Will Your State Raise Taxes?
May 28, 2013
The State of Minnesota just passed a new Tax Bill that will raise approximately $2.1 billion in new revenues. Almost all segments of business and individuals are affected by the new bill.
Our firm has provided a recap of the major changes that can be accessed here. As a result of these changes, many Minnesota farmers that have cash rent income for 2013 could very easily be in a combined 50% or higher tax bracket.
This is comprised of the following items:
- Highest federal rate of 39.6%
- Net investment income tax rate of 3.8% on their cash rents
- Minnesota top tax rate of 9.85%, and
- Most likely an effective 1% extra sur-tax related to the phaseout of itemized deductions.
If you add all of these tax rates together, you get an effective rate of 54.25%. The actual rate may be a little lower due to state taxes being deductible for federal purposes, but the final combined number is very close to or exceeds 50%. This top tax rate of 9.85% is now one of the five highest in the Country (still has a way togo to catch up to California's 13% plus rate).
Additionally, if a farmer in Minnesota has an entity that is subject to the Franchise Tax, this is expected to almost double in some cases. For example, if the combined property, payroll and sales of the entity $9.5 million, the old Franchise Tax was $1,000. The new Tax is $,870.
The bill contained 552 pages and many other tax increases were enacted. Will your state be next.