Calculator: See how Walz tax credits, rebates, and tax increases would impact you
(FOX 9) - Minnesota Gov. Tim Walz is proposing rebate checks and an expansion of two tax credits for families with young children that he considers the biggest tax cut in state history. Use this calculator to see how much you'd receive. Then, read below for more details about the other ways that Walz's budget plan could impact your personal budget if lawmakers pass it.
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Rebate checks: Individuals making less than $75,000 a year would receive $1,000. Married couples earning less than $150,000 would get $2,000 from the state. Parents would receive an additional payment of $200 per dependent child, up to $600. Walz estimated that 2.5 million households will get a check, and the rebates will cost $4 billion. Walz slashed the income limits roughly in half since he first proposed rebate checks last year, cutting an estimated 200,000 households from the program.
Child tax credit: Walz's budget would expand the state's child tax credit, so that families get $1,000 per child under age 18, with a $3,000 maximum. The credit would phase out between $50,000 and $60,000 in household income, and between $33,300 and $43,300 for single filers.
Child and dependent care credit: Families would get $4,000 per child under age 5, with a maximum of $10,500, for child care expenses. Older children would qualify for a $1,500 credit, with a maximum of $3,000. The credit is equal to 50% of qualifying child care expenses. The benefit phases out between $200,000 and $240,000 in household income for both married couples filing jointly and individuals.
Social Security exclusion: Walz's budget would increase Minnesota's subtraction that shields some Social Security benefits from state income tax. The change will save 43% of recipients an average of $278 per year, the governor said. Fifty-five percent of Social Security recipients already pay no tax. But the governor's proposal is far smaller than the full exemption of Social Security income that Republicans and several DFL senators favor.
Transit tax: People in the seven-county Twin Cities Metro would pay an additional one-eighth cent sales tax starting in October. The tax would eventually raise $93 million a year to plug gaps in Metro Transit's budget, which could ultimately help the agency pay for the behind-schedule Southwest Light Rail project. On $1,000 in purchases, a person would pay an additional $1.25 in tax.
Vehicle tab fee: Many drivers would pay more to register their vehicles. Minnesota's tab fees have three components: a $10 base fee, the manufacturer's suggested retail price, and the age of the vehicle. Under Walz's plan, the tab fee for a brand-new car would be based on 160% of the MSRP, up from 100% under current law. For a $30,000 vehicle, the fee would increase to $626 from $395. The fee increase would get smaller as a vehicle ages. And for vehicles at least 10 years old, the registration fee would change to $30, which is $5 less than current law.
Capital gains surcharge: Several thousand people would see a new tax on their capital gains and dividends. Walz would impose a 1.5% surcharge on gains and dividends higher than $500,000 a year, and a 4% surcharge on stock market earnings above $1 million a year, on top of the state's income tax. The new tax would affect 8,200 people, state officials estimate.
Payroll tax: Minnesota would join several other states in offering a paid family and medical leave benefit to all workers, who would be eligible for up to 24 total weeks of leave. Walz is calling for a 0.7% payroll tax to sustain the government-run system. The tax would likely be split between employers and employers. For a worker making $50,000 a year, the tax would be $175 for that worker and his or her employer.