A controversial law signed in 2017 portends big changes for Minnesota residents. Minnesota’s Omnibus Tax Bill, the first major tax legislation since 2014, addresses a number of issues. It’s important to understand how the bill affects you, especially when it comes to business, estate planning, and taxes.
Estate Tax Exemption
Minnesota is one of the few states that collects an estate tax. An estate’s tax bill depends on factors like the value of the estate, the residency of the deceased person (the “decedent”), and the prevailing exemption amount.
The new Bill increases the exemption amount from 2016 exclusion of $1.8 million to an exemption of $3 million by 2020. This means that by 2020, estates valued at less than $3 million will be exempt from the Minnesota estate tax. The increase will be implemented in four steps.
Also, taxable gifts made within three years of death are now subject to Minnesota estate tax. This change is retroactively effective to the date Minnesota required these gifts to be part of the Minnesota taxable estate.
The Omnibus Bill also modifies the way an individual’s domicile is determined. For tax years after 2016, the location of the individual’s attorney, CPA, financial advisor, or certain financial institution cannot be used to determine a person’s domicile. Prior to the Omnibus Bill, the Minnesota Department of Revenue considered this information when deciding if someone was required to pay Minnesota taxes. Such regulations were put in place before the rise of online banking. Now, it’s very likely that a Minnesota resident may physically move to another state while maintaining accounts with financial institutions with Minnesota locations.
Sales Tax Exemptions
Numerous changes were made to sales tax definitions, exemptions, and rates. For example:
- The exemption for nonprofit fundraising sales on leased property increased to 10 days.
- Sales tax exemption on telecommunications equipment was extended to include fiber and conduit purchases.
- Certain cities and counties received increased local sales taxes.
- Some marketplace providers with a Minnesota location are now required to collect and remit sales taxes. They may be exempted if they were already collecting the sales tax or if they less than $10,000 of taxable sales in Minnesota, with no other links to Minnesota.
Wondering How the New Tax Law Will Affect You?
At Virtus Law, we have the experience to address your concerns. To schedule an appointment with one of our estate planning attorneys, contact us at 612.888.1000 or send an email to email@example.com. Our main office is in Minneapolis, but we serve other communities like Edina, Mendota Heights, and Red Wing.