Minnesota has recently passed a number of tax law changes. These tax law changes could be significant depending on your tax situation. Below are some of the highlights for these changes.
Net Investment Tax
Starting in the tax year 2024, there will be an additional 1% tax on net investment income over $1 million. Net investment income includes interest, dividends, capital gains, rental and royalty income, and other similar income. There are certain investment deductions that reduce this income. This mimics the Federal net investment income tax.
Itemized Deduction Limitation
For taxpayers with AGE over $220,650, there is a reduction in standard or itemized deductions. The reduction is the lesser of 80% of the amount of deductions or 3% of AGI up to $304,970, plus 10% of AGI greater than $304,970. The calculation goes away for taxpayers with AGI greater than $1 million and becomes just a straight 80% reduction in standard or itemized deductions.
Direct Tax Rebate Payments
There will be a one-time income tax rebate using tax year 2021 to determine eligibility. A married couple with AGI of $150,000 or less will receive $520, single taxpayers with AGI of $75,000 or less will receive $260. There will also be $260 payment for each dependent claimed on your return, up to three dependents.
At Malloy, Montague, Karnowski, Radosevich & Co., P.A. (MMKR), we stay up to date on the ever-changing tax world so you don’t have to. If you want to know how these and other changes to the Minnesota tax laws impact your taxes, call our team today to schedule a consultation with one of our accountants.