Legislators reach agreement on tax bill

Legislative leaders reached an agreement on a $900 million tax bill Tuesday, according to state Sen. Ann Rest, DFL-New Hope, who is on the Taxes Committee.

The tax bill includes a significant change that will exempt federal unemployment benefits and Paycheck Protection Program business loans from taxation, in line with federal policy. Several states adopted the change earlier in the year, while Minnesota lawmakers debated the proposal for months.

It will also establish a film production tax credit at $5 million each year for fiscal years 2022 through 2025. Entertainment unions and film credit advocates lobbied the Legislature for a $25 million program, arguing that films and shows based in Minnesota have been shot out-of-state, Variety reported. 

“It’s not a disappointment,” Melodie Bahan, executive director of MN Film and TV, told Variety. “I certainly understand that from the legislators’ point of view, we’ve never had this program in the state. They need to make sure it works. Starting it at a low level is going to help us ensure we can make it a success, and provide the kinds of economic benefits and jobs we expect.”

The bill includes changes to the state’s tax credit for low-income working parents and credit increases for some taxpayers, a continuation of the historic preservation credit and an extension of a credit for startups.

Tax hikes on the wealthiest Minnesotans, sought by Gov. Tim Walz early in the year and opposed by the GOP, are not included.  

The agreement comes two weeks before lawmakers’ deadline to complete the $52 billion budget or send the state government into a shutdown. A handful of budget bills have been completed, with several — including major spending areas like education and human services — still outstanding.