Minnesota residents working in Wisconsin get tax break

Published 4:30 pm Friday, June 2, 2017

ST. PAUL — Minnesota residents working in Wisconsin will receive short-term tax credits as the two states continue to negotiate over longer-term breaks.

Such commuting residents will be eligible for an income tax reciprocity credit for 2017, The Winona Daily News reported.

The tax credit’s predicted cost would be about $8 million for the 2017 tax year. It’ll be paid from Minnesota’s general fund and be distributed by the Department of Revenue similar to a tax refund.

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Provisions in the bill also direct the Minnesota Department of Revenue commissioner to carry on negotiations with the Wisconsin Department of Revenue for a new tax reciprocity agreement.

Sen. Jeremy Miller, a Winona Republican, introduced the bill to return to negotiations with Wisconsin. He said a reciprocity agreement between the states would resolve issues created by filing multiple tax returns, as well as the states’ differing tax rates.

“That’s one of the biggest frustrations I hear,” Miller said.

Around 80,000 workers travel between the two states. About 56,000 Wisconsin residents work in Minnesota, and 24,000 Minnesota residents work in Wisconsin.

Former Gov. Tim Pawlenty ended reciprocity with Wisconsin in 2009, following years of haggling over payments and timing.

Wisconsin had been late with payments for taxes before Pawlenty canceled the arrangement, and they’ve still been unable to come to an agreement to reinstate the reciprocity arrangement.

The tension was eased in 2011, when Wisconsin paid Minnesota $59.7 million.

Wisconsin made some concessions, including agreeing to pay Minnesota quarterly estimates instead of a settlement after tax season and cooperating in studies over the issue’s economic impact.

In 2015, the last year they attempted to negotiate a deal, the deal-breaker was Minnesota’s demand for a $6 million payment to recoup what it projected as lost revenue in a new agreement.