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.

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