Minnesota 2025-2026 Regular Session

Minnesota Senate Bill SF1525 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; exempting tip income from the individual
3	3	1.3 income tax and tax withholding requirements; amending Minnesota Statutes 2024,
4	4	1.4 sections 290.0132, by adding a subdivision; 290.92, subdivision 2a, by adding a
5	5	1.5 subdivision.
6	6	1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
7	7	1.7 Section 1. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
8	8	1.8to read:
9	9	1.9 Subd. 36.Tip income.(a) The amount of tips is a subtraction.
10	10	1.10 (b) For the purposes of this subdivision, "tips" means amounts that an individual reports:
11	11	1.11 (1) to the individual's employer as required under section 6053(a) of the Internal Revenue
12	12	1.12Code; or
13	13	1.13 (2) to the Internal Revenue Service as wages which are subject to notice and demand
14	14	1.14for payment of employer taxes under section 3121(q) of the Internal Revenue Code.
15	15	1.15 EFFECTIVE DATE.This section is effective for taxable years beginning after December
16	16	1.1631, 2024.
17	17	1.17 Sec. 2. Minnesota Statutes 2024, section 290.92, subdivision 2a, is amended to read:
18	18	1.18 Subd. 2a.Collection at source.(1) Deductions. Every employer making payment of
19	19	1.19wages shall deduct and withhold upon such wages a tax as provided in this section.
20	20	1.20 (2) Withholding on payroll period. The employer shall withhold the tax on the basis
21	21	1.21of each payroll period or as otherwise provided in this section.
22	22	1Sec. 2.
23	23	25-03198 as introduced02/10/25 REVISOR EAP/LJ
24	24	SENATE
25	25	STATE OF MINNESOTA
26	26	S.F. No. 1525NINETY-FOURTH SESSION
27	27	(SENATE AUTHORS: EICHORN, Housley, Mathews and Draheim)
28	28	OFFICIAL STATUSD-PGDATE
29	29	Introduction and first reading02/17/2025
30	30	Referred to Taxes 2.1 (3) Withholding tables. Unless the amount of tax to be withheld is determined as
31	31	2.2provided in subdivision 3, the amount of tax to be withheld for each individual shall be
32	32	2.3based upon tables to be prepared and distributed by the commissioner. The tables shall be
33	33	2.4computed for the several permissible withholding periods and shall take account of
34	34	2.5allowances allowed under this section; and the amounts computed for withholding shall be
35	35	2.6such that the amount withheld for any individual during the individual's taxable year shall
36	36	2.7approximate in the aggregate as closely as possible the tax which is levied and imposed
37	37	2.8under this chapter for that taxable year, upon the individual's salary, wages, or compensation
38	38	2.9for personal services of any kind for the employer.
39	39	2.10 (4) Miscellaneous payroll period. If wages are paid with respect to a period which is
40	40	2.11not a payroll period, the amount to be deducted and withheld shall be that applicable in the
41	41	2.12case of a miscellaneous payroll period containing a number of days, including Sundays and
42	42	2.13holidays, equal to the number of days in the period with respect to which such wages are
43	43	2.14paid.
44	44	2.15 (5) Miscellaneous payroll period. (a) In any case in which wages are paid by an
45	45	2.16employer without regard to any payroll period or other period, the amount to be deducted
46	46	2.17and withheld shall be that applicable in the case of a miscellaneous payroll period containing
47	47	2.18a number of days equal to the number of days, including Sundays and holidays, which have
48	48	2.19elapsed since the date of the last payment of such wages by such employer during the
49	49	2.20calendar year, or the date of commencement of employment with such employer during
50	50	2.21such year, or January 1 of such year, whichever is the later.
51	51	2.22 (b) In any case in which the period, or the time described in clause (a), in respect of any
52	52	2.23wages is less than one week, the commissioner, under rules prescribed by the commissioner,
53	53	2.24may authorize an employer to determine the amount to be deducted and withheld under the
54	54	2.25tables applicable in the case of a weekly payroll period, in which case the aggregate of the
55	55	2.26wages paid to the employee during the calendar week shall be considered the weekly wages.
56	56	2.27 (6) Wages computed to nearest dollar. If the wages exceed the highest bracket, in
57	57	2.28determining the amount to be deducted and withheld under this subdivision, the wages may,
58	58	2.29at the election of the employer, be computed to the nearest dollar.
59	59	2.30 (7) Rules on withholding. The commissioner may, by rule, authorize employers:
60	60	2.31 (a) to estimate the wages which will be paid to any employee in any quarter of the
61	61	2.32calendar year;
62	62	2Sec. 2.
63	63	25-03198 as introduced02/10/25 REVISOR EAP/LJ 3.1 (b) to determine the amount to be deducted and withheld upon each payment of wages
64	64	3.2to such employee during such quarter as if the appropriate average of the wages so estimated
65	65	3.3constituted the actual wages paid; and
66	66	3.4 (c) to deduct and withhold upon any payment of wages to such employee during such
67	67	3.5quarter such amount as may be necessary to adjust the amount actually deducted and withheld
68	68	3.6upon wages of such employee during such quarter to the amount required to be deducted
69	69	3.7and withheld during such quarter without regard to this paragraph (7).
70	70	3.8 (8) Additional withholding. The commissioner is authorized to provide by rule for
71	71	3.9increases or decreases in the amount of withholding otherwise required under this section
72	72	3.10in cases where the employee requests the changes. Such additional withholding shall for
73	73	3.11all purposes be considered tax required to be deducted and withheld under this section.
74	74	3.12 (9) Tips. In the case of tips which constitute wages, this subdivision shall be applicable
75	75	3.13only to such tips as are included in a written statement furnished to the employer pursuant
76	76	3.14to section 6053 of the Internal Revenue Code and only to the extent that the tax can be
77	77	3.15deducted and withheld by the employer, at or after the time such statement is so furnished
78	78	3.16and before the close of the calendar year in which such statement is furnished, from such
79	79	3.17wages of the employee (excluding tips, but including funds turned over by the employee to
80	80	3.18the employer for the purpose of such deduction and withholding) as are under the control
81	81	3.19of the employer; and an employer who is furnished by an employee a written statement of
82	82	3.20tips (received in a calendar month) pursuant to section 6053 of the Internal Revenue Code
83	83	3.21to which subdivision 1 is applicable may deduct and withhold the tax with respect to such
84	84	3.22tips from any wages of the employee (excluding tips) under the employer's control, even
85	85	3.23though at the time such statement is furnished the total amount of the tips included in
86	86	3.24statements furnished to the employer as having been received by the employee in such
87	87	3.25calendar month in the course of employment by such employer is less than $20. Such tax
88	88	3.26shall not at any time be deducted and withheld in an amount which exceeds the aggregate
89	89	3.27of such wages and funds as are under the control of the employer minus any tax required
90	90	3.28by other provisions of state or federal law to be collected from such wages and funds.
91	91	3.29 (10) (9) Vehicle fringe benefits. An employer shall not deduct and withhold any tax
92	92	3.30under this section with respect to any vehicle fringe benefit provided to an employee if the
93	93	3.31employer has so elected for federal purposes and the requirement of and the definition
94	94	3.32contained in section 3402(s) of the Internal Revenue Code are complied with.
95	95	3.33 EFFECTIVE DATE.This section is effective for taxable years beginning after December
96	96	3.3431, 2024.
97	97	3Sec. 2.
98	98	25-03198 as introduced02/10/25 REVISOR EAP/LJ 4.1 Sec. 3. Minnesota Statutes 2024, section 290.92, is amended by adding a subdivision to
99	99	4.2read:
100	100	4.3 Subd. 32.Tip income exempt from withholding requirements.Income which is tips,
101	101	4.4as defined in section 290.0132, subdivision 36, is exempt from the withholding requirements
102	102	4.5of this section.
103	103	4.6 EFFECTIVE DATE.This section is effective for taxable years beginning after December
104	104	4.731, 2024.
105	105	4Sec. 3.
106	106	25-03198 as introduced02/10/25 REVISOR EAP/LJ