ST. PAUL, Minn. (KMSP) - Minnesotans will likely see an increase in income taxes next year after Gov. Mark Dayton vetoed a tax bill meant to bring the state tax code in line with the new federal system following a sweeping overhaul passed by the U.S. Congress last year, according to Certified Public Accountants who spoke with Fox 9.
It's also going to get harder to file returns because the new federal tax code uses a different formula to arrive at your taxable income, they said, forcing Minnesotans to essentially calculate their tax return twice. The bill vetoed by Dayton this week would have simply copied the federal formula.
"I'm very concerned for the taxpayers of Minnesota," said Todd Koch, a CPA with Jak & Company. "Without any changes, it is a very rare person that would pay less and almost everybody will pay more."
In a letter to legislative leaders this spring, state Revenue Commissioner Cynthia Bauerly said the state would have to draft more than 80 pages of new income tax instructions because Minnesota isn't currently seeing any reduction in rates or an expansion in credits but the federal system is. The work for many government agencies begins now to update the state's computer system and coordinate with software vendors like TurboTax to rewrite the programs for next year.
All this results in the average family of four having to pay $1,100 more in state income taxes.
"One thing that will happen is because Minnesota's law currently includes things like itemized deductions and the federal law no longer allows those itemized deductions, people will need to remember to keep those receipts and their backup for those types of itemizations," Bauerly said.