2013 Tax Law Changes Overview: Withholding Tax

Tax Type: Individual Income Tax and Withholding

Statute:290.06, Subd. 2c

Brief Description

Imposes a new 4th income tax tier rate of 9.85%. The 9.85% rate applies to the taxable income levels provided in the bill (House File 677).

Effective Date

Effective for taxable years beginning after December 31, 2012. Updated withholding tables will be provided on June 20, 2013 for immediate use.

Tax Type: Individual Income Tax and Withholding

Statute: 290.06, Subd. 2d

Brief Description

Resets the base year for adjusting the income tax brackets for inflation to 2013, using as the starting point the current law brackets adjusted to 2013, and the new 4th tier bracket amounts provided in section 10.

Effective Date

Effective for taxable years beginning after December 31, 2012

Tax Type:Withholding

Statute: 290.06, Subd. 2d

Brief Description

Resets the base year for adjusting the income tax brackets for inflation to 2013, using as the starting point the current law brackets adjusted to 2013, and the new 4th tier bracket amounts provided in section 10.

Effective Date

Effective for taxable years beginning after December 31, 2012

Tax Type: Withholding

Statute: 290.01, Subd. 31 and 290.92, Subd.1

Brief Description

Minnesota withholds from “wages” as defined by the Internal Revenue Code. For tax year 2012 Minnesota adopted the changes to the federal definition of wages made in U.S. Public Law 112-240. For 2013 and thereafter Minnesota did not adopt these federal changes in the above mentioned Public Law and Minnesota withholding and income tax treatment of some compensation received by employees will differ from federal treatment.

Effective Date

Effective January 1, 2013. Communication provided to employers and employees on June 20, 2013.

Tax Type: Withholding

Statute: 290.9705

Brief Description

State and local governments units that contract with non-Minnesota construction contractors must withhold 8% from payments due under the contract if the value of the contract exceeds $50,000. The funds are held by the DOR as surety for the payment of state taxes owed as a result of the contract. The threshold amount was previously based on the total value of all contracts with a vendor exceeding $50,000.

Effective Date

Effective for payments to contractors after December 31, 2013.

TaxType: For Businesses

Statute: 270C.69, Subd.1(c)

Brief Description

Wage Levy payment/Disclosure mandate: Employers must file all wage levy disclosure forms, and all wage levy payments electronically to the Department of Revenue.

Effective Date

Wage levy disclosers or wage levy payments filed or made after December 31, 2013.

TaxType: For Businesses

Statute: 289A.20, Subd. 2, 289A.20, Subd. 4,289A.26, Subd. 2a, 295.55, Subd. 4, 297F.09, Subd.7, 297G.09,Subd. 6,297I.35,Subd. 2,473.843,Subd.3

Brief Description

Continuous electronic payment requirement: Various statutes have been amended to require that when a business exceeds the current threshold requiring it to make electronic payments, that the business must make electronic payments in all subsequent years.

Effective Date

Effective for the fiscal year ending June 30, 2013 and all fiscal years thereafter.