Tax law provides $443 million in relief

The law also allows a $150 million one-time transfer on July 1, 2014, from the General Fund to boost the budget reserve and a $1 million appropriation to the Revenue Department for the law’s implementation.

Sponsored by Rep. Ann Lenczewski (DFL-Bloomington) and Sen. Rod Skoe (DFL-Clearbrook), the law conforms the state’s tax code to several federal provisions and repeals three unpopular business-to-business taxes enacted last year.

“These tax cuts will put more money in the pockets of Minnesota families and businesses, and in the spirit of the ‘Unsession,’ make taxes simpler for Minnesotans,” Dayton said.

The bill has various effective dates, however many of the conformity provisions are retroactive beginning after Dec. 31, 2012.

Conformity provisions include:

·   expansion of the Working Family Tax Credit to include more families and an increase to the credit;

·   a $74 annual increase in the child care tax credit to qualifying families;

·   the ability to deduct college student loan interest and a $140 tuition deduction;

·   enabling businesses to offer employees tax-free tuition and adoption assistance;

·   an itemized deduction for mortgage insurance premiums;

·   an option for taxpayers to claim an itemized deduction for sales taxes rather than income taxes paid;

·   an increased maximum exclusion for employer-provided adoption assistance; and

·   authority for people age 70½ or older to transfer up to $100,000 from a traditional IRA or Roth IRA to a qualified charity.

Other items affecting personal taxes include:

·   repeal of the gift tax section of law retroactive for gifts made after June 30, 2013; and

·   adjustments to the estate tax by removing language allowing an exclusion for qualified small business and farm property.

The so-called marriage penalty will be eliminated beginning for the 2014 calendar year.

Business-related taxes and credits

All three business-to-business taxes enacted last year have been repealed as of March 31, 2014. Two of the taxes — the telecommunications equipment tax and the equipment repair tax — were effective July 1, 2013. No refund will be provided. The warehouse sales tax was set to take effect April 1, 2014.

The law will push back the effective date for an upfront sales tax exemption for capital equipment purchases after June 30, 2015.

With a carve-out directed at businesses in Greater Minnesota and those that are minority-owned, the Angel Investment Tax Credit has been extended and expanded. It was set to sunset this calendar year. For 2014, the allocation will increase from $12 million to $15 million. A credit will be available in that amount for 2015 and 2016.

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