The plan raises $1.636 billion in additional income tax revenues by: 

• Creating a new, fifth tier income tax bracket for household incomes above $1 million, $750,000 for head of household, and $500,000 single;
• Adding a 1.5-4% tax on capital gains and dividend income;
• Raising the tax on foreign income;
• Increasing the corporate franchise tax from 9.8% to 11.25%;
• Reinstating the estate tax exclusion at $2.7 million (except for small businesses and farms that would be exempt to $5 million); 

The Governor does propose several tax cuts including expanding the threshold for the state’s first-tier tax bracket and an expanded working family tax credit.

Budget Proposals

The Governor’s proposed budget would be the largest in state history, and calls for additional spending for education, economic recovery, and working families; including:

• $745 million increase in E-12 education spending;
• $50 million for small business forgivable loan program;
• $50 million for broadband grants;
• One-time payment of up to $750 for those who qualify for Minnesota Family Investment Program (MFIP); and
• Creating a new paid family leave program that provides 12 weeks of leave to workers following the birth of a child or to care for a family member;
• $50M in forgivable loans to help the hospitality industry business and others hit by COVID; and
• $150M to rebuild Twin Cities corridors damaged by civil unrest.

The Governor proposes to preserve Local Government Aid and County Program Aid funding at the current funding levels.

Republican legislative leaders were quick to criticize the Governor’s budget proposal stating that the budget can be balanced through cutting spending and utilizing the state’s healthy budget reserve instead of raising taxes. Democratic lawmakers, however, praised the Governor for addressing the tremendous needs in education, for helping families in need, and businesses struggling to survive.

Important Dates

End of February/Beginning of March
February state budget forecast is released

March 12
1st Committee Deadline - committees must act favorably on bills in the house of origin

March 19
2nd Committee Deadline - committees must act favorably on bills, or companions of bills, that met the first deadline in the other house

March 26 - April 5
Easter/Passover Break - the legislature is in recess

April 9
3rd Committee Deadline - committees must act favorably on major appropriation and finance bills

May 17 
The legislature must adjourn

Please note: Committee deadlines do not apply to the committees on Capital Investment, Ways and Means/Finance, Taxes, or Rules and Legislative Administration.