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Tax credits holding up WI-MN reciprocity agreement as deadline looms

MADISON, WI (WTAQ) - Tax credits appear to be the sticking point, as Wisconsin and Minnesota reach a deadline of Tuesday to bring back their long-time income tax reciprocity. 

Negotiators said last week they probably wouldn't make the deadline. That means people who live in Wisconsin and work in Minnesota -- and vice-versa -- will have to file tax returns in both states for another year. 

Minnesota Revenue Commissioner Myron Frans says the sticking point is tax credits for his residents.

Frans says Wisconsin has a higher effective tax rate for many middle-income people. That means Minnesotans end up paying more for working in Wisconsin. 

Jack Jablonski, the deputy revenue secretary for Wisconsin, said Minnesota set a limit on tax credits.

That was after former Minnesota Governor Tim Pawlenty scrapped the tax reciprocity in 2009 because his state was losing money.