1.1 A bill for an act
1.2 relating to transportation; amending imposition and allocation of certain taxes;
1.3 repealing retail delivery fee; amending Minnesota Statutes 2024, sections 174.49,
1.4 subdivisions 2, 3; 270C.15; 297A.94; 297A.9915, subdivision 4; repealing
1.5 Minnesota Statutes 2024, sections 168E.01; 168E.03; 168E.05; 168E.07; 168E.09.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2024, section 174.49, subdivision 2, is amended to read:
1.8 Subd. 2.Transportation advancement account.A transportation advancement account
1.9is established in the special revenue fund. The account consists of funds under sections
1.10168E.09, subdivision 2, and section 297A.94, and as provided by law and any other money
1.11donated, allotted, transferred, or otherwise provided to the account.
1.12 EFFECTIVE DATE.This section is effective July 1, 2025.
1.13 Sec. 2. Minnesota Statutes 2024, section 174.49, subdivision 3, is amended to read:
1.14 Subd. 3.Distribution.The commissioner must distribute or transfer the funds in the
1.15transportation advancement account as follows:
1.16 (1) 36 percent to metropolitan counties in the manner provided under subdivision 5;
1.17 (2) ten (1) 28 percent to the county state-aid highway fund;
1.18 (3) 15 (2) 23 percent to the larger cities assistance account under section 162.146,
1.19subdivision 1;
1.20 (4) 27 (3) 34 percent to the small cities assistance account under section 162.145,
1.21subdivision 2; and
1Sec. 2.
25-02323 as introduced01/16/25 REVISOR KRB/BM
SENATE
STATE OF MINNESOTA
S.F. No. 1058NINETY-FOURTH SESSION
(SENATE AUTHORS: DRAZKOWSKI and Miller)
OFFICIAL STATUSD-PGDATE
Introduction and first reading02/06/2025
Referred to Transportation 2.1 (5) 11 (4) 15 percent to the town road account under section 162.081; and.
2.2 (6) one percent to the food delivery support account under section 256.9752, subdivision
2.31a.
2.4 EFFECTIVE DATE.This section is effective July 1, 2025.
2.5 Sec. 3. Minnesota Statutes 2024, section 270C.15, is amended to read:
2.6 270C.15 REVENUE DEPARTMENT SERVICE AND RECOVERY SPECIAL
2.7REVENUE FUND.
2.8 A Revenue Department service and recovery special revenue fund is created for the
2.9purpose of recovering the costs of furnishing government data and related services or
2.10products, as well as recovering costs associated with collecting local taxes on sales and the
2.11retail delivery fee established under chapter 168E. All money collected under this section
2.12is deposited in the Revenue Department service and recovery special revenue fund. Money
2.13in the fund is appropriated to the commissioner to reimburse the department for the costs
2.14incurred in administering the tax law or providing the data, service, or product. Any money
2.15paid to the department as a criminal fine for a violation of state revenue law that is designated
2.16by the court to fund enforcement of state revenue law is appropriated to this fund.
2.17 EFFECTIVE DATE.This section is effective July 1, 2025.
2.18 Sec. 4. Minnesota Statutes 2024, section 297A.94, is amended to read:
2.19 297A.94 DEPOSIT OF REVENUES.
2.20 (a) Except as provided in this section, the commissioner shall deposit the revenues,
2.21including interest and penalties, derived from the taxes imposed by this chapter in the state
2.22treasury and credit them to the general fund.
2.23 (b) The commissioner shall deposit taxes in the Minnesota agricultural and economic
2.24account in the special revenue fund if:
2.25 (1) the taxes are derived from sales and use of property and services purchased for the
2.26construction and operation of an agricultural resource project; and
2.27 (2) the purchase was made on or after the date on which a conditional commitment was
2.28made for a loan guaranty for the project under section 41A.04, subdivision 3.
2.29The commissioner of management and budget shall certify to the commissioner the date on
2.30which the project received the conditional commitment. The amount deposited in the loan
2Sec. 4.
25-02323 as introduced01/16/25 REVISOR KRB/BM 3.1guaranty account must be reduced by any refunds and by the costs incurred by the Department
3.2of Revenue to administer and enforce the assessment and collection of the taxes.
3.3 (c) The commissioner shall deposit the revenues, including interest and penalties, derived
3.4from the taxes imposed on sales and purchases included in section 297A.61, subdivision 3,
3.5paragraph (g), clauses (1) and (4), in the state treasury, and credit them as follows:
3.6 (1) first to the general obligation special tax bond debt service account in each fiscal
3.7year the amount required by section 16A.661, subdivision 3, paragraph (b); and
3.8 (2) after the requirements of clause (1) have been met, the balance to the general fund.
3.9 (d) Beginning with sales taxes remitted after July 1, 2017, The commissioner shall
3.10deposit in the state treasury the revenues collected under section 297A.64, subdivision 1,
3.11including interest and penalties and minus refunds, and credit them to the highway user tax
3.12distribution fund transportation advancement account under section 174.49.
3.13 (e) The commissioner shall deposit the revenues, including interest and penalties,
3.14collected under section 297A.64, subdivision 5, in the state treasury and credit them to the
3.15general fund. By July 15 of each year the commissioner shall transfer to the highway user
3.16tax distribution fund an amount equal to the excess fees collected under section 297A.64,
3.17subdivision 5, for the previous calendar year.
3.18 (f) Beginning with sales taxes remitted after July 1, 2017, in conjunction with the deposit
3.19of revenues under paragraph (d), the commissioner shall deposit into the state treasury and
3.20credit to the highway user tax distribution fund an amount equal to the estimated revenues
3.21derived from the tax rate imposed under section 297A.62, subdivision 1, on the lease or
3.22rental for not more than 28 days of rental motor vehicles subject to section 297A.64. The
3.23commissioner shall estimate the amount of sales tax revenue deposited under this paragraph
3.24based on the amount of revenue deposited under paragraph (d).
3.25 (g) The commissioner must deposit the revenues derived from the taxes imposed under
3.26section 297A.62, subdivision 1, on the sale and purchase of motor vehicle repair and
3.27replacement parts in the state treasury and credit:
3.28 (1) 43.5 percent in each fiscal year to the highway user tax distribution fund;
3.29 (2) a percentage to the transportation advancement account under section 174.49 as
3.30follows:
3.31 (i) 3.5 percent in fiscal year 2024;
3.32 (ii) 4.5 percent in fiscal year 2025;
3Sec. 4.
25-02323 as introduced01/16/25 REVISOR KRB/BM 4.1 (iii) 5.5 percent in fiscal year 2026;
4.2 (iv) 7.5 percent in fiscal year 2027;
4.3 (v) 14.5 percent in fiscal year 2028;
4.4 (vi) 21.5 percent in fiscal year 2029;
4.5 (vii) 28.5 percent in fiscal year 2030;
4.6 (viii) 36.5 percent in fiscal year 2031;
4.7 (ix) 44.5 percent in fiscal year 2032; and
4.8 (x) 56.5 percent in fiscal year 2033 and thereafter; and
4.9 (3) the remainder in each fiscal year to the general fund.
4.10For purposes of this paragraph, "motor vehicle" has the meaning given in section 297B.01,
4.11subdivision 11, and "motor vehicle repair and replacement parts" includes (i) all parts, tires,
4.12accessories, and equipment incorporated into or affixed to the motor vehicle as part of the
4.13motor vehicle maintenance and repair, and (ii) paint, oil, and other fluids that remain on or
4.14in the motor vehicle as part of the motor vehicle maintenance or repair. For purposes of this
4.15paragraph, "tire" means any tire of the type used on highway vehicles, if wholly or partially
4.16made of rubber and if marked according to federal regulations for highway use.
4.17 (h) 81.56 percent of the revenues, including interest and penalties, transmitted to the
4.18commissioner under section 297A.65, must be deposited by the commissioner in the state
4.19treasury as follows:
4.20 (1) 47.5 percent of the receipts must be deposited in the heritage enhancement account
4.21in the game and fish fund, and may be spent only on activities that improve, enhance, or
4.22protect fish and wildlife resources, including conservation, restoration, and enhancement
4.23of land, water, and other natural resources of the state;
4.24 (2) 22.5 percent of the receipts must be deposited in the natural resources fund, and may
4.25be spent only for state parks and trails;
4.26 (3) 22.5 percent of the receipts must be deposited in the natural resources fund, and may
4.27be spent only on metropolitan park and trail grants;
4.28 (4) three percent of the receipts must be deposited in the natural resources fund, and
4.29may be spent only on local trail grants;
4Sec. 4.
25-02323 as introduced01/16/25 REVISOR KRB/BM 5.1 (5) two percent of the receipts must be deposited in the natural resources fund, and may
5.2be spent only for the Minnesota Zoological Garden, the Como Park Zoo and Conservatory,
5.3and the Duluth Zoo; and
5.4 (6) 2.5 percent of the receipts must be deposited in the pollinator account established in
5.5section 103B.101, subdivision 19.
5.6 (i) 1.5 percent of the revenues, including interest and penalties, transmitted to the
5.7commissioner under section 297A.65 must be deposited in a regional parks and trails account
5.8in the natural resources fund and may only be spent for parks and trails of regional
5.9significance outside of the seven-county metropolitan area under section 85.535, based on
5.10recommendations from the Greater Minnesota Regional Parks and Trails Commission under
5.11section 85.536.
5.12 (j) 1.5 percent of the revenues, including interest and penalties, transmitted to the
5.13commissioner under section 297A.65 must be deposited in an outdoor recreational
5.14opportunities for underserved communities account in the natural resources fund and may
5.15only be spent on projects and activities that connect diverse and underserved Minnesotans
5.16through expanding cultural environmental experiences, exploration of their environment,
5.17and outdoor recreational activities.
5.18 (k) The revenue dedicated under paragraph (h) may not be used as a substitute for
5.19traditional sources of funding for the purposes specified, but the dedicated revenue shall
5.20supplement traditional sources of funding for those purposes. Land acquired with money
5.21deposited in the game and fish fund under paragraph (h) must be open to public hunting
5.22and fishing during the open season, except that in aquatic management areas or on lands
5.23where angling easements have been acquired, fishing may be prohibited during certain times
5.24of the year and hunting may be prohibited. At least 87 percent of the money deposited in
5.25the game and fish fund for improvement, enhancement, or protection of fish and wildlife
5.26resources under paragraph (h) must be allocated for field operations.
5.27 (l) The commissioner must deposit the revenues, including interest and penalties minus
5.28any refunds, derived from the sale of items regulated under section 624.20, subdivision 1,
5.29that may be sold to persons 18 years old or older and that are not prohibited from use by
5.30the general public under section 624.21, in the state treasury and credit:
5.31 (1) 25 percent to the volunteer fire assistance grant account established under section
5.3288.068;
5.33 (2) 25 percent to the fire safety account established under section 297I.06, subdivision
5.343; and
5Sec. 4.
25-02323 as introduced01/16/25 REVISOR KRB/BM 6.1 (3) the remainder to the general fund.
6.2 For purposes of this paragraph, the percentage of total sales and use tax revenue derived
6.3from the sale of items regulated under section 624.20, subdivision 1, that are allowed to be
6.4sold to persons 18 years old or older and are not prohibited from use by the general public
6.5under section 624.21, is a set percentage of the total sales and use tax revenues collected in
6.6the state, with the percentage determined under Laws 2017, First Special Session chapter
6.71, article 3, section 39.
6.8 (m) The revenues deposited under paragraphs (a) to (l) do not include the revenues,
6.9including interest and penalties, generated by the sales tax imposed under section 297A.62,
6.10subdivision 1a, which must be deposited as provided under the Minnesota Constitution,
6.11article XI, section 15.
6.12 EFFECTIVE DATE.This section is effective for taxes remitted after June 30, 2025.
6.13 Sec. 5. Minnesota Statutes 2024, section 297A.9915, subdivision 4, is amended to read:
6.14 Subd. 4.Deposit.Proceeds of the regional transportation sales tax must be allocated as
6.15follows:
6.16 (1) 83 74 percent to the Metropolitan Council for the purposes specified under section
6.17473.4465; and
6.18 (2) 17 26 percent to metropolitan counties, as defined in section 174.49, subdivision 1,
6.19in the manner provided under section 174.49, subdivision 5.
6.20 EFFECTIVE DATE.This section is effective for taxes remitted after June 30, 2025.
6.21 Sec. 6. REPEALER.
6.22 Minnesota Statutes 2024, sections 168E.01; 168E.03; 168E.05; 168E.07; and 168E.09,
6.23are repealed.
6.24 EFFECTIVE DATE.This section is effective July 1, 2025.
6Sec. 6.
25-02323 as introduced01/16/25 REVISOR KRB/BM 168E.01 DEFINITIONS.
Subdivision 1.Scope.As used in this chapter, the following terms have the meanings given.
Subd. 2.Accessories and supplies."Accessories and supplies" has the meaning given in section
297A.67, subdivision 7a.
Subd. 3.Baby products."Baby products" means breast pumps, baby bottles and nipples,
pacifiers, teething rings, infant syringes, baby wipes, cribs and bassinets, crib and bassinet mattresses,
crib and bassinet sheets, changing tables, changing pads, strollers, car seats and car seat bases, baby
swings, bottle sterilizers, and infant eating utensils.
Subd. 4.Clothing."Clothing" has the meaning given in section 297A.67, subdivision 8.
Subd. 5.Commissioner."Commissioner" means the commissioner of revenue.
Subd. 6.Drugs and medical devices."Drugs and medical devices" has the meaning given in
section 297A.67, subdivision 7.
Subd. 7.Food and beverage service establishment."Food and beverage service establishment"
has the meaning given in section 157.15, subdivision 5.
Subd. 8.Food and food ingredients."Food and food ingredients" has the meaning given in
section 297A.67, subdivision 2.
Subd. 9.Marketplace provider."Marketplace provider" has the meaning given in section
297A.66, subdivision 1, paragraph (d).
Subd. 10.Person."Person" has the meaning given in section 297A.61, subdivision 2.
Subd. 11.Prepared food."Prepared food" has the meaning given in section 297A.61, subdivision
31.
Subd. 12.Retail delivery.(a) "Retail delivery" means a delivery to a person located in Minnesota
of the following items as part of a retail sale:
(1) tangible personal property that is subject to taxation under chapter 297A; and
(2) clothing, as defined under section 297A.67, subdivision 8, excluding cloth and disposable
child and adult diapers.
(b) Retail delivery does not include pickup at the retailer's place of business, including curbside
delivery.
Subd. 13.Retail delivery fee."Retail delivery fee" means the fee imposed under section 168E.03
on retail deliveries.
Subd. 14.Retail sale."Retail sale" has the meaning given in section 297A.61, subdivision 4.
Subd. 15.Retailer."Retailer" means any person making sales, leases, or rental of personal
property or services within or into the state of Minnesota. Retailer includes a:
(1) retailer maintaining a place of business in this state;
(2) marketplace provider maintaining a place of business in this state, as defined in section
297A.66, subdivision 1, paragraph (a);
(3) retailer not maintaining a place of business in this state; and
(4) marketplace provider not maintaining a place of business in this state, as defined in section
297A.66, subdivision 1, paragraph (b).
Subd. 16.Tangible personal property."Tangible personal property" has the meaning given
in section 297A.61, subdivision 10.
Subd. 17.Threshold amount."Threshold amount" means $100, before application of the tax
imposed under section 297A.62, subdivisions 1 and 1a, and any applicable local sales and use taxes,
and excluding exempt items under section 168E.05.
168E.03 FEE IMPOSED.
Subdivision 1.Retail delivery fee imposed.(a) A fee is imposed on each retailer equal to 50
cents on each transaction that equals or exceeds the threshold amount involving retail delivery in
Minnesota. The retailer may, but is not required to, collect the fee from the purchaser. If separately
1R
APPENDIX
Repealed Minnesota Statutes: 25-02323 stated on the invoice, bill of sale, or similar document given to the purchaser, the fee is excluded
from the sales price for purposes of the tax imposed under chapter 297A.
(b) If the retailer collects the fee from the purchaser:
(1) the retail delivery fee must be charged in addition to any other delivery fee; and
(2) the retailer must show the total of the retail delivery fee and other delivery fees as separate
items and distinct from the sales price and any other taxes or fees imposed on the retail delivery on
the purchaser's receipt, invoice, or other bill of sale. The receipt, invoice, or other bill of sale must
state the retail delivery fee as "road improvement and food delivery fee."
Subd. 2.Multiple items or shipments.The fee imposed under subdivision 1 is imposed once
per transaction regardless of the number of shipments necessary to deliver the items of tangible
personal property purchased or of the number of items of tangible personal property purchased.
Subd. 3.Returns and cancellations.The fee imposed under subdivision 1 is nonrefundable if
any or all items purchased are returned to a retailer or if the retailer provides a refund or credit in
the amount equal to or less than the purchase price. The fee must be refunded to the purchaser if
the retail delivery is canceled by the purchaser, retailer, or delivery provider.
168E.05 EXEMPTIONS.
Subdivision 1.Transactions.The following retail deliveries are exempt from the fee imposed
by this chapter:
(1) a retail delivery to a purchaser who is exempt from tax under chapter 297A;
(2) a retail delivery on a motor vehicle for which a permit issued by the commissioner of
transportation or a road authority is required under chapter 169 or 221 and the retailer has maintained
books and records through reasonable and verifiable standards that the retail delivery was on a
qualifying vehicle;
(3) a retail delivery resulting from a retail sale of food and food ingredients or prepared food;
(4) a retail delivery resulting from a retail sale by a food and beverage service establishment,
regardless of whether the retail delivery is made by a third party other than the food and beverage
service establishment; and
(5) a retail delivery resulting from a retail sale of drugs and medical devices, accessories and
supplies, or baby products.
Subd. 2.Small businesses.(a) The fee imposed by this chapter and the requirements of this
chapter do not apply to:
(1) a retailer that made retail sales totaling less than $1,000,000 in the previous calendar year;
and
(2) a marketplace provider when facilitating the sale of a retailer that made retail sales totaling
less than $100,000 in the previous calendar year through the marketplace provider.
(b) A retailer or marketplace provider must begin collecting and remitting the delivery fee to
the commissioner on the first day of a calendar month occurring no later than 60 days after the
retailer or marketplace provider exceeds a retail sales threshold in paragraph (a).
168E.07 COLLECTION AND ADMINISTRATION.
Subdivision 1.Returns; payment of fees.A retailer must report the fee on a return prescribed
by the commissioner and must remit the fee with the return. The return and fee must be filed and
paid using the filing cycle and due dates provided for taxes imposed under chapter 297A.
Subd. 2.Collection and remittance.A retailer that collects the fee from the purchaser must
collect the fee in the same manner as the tax collected under chapter 297A. A retailer using a
third-party entity to collect and remit the tax imposed under chapter 297A may elect to have that
third-party entity collect and remit the fee imposed under this chapter.
Subd. 3.Administration.Unless specifically provided otherwise by this chapter, the audit,
assessment, refund, penalty, interest, enforcement, collection remedies, appeal, and administrative
provisions of chapters 270C and 289A, that are applicable to taxes imposed under chapter 297A,
apply to the fee imposed under this chapter.
2R
APPENDIX
Repealed Minnesota Statutes: 25-02323 Subd. 4.Interest on overpayments.The commissioner must pay interest on an overpayment
refunded or credited to the retailer from the date of payment of the fee until the date the refund is
paid or credited. For purposes of this subdivision, the date of payment is the due date of the return
or the date of actual payment of the fee, whichever is later.
168E.09 DEPOSIT OF PROCEEDS.
Subdivision 1.Costs deducted.The commissioner must retain an amount that does not exceed
the total cost of collecting, administering, and enforcing the retail delivery fee and must deposit the
amount in the revenue department service and recovery special revenue fund.
Subd. 2.Deposits.After deposits under subdivision 1, the commissioner must deposit the
balance of proceeds from the retail delivery fee in the transportation advancement account under
section 174.49.
3R
APPENDIX
Repealed Minnesota Statutes: 25-02323