January 13, 2015


State & Local Taxes in 2015


Minnesota Tax Code Features

Progressive Features

• Graduated personal income tax structure

• Income tax brackets, standard deduction, and exemptions are indexed to inflation

• Provides a refundable working families tax credit

• Provides a refundable property tax “circuit breaker” credit

• Sales tax base excludes groceries

• Requires the use of combined reporting for the corporate income tax

Regressive Features

• Comparatively high sales tax rate

• Comparatively high cigarette tax rate

Tax Changes Enacted in 2013 & 2014

• Cigarette tax increased

• Increased Working Families tax credit

• Added new top income tax bracket

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, Minnesota has the 45th most unfair state and local tax system in the country. States with regressive tax structures have negative tax inequality indexes, meaning that incomes are less equal in those states after state and local taxes than before (See Ap­pendix B for state-by-state rankings and more details).

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