actions to negate these projected increases, which is very unlikely.