MN HF4777

Reduces the lowest individual income tax bracket rate from 5.35% to 2.8% for married filing jointly, unmarried, and head of household filers, effective for taxable years beginning after December 31, 2021.

Adjusts income bracket thresholds for all four tax brackets across all filing statuses, increasing the dollar amounts at which higher rates apply (for example, married filing jointly bracket thresholds increase from $38,770 to $41,050 and $154,020 to $163,060).

Changes the statutory year for inflation adjustments of tax brackets from taxable year 2019 to taxable year 2022, with annual adjustments to continue using the section 270C.22 formula.

Maintains the three higher tax rates (6.8%, 7.85%, and 9.85%) while preserving the structure of the tax code for married filing separately, estates, and trusts.

Applies to all individual income tax calculations including those for non-Minnesota residents and qualifying entity owners.