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Last Updated: 7/14/2017

2017 Tax Law Changes

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Estate Tax Exclusion and Filing Requirement

 
Note: The increased estate tax exemption contained in Minnesota Laws 2017, 1st Special session, Chapter 1, is the subject of on-going negotiations.  We will provide updates as appropriate.
The exemption amount and filing requirement for Estate Tax is rising incrementally from 2017 to 2020. For 2017 decedents, the tax filing threshold is retroactively increased from $1.8 million to $2.1 million.
 
The qualified small business property and farm property deductions are changing each year with the exemption amount. However, the maximum combined exclusion (estate tax exemption plus qualified deduction) will remain $5 million.
 
See Estate Tax Filing Requirement for more information. 

 

Tax Rates

For 2017 decedents the Estate Tax rate ranges from 12% to 16%. See Estate Tax Rates for more information. 

 

Resident and Domicile Definition

The definition of a Resident Individual has been modified in determining the decedent’s domicile at the time of death. For details about determining domicile, see the Individual Income Tax Domicile page.
 
 

Recapture Tax Reform

Estates that claim the qualified small business property or qualified farm property deduction are subject to a three-year holding period. If the qualified heirs do not meet certain requirements during this time, the estate is subject to a Recapture Tax.
 
New exceptions have been added for qualified farm property during the three-year holding period. None of the following situations will trigger the Recapture Tax:
 
  • The farm property is acquired by a governmental unit through eminent domain for a public purpose.
  • Part of the farm property (less than 1/5 of the claimed acreage) is reclassified for property taxes from 2a (agricultural) to 2b (rural vacant land), as long as the qualified heir has not substantially altered the property.
  • Part of the farm property (consisting of a residence, garage, and up to 1 acre of land) is reclassified for property taxes from 2a (agricultural) to 4bb (residential non-homestead).
The exceptions apply retroactively to the estates of all decedents dying after June 30, 2011.
 
 
For more information see the Department of Revenue's Legislative Bulletin and the Session Law passed by the Legislature and signed by Governor Dayton.