On May 20th the Minnesota Legislature passed an omnibus tax bill which will soon go to the governor to be signed into law.
If you are contemplating making a gift, there may be some benefit to making it prior to July 1.
Effective July 1, 2013, there is a provision in the bill imposing a 10% MN gift tax. A lifetime credit of $100,000 is allowed against the gift tax, which translates to a tax imposed on lifetime gifts in excess of $1 million. The current federal annual exclusion of $14,000 will be allowed for MN gifts, as well as some of the other current exclusions (gifts to spouse, charity). If you are considering making gifts that will exceed these exclusions, contact us for more information.
The new legislation also includes a change in the current MN estate tax system whereby gifts made within three years of death may be included in determining MN estate taxes payable. The estate tax has also been expanded and applies to non-residents owning real or personal property located in MN through a pass-through entity. Under the new “look-through” provision, the pass-through entity is disregarded and the non-resident is deemed to own the MN property outright and the value will be used in determining MN estate taxes. As a result, there will be non-residents owing MN estate tax who previously would not.
The bill also contains many other new tax provisions including a new 9.85% fourth tier personal income tax bracket for married filing joint filers with taxable income over $250,000, and over $150,000 for single filers.
Contact us if you want to learn more.
