ST. PAUL — Hundreds of thousands of Minnesota residents will see their state tax burdens drop thanks to a bill that won final backing Friday from the Legislature and Gov. Mark Dayton.
By lopsided margins, the House and Senate approved the $434 million relief package containing extra deductions and exemptions that can be claimed on this year's tax forms and many more that can be accessed next year. The bill also repeals three controversial business sales taxes beginning in April. And it raises the balance of the state's reserves by $150 million.
Calling it a "monumental victory," Dayton and legislative leaders hailed it an hour before the final House vote. The governor said he wouldn't waste any time signing it.
"I'm not aware of a time when a major tax bill has passed this quickly," Dayton said.
It lines Minnesota's tax code up with more deductions available to federal filers, which will reduce state tax burdens for qualifying residents.
Among the recipients would be those eligible for working family credits, recent college graduates paying off loans and people receiving certain tuition allowances. Those who lost homes to foreclosure or unloaded them in short sales in the last year would get some of the largest relief. Dayton's administration said at least 300,000 and as many as 500,000 tax filers could qualify for one or more breaks.
Revenue Department Commissioner Myron Frans said programmers would work through the weekend to update state filing systems and software. He urged people who might qualify for the new deductions to wait until Monday to submit a return. Those who have already filed will get a refund automatically or be contacted by the department later this spring about amending their return.
About half of taxpayers have already filed this year.
The proposal marks a sharp turn from last spring, when lawmakers digging out of a budget hole and intent on repaying old IOUs raised taxes by more than $2.1 billion. A recent economic report showed Minnesota was on pace to have a $1.2 billion surplus by the summer of 2015.