Minnesota Income Tax Brackets Adjusted for 2016 and other Tax Changes

Published On: 13th November 2015

From the internet

The Minnesota Department of Revenue has announced that they have adjusted the individual income tax brackets for the 2016 tax year. The change will be .45 percent compared to the 2015 tax year. This is an adjustment that occurs every year, but for the 2016 tax year, the adjustment will keep tax payers from having to pay higher taxes because of inflationary income changes.

It is required by law that states index for individual income inflation. An inflation factor is used to adjust the brackets each year, rounding it to the nearest $10, based on the U.S Consumer Price Index. What doesn’t change is each tax bracket’s tax rate.

In addition to the income tax bracket adjustment, Minnesota has repealed the two percent income tax withholding for self-employed workers that are hired for construction projects.

A recent change in the law ended the previous requirement that construction companies withhold two percent state income tax on independent contractors. These workers included plumbers, electricians, and carpenters hired by construction companies to help them complete specific tasks.

Independent contractors are required to report their income and pay taxes on that income like anyone else who earns money. However, independent contractors in Minnesota can request that state income tax be withheld from their earnings. This is called “voluntary withholding,” but isn’t required.

The Minnesota Department of Revenue is updating the Withholding Tax return to reflect the change.

It is important to note that the change doesn’t apply to construction company employees, as they are not considered independent contractors. They are still subject to regular tax withholding by their employers.

Lastly, the Department of Revenue is reminding qualified veterans with disabilities that own their homes to claim the homestead benefit that is designed just for them. This presents another tax saving opportunity for those who have served the country.