Final tax bill
The tax bill made several updates and changes to conform Minnesota tax law with changes passed in the federal Tax Cuts and Jobs Act of 2017 (TCJA). The bill passed the Senate 52-15 and the House 74-54.
Some highlights include:
- A change to the starting point for determining individual income taxes from federal taxable income (FTI) to federal adjusted gross income (FAGI).
- Conformity to the standard deductions.
- Dependent exemption equal to that allowed under pre-TCJA law, but the personal exemption was eliminated.
- Creates a state itemized deduction for unreimbursed employee expenses.
- Section 179 conformity to the $1 million federal allowance, but the 80% add-back rule was retained.
- Temporary expanded bonus depreciation, but the add-back rule was retained.
- Business interest deductions are capped at 30% of adjusted taxable income.
- More businesses will have the option to use cash basis rather than accrual basis.
- Net operating carrybacks are no longer allowed, and carryovers are limited to 80% of the loss.
Tax bill documents
- Many Minnesota changes will take effect at the same time the federal changes took effect, resulting in retroactive conformity.
- The tax bill included a special adjustment for tax year 2018 that will result in most individual filers not seeing an increase or decrease in tax owed.
- Changes were made to the June accelerated tax liability formula. The rate increased from 81.4% to 87.5% for tax owed in 2020 and 2021. The rate will reduce to 84.5% for tax owed in 2022.
- Several new local option sales taxes were passed. The new rates, when effective, will be posted on the Department of Revenue sales tax map.