On May 25, 2019, Minnesota state legislators passed a $48.3 billion budget. One of the many things involved in this budget is a tax bill that makes Minnesota tax law conform with the Federal Tax Cuts and Jobs Act. What does this mean for you?
For starters, on the individual side of tax changes personal exemptions will no long exist. The standard deduction will match the Federal which is $12,200 filing single and $24,400 married filing joint for the upcoming year. Miscellaneous itemized deductions that were subject to 2% of AGI such as tax prep fees and cost of producing income will no longer be deductible. And another thing worth noting is medical expense deduction will be increasing from 7.5% of your AGI to 10% of your AGI.
For business tax changes, Section 179 increases to match the Federal amount of $1 million, though the 80% add-back rule is still in effect. More businesses will have the availability to use the cash basis over the accrual basis. And business interest deductions are capped at 30% of adjusted taxable income.
This is just a taste of the changes that will be taking place in the upcoming tax season. Here is a link to look at all the changes: https://www.house.leg.state.mn.us/hrd/bs/91/2019-1/HF0005.pdf. If you would like to discuss what these changes mean for you and/or your business please reach out to your SDK tax advisor.