New MN Estate Tax Relief Retroactive to January 1, 2017 - or is it?
After tumultuous regular and special sessions, the Minnesota Legislature sent a number of bills to Governor Dayton last week. On Tuesday, Governor Dayton announced he would allow H.F. 1, the omnibus tax bill, to become law by not vetoing it (he later signed the bill to avoid ambiguity). The tax bill includes changes to the estate tax as follows:
The 2017 exemption is bumped up to $2,100,000 from $1.8 million
2018 exemption is now $2.4 million
2019 exemption is now $2.7 million
2020+ exemption is $3 million
These changes increase the overall estate tax exemption from $2 million (currently being phased in and would be completely phased in next year) to $3 million over a four year period. Don't forget that farmers and small business owners can pass up to $5 million without paying estate tax; learn about the qualified family farm land deduction here.
However, in response to an attempt at the legislature to defund the Minnesota Department of Revenue if Dayton vetoed the tax bill, Governor Dayton instead defunded the Legislature for the next two years using line-item vetoes. Dayton is asking for another special session that would eliminate the estate tax exemption increase, tobacco tax breaks, and a few other tax breaks. Governor Dayton's letter outlining this is available here. At this point, it seems likely the Legislature will sue the Governor over its funding instead.
For an overview of the estate tax, read our post on death taxes.
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