Error In New Tax Law Would Cost Minnesotans $352 Million

ST. PAUL, MN — Minnesota lawmakers and officials are scrambling after discovering a drafting error in a new tax law that would cost residents a total of $352 million.

On Friday, Minnesota Department of Revenue Commissioner Paul Marquart, Senate Tax Committee Chair Sen. Ann Rest, and House Tax Committee Chair Rep. Aisha Gomez announced they agreed to fix a drafting error relating to the standard deduction amounts.

The correction to the tax bill will be made in the 2024 legislative session, officials said.

"No taxpayers are impacted by this drafting error for the current 2023 tax year," read a statement from the Department of Revenue.

"If an update is made during the 2024 legislative session, no taxpayers would see an impact to their tax filing due to this drafting error."

In 2019, legislators doubled the standard deduction for state taxpayers. They set the amount for a married joint filer at $24,400 and a single filer at $12,200. Lawmakers also directed the Department of Revenue commissioner to adjust those amounts annually for inflation.

After four years of inflation adjustments, the 2023 standard deduction for a married joint filer is $27,650 and $13,825 for a single filer, officials said.

However, tax legislation signed into law in May mistakenly used the 2019 standard deduction amounts for the starting point in tax year 2024 instead of the inflation-adjusted amounts of $27,650/$13,825, "eliminating four years of inflation adjustments."

If lawmakers fail to remedy the mistake next session, the vast majority of Minnesotans would see their taxable income increase when filing their 2024 taxes.

Reporting from the Associated Press was used in this story.