HF 1131

Introduction - 94th Legislature (2025 - 2026)

Posted on 02/19/2025 11:13 a.m.

A bill for an act
relating to taxation; corporation franchise; providing for contingent rate reductions;
amending Minnesota Statutes 2024, section 290.06, subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 290.06, subdivision 1, is amended to read:

Subdivision 1.

Computation, corporations.

new text begin (a) new text end The franchise tax imposed upon
corporations shall be computed by applying to their taxable income the rate of 9.8 percent new text begin ,
reduced by all prior adjustments made under paragraph (b) new text end .

new text begin (b) The commissioner must adjust the rate under paragraph (a) by reducing the rate by
0.312 percent each time either of the following occur:
new text end

new text begin (1) if the amount of a budget surplus equals or exceeds the amount of net adjusted revenue
reduction; and
new text end

new text begin (2) if the most recent tax incidence report submitted to the legislature under section
270C.13 allocates over 70 percent of the corporate franchise tax to consumers.
new text end

new text begin (c) In no case may the commissioner adjust the rate pursuant to paragraph (b) below
8.24 percent. The commissioner must publish notice of a rate reduction by December 31.
The adjusted rate is effective for taxable years beginning after December 31 of the calendar
year in which the notice is published.
new text end

new text begin (d) For purposes of this subdivision, the following terms have the meanings given:
new text end

new text begin (1) "budget surplus" means, for the calendar year in which the commissioner is required
to publish notice of a rate reduction under paragraph (b), the amount of a positive unrestricted
general fund balance remaining after any transfer is made to the budget reserve account as
required under section 16A.152, subdivision 1b; and
new text end

new text begin (2) "net adjusted revenue reduction" means the difference, if any, between:
new text end

new text begin (i) the amount of revenue the commissioner estimates will be collected from the tax
imposed in paragraph (a), for the taxable year for which a rate reduction under paragraph
(b) may apply; and
new text end

new text begin (ii) the amount of revenue the commissioner estimates will be collected from the tax
imposed in paragraph (a) using a rate that is determined by reducing the rate in paragraph
(a) by 0.312 percent, for the same taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2025.
new text end