Minnesota/Wisconsin Tax Reciprocity Could Return

Minnesota residents who commute across the border into Wisconsin for work could soon save money on their income tax returns. The 2017 tax bill, which passed the legislature last week and was signed into law by Gov. Mark Dayton on May 30, included a provision authorizing a new income tax reciprocity agreement between Minnesota and Wisconsin.

Income tax reciprocity Minnesota Wisconsin

Minnesotans who travel to Wisconsin for work got some good news as part of the 2017 tax package signed by Minnesota Governor Mark Dayton contains a new reciprocity agreement between Minnesota and Wisconsin. (photo from the St Paul Pioneer Press)

The income tax reciprocity provision calls for a dual track approach: for tax year 2017, Minnesota residents working in Wisconsin will be eligible for an income tax reciprocity tax credit. Additionally, the bill instructs the commissioner of the Minnesota Department of Revenue to work with the secretary of the Wisconsin Revenue Department to enter into a new income tax reciprocity agreement for tax year 2018. If the two states are unable to reach an agreement, the tax credit will continue for Minnesota residents.

“Income tax reciprocity is a huge issue for our area,” said Sen. Jeremy Miller (R-Winona), who authored an income tax reciprocity bill early in session. “Thousands of people live in Minnesota but commute to Wisconsin for work – in fact, Houston County is the number one county in Minnesota impacted by the lack of a reciprocity agreement. I have spent years working with Rep. Davids and others toward a bipartisan solution to make filing tax returns more convenient for these residents. I’m very happy we were finally able to get this signed into law.”

The tax bill stipulates that a reciprocity agreement must include the following:

 

  • A provision providing for suspending the agreement if either party does not pay on time
  • A provision setting the interest rate that will be applied
  • A provision stating a time for annual reconciliation
  • A provision requiring both parties to conduct joint benchmark studies about the agreement every five years
  • A provision providing for an annual application for taxpayers who request an exemption
  • A provision stating the quarterly payments must be a reasonable estimate of loss

“This was one of the most productive legislative sessions we have had in a long time,” continued Sen. Miller. “In addition to tax reciprocity, the tax relief package included targeted relief to middle income families, senior citizens, small businesses, and farmers, as well as a first-in-the-nation student loan tax credit, which I authored in the Senate. Finally, this bill included additional permanent, ongoing local aid for cities and counties. I’m proud of the things we were able to get done for the people of Minnesota.”

There was an income tax reciprocity agreement in place from 1968 to 2009, but it was terminated because Wisconsin was not making timely reimbursement payments. An income tax reciprocity tax credit was included in the bipartisan tax bill that passed at the end of the 2016 before ultimately being vetoed by the governor.

Agriculture News at the Minnesota Legislature

Minnesota Legislature In my years of living and working in Minnesota, I’ve watched the state legislature as part of my roles in broadcasting and journalism, and it’s safe to say the polarization along political lines is as big a challenge as it’s ever been. But it’s good to see that agriculture can actually play a part in bringing the Minnesota Legislature to the table to get things done.

I offer as proof a conversation I had last week with Thom Peterson, the Director of Government Relations with the Minnesota Farmers Union. If something is happening that could potentially affect the state’s agriculture industry, he’s one of the people that’ll know about it before the public. The legislature recently passed an ag appropriations bill and Peterson said it’s a good example of how people at the capitol can still work together.

Property tax Minnesota Legislature

Thom Peterson is Director of Government Relations for the Minnesota Farmers Union

“The Ag Appropriations Bill for the House of Representatives passed last week 134-0,” he said, “which I think is kind of neat because, in this day and age when a lot of people are on opposite ends of the spectrum, a lot of times ag groups and legislators are still able to work together.”

The Chair of the Agriculture Finance Committee in the Minnesota Legislature is Republican Rod Hamilton from southwest Minnesota and Jeanne Poppe, a Freeborn County Democrat, is the DFL lead on the Ag Finance Committee. Peterson said she worked with Representative Hamilton to pass a good bill that both parties could agree on.

One of the interesting things about the Appropriations Bill is funding for more hemp production in the state. Peterson said production has grown in the last couple of years in different parts of the state. The law allowing production first passed in 2015, with seven farmers growing 35 acres of hemp for the first time in 50 years.

This year, he said more than 40 farmers are going to plant 2,000 acres of hemp in Minnesota. Folks may hear hemp and automatically associate it with marijuana. This is not the same thing as growing an illegal drug in a farm field. Hemp is potentially a very valuable product for the state’s farmers.

“I always say you’d have to smoke 40 acres of it to have a chance to get high,” Peterson said. “It has no THC value (the chemical that induces the “high”). Canada has been growing and selling it to us for years with no problems.”

Other things looming for agriculture is the potential for some property tax relief for farmers and gricultural landowners. Here’s the conversation I had last week with Thom: