MN House unanimously passes bill with various tax breaks

01/12/2007

St. Paul, MN (AP) -- A bill that provides tax breaks linked to college costs, classroom supply purchases and military combat pay unanimously passed the Minnesota House on Thursday and could wind up on Gov. Tim Pawlenty's desk next week.

Legislators are rushing to align Minnesota's tax code with recent changes Congress made to federal guidelines. The goal is to get it done before the window opens for filing 2006 returns so Minnesotans eligible for the targeted deductions can claim them without filing extra paperwork.

Under the bill:

• An estimated 111,000 Minnesotans would be able to deduct up to $4,000 in college tuition costs and related expenses from their income taxes, resulting in a net saving of $165.

• More than 53,000 teachers would be eligible for a deduction of up to $250 for classroom supplies they buy, reaping an average tax benefit of $20.

• Military personnel would get permission to put tax-exempt combat pay into retirement accounts without penalty.

The DFL-led Senate hopes to vote on the bill next week, and Pawlenty has pledged his signature.