Minnesota House submits proposal for tax increases
April 27, 2023
With the current legislative session ending in May, the Minnesota House released a tax proposal that includes the creation of two major tax increases that would impact high-income residents and corporations. The first is a new fifth-tier income tax rate of 10.85%, and the second an increased in taxes on multinational corporations via mandatory combined worldwide reporting. The fifth income tax tier of 10.85% would affect married couples with incomes of $1 million and $600,000 for individuals. The current top rate is 9.85%. The new tier would affect 24,200 taxpayers, or about 0.8% of all filers, with an average increase of $9,231 a year. The proposed change in how corporate income is calculated would include income held in other countries. Taken together, the two proposed tax increases equal nearly $1 billion over the two years beginning July 1.
Chris Powers, who leads Abdo’s tax department says her team is ready to help businesses impacted by these bills should they pass. “We are seeing the proposed tax law changes moving swiftly through Minnesota legislature,” said Powers, “As soon as we have the final law details we will educate our clients and create a plan so they are ready for tax day.”
In addition to these proposals, the Minnesota Paid Family and Medical Leave bill would give workers up to 12 weeks of paid medical leave and 12 more weeks of paid family leave funded by the state budget surplus and a new $2.9 billion payroll tax.
Abdo’s Leah Davis, who leads the firm’s HR & Payroll team, is keeping a close eye on these developments that would impact Minnesota employers. “All signs point toward sweeping workplace policy and payroll tax legislation for Minnesota employers in 2023,” said Davis. “It’s our priority at Abdo to make sure our clients are prepared to understand, comply and educate their employees on these changes related to paid family leave, employment agreement limitations, and safe and sick leave, among others, as they roll out.”
The nearly $17.9 billion increase resulting from these proposed taxes would represent a more than 30% increase to the state’s current $52 billion two-year budget. Abdo will continue to monitor issues at the Minnesota Capitol that have financial implications for the state’s business owners and our clients. Please reach out to us if you have any questions or concerns as we await the outcome.
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Chris Powers, CPA
Chris helps her clients confidently navigate tricky tax laws and complex regulatory challenges.
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