Politics and Government

Late-summer stimulus: Minnesota tax rebates begin arriving

Minnesota Capitol building is shown
More than $1.1 billion will make its way from state government coffers to bank accounts or mailboxes of qualifying Minnesotans starting this week. 
Kerem Yücel | MPR News

Updated 10:05 a.m. Wednesday

The Minnesota tax rebate wait is over.

More than $1.1 billion will make its way from state government coffers to bank accounts or mailboxes of qualifying Minnesotans starting this week. 

The first wave of payments will be direct deposits — $260 per person and up to $1,300 for a household — and paper checks in the mail will follow for those who haven’t supplied bank information to the state previously. The Revenue Department expects nearly 2.1 million rebate payments to be distributed by the end of September.

The Legislature carved the one-time rebates out of a projected $17.6 billion budget surplus, opting for smaller payments than DFL Gov. Tim Walz recommended and campaigned on. 

Not all taxpayers will get money from the program. Rebates were reserved for married filers with an adjusted gross income below $150,000 in 2021 or single filers beneath $75,000. Earnings even one dollar above the thresholds are disqualifying.

The $260 amount is multiplied by the number of recipients in a household, with married filers and up to three dependents earning the maximum. Taxpayers who died after Jan. 1, 2023 still qualify and people who live in the state part of the year are due a proportional amount.

The broader tax bill containing the rebates was signed in May. Revenue officials spent the following months setting up a distribution system and vetting the list of approved recipients.

As Walz was promoting the rebates Wednesday, top Republicans in the Legislature noted they fell far short of what the DFL governor proposed during his reelection campaign last year.

Republican House Minority Leader Lisa Demuth said the amount of the rebate is paltry. She’s also upset many people won’t qualify due to their income.

“Not to all taxpayers, especially looking back at the campaign trail when Governor Walz was saying `$2,000 checks to Minnesotans,’ I do feel it is really disingenuous,” Demuth said.

Senate Minority Leader Mark Johnson, R-East Grand Forks, said the rebates will get washed out by added taxes and fees on gas, vehicle registration and general sales taxes that DFL majorities passed during the legislative session earlier this year.

Tax year 2021 was used as the baseline because the rebates were sold as an offset to financial hardships during COVID-19 and inflationary pressures that followed. Plus, the state was hoping to piggyback on prior IRS rulings that spared such state payments from federal taxation; a final ruling on that is pending.