Minnesota 2025-2026 Regular Session

Minnesota House Bill HF2591 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to taxation; individual income; establishing a fifth tier of the individual
3	3	1.3 income tax at a rate sufficient to offset lost federal Medicaid funds; amending
4	4	1.4 Minnesota Statutes 2024, section 290.06, subdivisions 2c, 2d.
5	5	1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
6	6	1.6 Section 1. Minnesota Statutes 2024, section 290.06, subdivision 2c, is amended to read:
7	7	1.7 Subd. 2c.Schedules of rates for individuals, estates, and trusts.(a) The income taxes
8	8	1.8imposed by this chapter upon married individuals filing joint returns and surviving spouses
9	9	1.9as defined in section 2(a) of the Internal Revenue Code must be computed by applying to
10	10	1.10their taxable net income the following schedule of rates:
11	11	1.11 (1) On the first $38,770 $47,620, 5.35 percent;
12	12	1.12 (2) On all over $38,770 $47,620, but not over $154,020 $189,180, 6.8 percent;
13	13	1.13 (3) On all over $154,020 $189,180, but not over $269,010 $330,410, 7.85 percent;
14	14	1.14 (4) On all over $269,010 $330,410, but not over $1,667,000, 9.85 percent; and
15	15	1.15 (5) On all over $1,667,000, the percentage determined under paragraph (g).
16	16	1.16 Married individuals filing separate returns, estates, and trusts must compute their income
17	17	1.17tax by applying the above rates to their taxable income, except that the income brackets
18	18	1.18will be one-half of the above amounts after the adjustment required in subdivision 2d.
19	19	1.19 (b) The income taxes imposed by this chapter upon unmarried individuals must be
20	20	1.20computed by applying to taxable net income the following schedule of rates:
21	21	1.21 (1) On the first $26,520 $32,570, 5.35 percent;
22	22	1Section 1.
23	23	REVISOR EAP/RC 25-0479003/11/25
24	24	State of Minnesota
25	25	This Document can be made available
26	26	in alternative formats upon request
27	27	HOUSE OF REPRESENTATIVES
28	28	H. F. No. 2591
29	29	NINETY-FOURTH SESSION
30	30	Authored by Gomez, Hicks, Long, Stephenson, Greenman and others03/20/2025
31	31	The bill was read for the first time and referred to the Committee on Taxes 2.1 (2) On all over $26,520 $32,570, but not over $87,110 $106,990, 6.8 percent;
32	32	2.2 (3) On all over $87,110 $106,990, but not over $161,720 $198,630, 7.85 percent;
33	33	2.3 (4) On all over $161,720 $198,630, but not over $1,000,000, 9.85 percent; and
34	34	2.4 (5) On all over $1,000,000, the percentage determined under paragraph (g).
35	35	2.5 (c) The income taxes imposed by this chapter upon unmarried individuals qualifying as
36	36	2.6a head of household as defined in section 2(b) of the Internal Revenue Code must be
37	37	2.7computed by applying to taxable net income the following schedule of rates:
38	38	2.8 (1) On the first $32,650 $40,100, 5.35 percent;
39	39	2.9 (2) On all over $32,650 $40,100, but not over $131,190 $161,130, 6.8 percent;
40	40	2.10 (3) On all over $131,190 $161,130, but not over $214,980 $264,050, 7.85 percent;
41	41	2.11 (4) On all over $214,980 $264,050, but not over $1,334,000, 9.85 percent; and
42	42	2.12 (5) On all over $1,334,000, the percentage determined under paragraph (g).
43	43	2.13 (d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax
44	44	2.14of any individual taxpayer whose taxable net income for the taxable year is less than an
45	45	2.15amount determined by the commissioner must be computed in accordance with tables
46	46	2.16prepared and issued by the commissioner of revenue based on income brackets of not more
47	47	2.17than $100. The amount of tax for each bracket shall be computed at the rates set forth in
48	48	2.18this subdivision, provided that the commissioner may disregard a fractional part of a dollar
49	49	2.19unless it amounts to 50 cents or more, in which case it may be increased to $1.
50	50	2.20 (e) An individual who is not a Minnesota resident for the entire year must compute the
51	51	2.21individual's Minnesota income tax as provided in this subdivision. After the application of
52	52	2.22the nonrefundable credits provided in this chapter, the tax liability must then be multiplied
53	53	2.23by a fraction in which:
54	54	2.24 (1) the numerator is the individual's Minnesota source federal adjusted gross income as
55	55	2.25defined in section 62 of the Internal Revenue Code and increased by:
56	56	2.26 (i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, 17, 19,
57	57	2.27and 20, and 290.0137, paragraph (a); and reduced by
58	58	2.28 (ii) the Minnesota assignable portion of the subtraction for United States government
59	59	2.29interest under section 290.0132, subdivision 2, the subtractions under sections 290.0132,
60	60	2.30subdivisions 9, 10, 14, 15, 17, 18, 27, 31, and 32, and 290.0137, paragraph (c), after applying
61	61	2.31the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and
62	62	2Section 1.
63	63	REVISOR EAP/RC 25-0479003/11/25 3.1 (2) the denominator is the individual's federal adjusted gross income as defined in section
64	64	3.262 of the Internal Revenue Code, increased by:
65	65	3.3 (i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, 17, 19,
66	66	3.4and 20, and 290.0137, paragraph (a); and reduced by
67	67	3.5 (ii) the subtractions under sections 290.0132, subdivisions 2, 9, 10, 14, 15, 17, 18, 27,
68	68	3.631, and 32, and 290.0137, paragraph (c).
69	69	3.7 (f) If an individual who is not a Minnesota resident for the entire year is a qualifying
70	70	3.8owner of a qualifying entity that elects to pay tax as provided in section 289A.08, subdivision
71	71	3.97a, paragraph (b), the individual must compute the individual's Minnesota income tax as
72	72	3.10provided in paragraph (e), and also must include, to the extent attributed to the electing
73	73	3.11qualifying entity:
74	74	3.12 (1) in paragraph (e), clause (1), item (i), and paragraph (e), clause (2), item (i), the
75	75	3.13addition under section 290.0131, subdivision 5; and
76	76	3.14 (2) in paragraph (e), clause (1), item (ii), and paragraph (e), clause (2), item (ii), the
77	77	3.15subtraction under section 290.0132, subdivision 3.
78	78	3.16 (g) For taxable years beginning after December 31, 2024, and before January 1, 2027,
79	79	3.17the commissioner of revenue must calculate the tax rate that applies under paragraphs (a),
80	80	3.18clause (5); (b), clause (5); and (c), clause (5). The commissioner must set the rate at the
81	81	3.19level the commissioner estimates would be necessary to raise an amount of revenue in fiscal
82	82	3.20years 2026 and 2027 equal to the amount lost due to federal policy changes, as certified by
83	83	3.21the commissioner of management and budget under section 3. The rate established by the
84	84	3.22commissioner for taxable years beginning after December 31, 2024, and before January 1,
85	85	3.232027, remains in effect for taxable years beginning after December 31, 2026.
86	86	3.24 EFFECTIVE DATE.This section is effective for taxable years beginning after December
87	87	3.2531, 2024.
88	88	3.26 Sec. 2. Minnesota Statutes 2024, section 290.06, subdivision 2d, is amended to read:
89	89	3.27 Subd. 2d.Inflation adjustment of brackets.The commissioner shall annually adjust
90	90	3.28the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed
91	91	3.29in subdivision 2c, except the fifth tier under paragraphs (a), clause (5); (b), clause (5); and
92	92	3.30(c), clause (5), as provided in section 270C.22. The statutory year is taxable year 2019 2025.
93	93	3.31The rate applicable to any rate bracket must not be changed. The dollar amounts setting
94	94	3.32forth the tax shall be adjusted to reflect the changes in the rate brackets. The rate brackets
95	95	3.33as adjusted must be rounded to the nearest $10 amount. If the rate bracket ends in $5, it
96	96	3Sec. 2.
97	97	REVISOR EAP/RC 25-0479003/11/25 4.1must be rounded up to the nearest $10 amount. The commissioner shall determine the rate
98	98	4.2bracket for married filing separate returns after this adjustment is done. The rate bracket
99	99	4.3for married filing separate must be one-half of the rate bracket for married filing joint.
100	100	4.4 EFFECTIVE DATE.This section is effective for taxable years beginning after December
101	101	4.531, 2025.
102	102	4.6 Sec. 3. COMMISSIONER OF MANAGEMENT AND BUDGET TO ESTIMATE
103	103	4.7FEDERAL FUNDING LOSS.
104	104	4.8 (a) No later than December 31, 2025, the commissioner of management and budget must
105	105	4.9calculate and certify to the commissioner of revenue an estimate of the total net change in
106	106	4.10federal Medicaid revenues received by the state in fiscal years 2026 and 2027 relative to
107	107	4.11the amount anticipated in the governor's budget that is the result of:
108	108	4.12 (1) executive actions implemented on or after January 20, 2025, including but not limited
109	109	4.13to executive orders, changes to administrative rules, and changes to other administrative
110	110	4.14guidance; and
111	111	4.15 (2) changes to federal law or administrative rules enacted by the 119th Congress.
112	112	4.16 (b) The commissioner of revenue must use the amount certified under this section to
113	113	4.17calculate the rate for the fifth tier of the individual income tax, as provided in Minnesota
114	114	4.18Statutes, section 290.06, subdivision 2c, paragraph (g).
115	115	4.19 (c) For the purposes of this section, "governor's budget" means the budget submitted to
116	116	4.20the legislature under Minnesota Statutes, section 16A.11, for fiscal years 2026 and 2027.
117	117	4Sec. 3.
118	118	REVISOR EAP/RC 25-0479003/11/25