Mar 14, 2022 - Politics

Big tax hike could hit Minnesota businesses Tuesday

Illustration of the Minnesota State Capitol with lines radiating from it.
Illustration: Brendan Lynch/Axios

Businesses across the state will face a big tax increase starting Tuesday if the divided Legislature can't strike a deal on refilling the state's depleted unemployment benefits fund.

The big issue: The state had to borrow from the federal government to pay out unemployment claims during the pandemic.

  • Now, the Unemployment Insurance trust fund is more than $1.3 billion in debt and if it isn't replenished, first quarter payroll tax bills go up 30% on average to pay it back.

The hold up: Majority House Democrats want to link a UI fix to increasing the pot of money for stalled frontline worker bonuses to $1 billion.

  • GOP leaders in the Senate, which passed a $2.7 billion bill last month to refill the fund, don't want to increase the hero pay pool.

Of note: House Speaker Melissa Hortman has suggested the Legislature has until April 30, the last day companies can pay the quarterly bill with a penalty, but business leaders and the state employment agency say waiting will create a budgeting and logistical headache.

  • "Delaying past March 15 creates confusion for businesses, and it might take months to recalculate bills and provide refunds to businesses who overpay," DEED commissioner Steve Grove tweeted Friday.
avatar

Get more local stories in your inbox with Axios Twin Cities.

🌱

Support local journalism by becoming a member.

Learn more

More Twin Cities stories

No stories could be found

Twin Citiespostcard

Get a free daily digest of the most important news in your backyard with Axios Twin Cities.

🌱

Support local journalism by becoming a member.

Learn more