Here's what Minnesota Gov. Tim Walz's budget proposal means for your bank account
Gov. Tim Walz's $65.2 billion budget proposal includes big spending increases and new tax credits and checks for millions of Minnesotans.
The big picture: Walz's plan, released in full Tuesday, represents a roughly 25% increase from the current two-year budget. It taps a $17.6 billion surplus to pay for hikes for schools, housing, and more government programs.
Zoom in: It also includes proposed tax credits and increases. Here's a look at how Walz's plan might impact your bottom line:
💵 Rebate checks: Direct payments of $2,000 for households with a federally adjusted income of less than $150,000 and $1,000 for individuals making less than $75,000. Families could get an additional $200 per child, for up to three dependents.
👶 Child tax credits: Families making less than $50,000 could receive $1,000 per child, for up to three children. The credit phases out for higher income households. Additional tax credits would offset the cost of childcare.
👵 Social security taxes: Instead of fully eliminating state taxes on Social Security income, Walz proposed increasing the "subtraction" that lowers seniors' tax liability on the payments from about $5,800 to $10,000. The relief would phase out for households making $120,000 or more.
💸 Tax increases: Walz wants to raise capital gains taxes by 1.5% on income between $500,000 and $1 million, and 4% on income over $1 million. The Minnesota Chamber of Commerce says it would be the highest such rate in the nation.
- A payroll tax increase for employers and employees, set to start in 2026, would also be used to pay for a new state-run paid family leave program.
Between the lines: Walz's proposal directs the most aid to families in lower income brackets, a change from the across-the-board tax cuts on the table when government was divided last year.
- For example, a married couple making $50,000 with kids ages 4 and 6 would net about $9,900 in tax savings, the state's top budget official told reporters.
- A single person with no children and a federally adjusted income of $76,000 doesn't qualify for any of the touted credits.
What's next: The state Legislature will weigh the proposals and craft spending bills in the months ahead. A DFL trifecta doesn't mean the governor's full plan gets the green light.
- Leading business groups are already raising alarm about the tax and spending levels.
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