Stay up-to-date on the latest firm, tax, and regulatory updates by joining our newsletter!
Earlier this week, Minnesota Governor Tim Walz and legislative leaders announced they had agreed on a state budget deal that will bring Minnesota’s taxes on unemployment payments and forgiven Paycheck Protection Program (PPP) loans in line with the federal government’s. Specifically, the state will exempt $10,200 of unemployment benefits from state income taxes and will exempt all forgiven PPP loans.
Many states have followed suit in exempting these types of income from taxes. Minnesota lawmakers debated plans for months, but did not come to an agreement until Monday, the day taxes were due for individuals. It is important to note that the deal has been announced, but has yet to actually be incorporated into legislation, passed by both houses of the Legislature and signed by the governor.
If the deal is signed into law, the Department of Revenue will review the law and determine whether adjustments can automatically be made on returns. If the state can’t make automatic adjustments, it will notify taxpayers and ask them to file an amended return. The Department of Revenue also stated that there will likely be a significant number of returns that it will not be able to automatically adjust, and it will depend on the complexity of the returns, as well as the complexity of any tax bill passed.
A special session is needed to finalize details and draft the legislation; that session is expected to occur no later than mid-June.
Boeckermann Grafstrom & Mayer (BGM) will continue to monitor this issue and keep you apprised of any changes. Please feel free to contact your BGM professional if you have specific questions or concerns.
Please SUBSCRIBE to our newsletter and you’ll receive practical, actionable updates on a regular basis.