A new state gift tax that went into effect Monday makes Minnesota the second state in the country to tax gifts between residents. But only the wealthy will pay the price; the new tax only applies to gifts of $1 million or more over a lifetime.
The Pioneer Press reports the tax was included in the omnibus tax bill approved by the Legislature. The Minnesota Department of Revenue expects it to generate about $13.5 million in 2014.
The new law is similar to, and imposed in addition to, a federal gift tax law. Both place a 10 percent tax on gifts worth more than $14,000 to a single recipient in a single year. Married couples can combine their $14,000 and would then have to give gifts totaling $28,000 to trigger the tax. Married couples may also elect to combine their $100,000 lifetime credits. Gifts between spouses and gifts to charity are exempted from the new tax.
Business owners hoping to pass down their businesses to their children before they die will now pay a gift tax if the business is valued at more than $1 million.