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What's in the tax bill agreed by Republican lawmakers?

The House and Senate agreed the bill on Friday.

What's happening?

The Minnesota House and Senate have agreed a bill that makes Minnesota's tax code conform with federal codes.

The passage of the federal Tax Cut and Jobs Bill in December forced state lawmakers to change Minnesota tax codes.

If it doesn't pass changes, some 870,000 residents would see tax increases averaging $489 because of the loss of deductions in federal tax rules.

What does the new bill do?

The Republican leadership say that the bill would result in 82 percent of Minnesota families getting a tax cut, and only 0.2 percent of households seeing a tax increase.

It includes state tax cuts from 5.35 percent to 5.3 percent this year, and then to  5.25 percent from next year for the state's lowest earners – those earning less than $25,891.

Meanwhile the next income tax bracket, earning $25,891 to $85,060 will also see their taxes drop from 7.05 percent to 6.95 percent this year, and 6.85 percent from next year.

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It also increases by $1,000 the amount that married filers can earn before getting taxed.

The bill also contains corporate tax cuts for business.

Rep. Greg Davids (R–Preston) describes the proposal as a "victory for middle class families" and says they are committed to working with the governor on passing it.

Will it be approved?

That's the question. Governor Mark Dayton has previously proposed his own bill that would have cut taxes for 1.9 million Minnesota households.

His also contains some tax increases on businesses, including a tax on foreign income and a cap on the amount of interest costs they can deduct.

The Department of Revenue Commission Cynthia Bauerly said the GOP bill was an improvement on earlier versions, but didn't contain some things that Dayton wants, including an expansion of the working family tax credit, the Star Tribune reports.

But given that failing to come to an agreement will lead to a significant tax hike on hundreds of thousands of Minnesotans, the motivation is there for both sides to come to an agreement.

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