SF 132

1st Engrossment - 94th Legislature (2025 - 2026)

Posted on 11/05/2025 01:44 p.m.

A bill for an act
relating to taxation; modifying provisions governing individual income and
corporate franchise taxes, property taxes, certain state aid programs, and provisions
related to public finance; modifying property tax classifications, exemptions, and
refunds; modifying aid reporting requirements; providing certain aid penalty relief;
appropriating money; amending Minnesota Statutes 2024, sections 3.8855,
subdivisions 2, 3, 8; 10A.02, subdivision 11b; 10A.322, subdivision 4; 270C.445,
subdivision 3; 272.01, subdivision 2; 272.02, subdivision 19, by adding
subdivisions; 273.124, subdivisions 8, 14; 273.13, subdivision 22; 273.38; 273.41;
290.0132, by adding subdivisions; 290.06, subdivision 23; 290.0693, subdivision
1; 290.0695, subdivisions 1, 3; 290.091, subdivision 2; 290A.03, subdivision 3;
446A.086, subdivision 1; 469.104; 474A.091, subdivisions 2, 2a; Laws 2023,
chapter 64, article 4, section 27, by adding a subdivision; repealing Minnesota
Statutes 2024, sections 13.4967, subdivision 2a; 290.0679.

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

ARTICLE 1

INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

Minnesota Statutes 2024, section 3.8855, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For the purposes of this section deleted text begin , deleted text end new text begin :
new text end

new text begin (1) "commissioner" means the commissioner of revenue; and
new text end

new text begin (2) new text end "significant tax expenditure," "tax," and "tax expenditure" have the meanings given
in section 270C.11, subdivision 6.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2024, section 3.8855, subdivision 3, is amended to read:

Subd. 3.

Membership.

(a) The commission consists of:

(1) two senators appointed by the senate majority leader;

(2) two senators appointed by the senate minority leader;

(3) two representatives appointed by the speaker of the house;

(4) two representatives appointed by the minority leader of the house of representatives;
and

(5) the commissioner deleted text begin of revenue deleted text end or the commissioner's designee.

(b) Each appointing authority must make appointments by January 31 of the regular
legislative session in the odd-numbered year.

(c) If the chair of the house or senate committee with primary jurisdiction over taxes is
not an appointed member, the chair is an ex officio, nonvoting member of the commission.

new text begin (d) The commissioner may designate another individual to represent the commissioner
or the commissioner's designee at any meeting of the commission.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2024, section 3.8855, subdivision 8, is amended to read:

Subd. 8.

Terms; vacancies new text begin ; meetings new text end .

(a) Members of the commission serve a term
beginning upon appointment and ending at the beginning of the regular legislative session
in the next odd-numbered year. The appropriate appointing authority must fill a vacancy
for a seat of a current legislator for the remainder of the unexpired term. Members may be
removed or replaced at the pleasure of the appointing authority.

(b) If a commission member ceases to be a member of the legislative body from which
the member was appointed, the member vacates membership on the commission.

new text begin (c) The commissioner of revenue must convene the first meeting of each year required
under subdivision 4, paragraph (c).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2024, section 10A.02, subdivision 11b, is amended to read:

Subd. 11b.

Data privacy related to electronic reporting system.

new text begin (a) new text end The board may
develop and maintain systems to enable treasurers to enter and store electronic records
online for the purpose of complying with this chapter. Data entered into such systems by
treasurers or their authorized agents is not government data under chapter 13 and may not
be accessed or used by the board for any purpose without the treasurer's written consent.
Data from such systems that has been submitted to the board as a filed report is government
data under chapter 13.

new text begin (b) For purposes of administering the refund under section 290.06, subdivision 23, the
board may access or use the following data entered and stored in an electronic reporting
system and share the data with the commissioner of revenue: (1) the amount of the
contribution; (2) the name and address of the contributor; (3) any unique identifier for the
contribution; (4) the name and campaign identification number of the party or candidate
that received the contribution; and (5) the date on which the contribution was received. Data
accessed, used, or maintained by the board under this paragraph are classified as nonpublic
data, as defined in section 13.02, subdivision 9, and private data on individuals, as defined
in section 13.02, subdivision 12.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2027.
new text end

Sec. 5.

Minnesota Statutes 2024, section 10A.322, subdivision 4, is amended to read:

Subd. 4.

Refund deleted text begin receipt forms deleted text end new text begin receipts new text end ; penalty.

(a) The board must make available
to a political party on request and to any candidate for whom an agreement under this section
is effective, deleted text begin a supply of deleted text end official refund deleted text begin receipt forms deleted text end new text begin receipts in an electronic format new text end that
state in boldface type that:

(1) a contributor who is given a receipt deleted text begin form deleted text end is eligible to claim a refund as provided in
section 290.06, subdivision 23; and

(2) if the contribution is to a candidate, that the candidate has signed an agreement to
limit campaign expenditures as provided in this section.

deleted text begin The forms must provide duplicate copies of the receipt to be attached to the contributor's
claim. deleted text end new text begin An official refund receipt must only be issued for a contribution of $10 or more.
Each receipt must be in an electronic format and include a unique receipt validation number
that allows the commissioner of revenue to verify the information on the receipt with the
Campaign Finance Board. A political party or candidate may provide a printed copy of the
electronic receipt to the contributor.
new text end

new text begin (b) Once each business day, the board must provide the commissioner of revenue a
receipt validation report. For each contribution reported to the board since the previous
report, the report must include:
new text end

new text begin (1) the date and amount of the contribution;
new text end

new text begin (2) the name and address of the contributor;
new text end

new text begin (3) the name and campaign identification number of the party or candidate that received
the contribution; and
new text end

new text begin (4) the receipt validation number assigned to the contribution.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end The willful issuance of an official refund receipt deleted text begin form or a facsimile of one deleted text end to
any of the candidate's contributors by a candidate or treasurer of a candidate who did not
sign an agreement under this section is subject to a civil penalty of up to $3,000 imposed
by the board.

deleted text begin (c) deleted text end new text begin (d) new text end The willful issuance of an official refund receipt deleted text begin form or a facsimile deleted text end to an
individual not eligible to claim a refund under section 290.06, subdivision 23, is subject to
a civil penalty of up to $3,000 imposed by the board.

deleted text begin (d) deleted text end new text begin (e) new text end A violation of paragraph deleted text begin (b) deleted text end new text begin (c) new text end or deleted text begin (c) deleted text end new text begin (d) new text end is a misdemeanor.

new text begin (f) A receipt validation report and a receipt validation number prepared pursuant to this
section are classified as nonpublic data, as defined in section 13.02, subdivision 9, and
private data on individuals, as defined in section 13.02, subdivision 12.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for contributions made after December
31, 2026.
new text end

Sec. 6.

Minnesota Statutes 2024, section 270C.445, subdivision 3, is amended to read:

Subd. 3.

Standards of conduct.

No tax preparer shall:

(1) without good cause fail to promptly, diligently, and without unreasonable delay
complete a client's return;

(2) obtain the signature of a client to a return or authorizing document that contains
blank spaces to be filled in after it has been signed;

(3) fail to sign a client's return when compensation for services rendered has been made;

(4) fail to provide on a client's return the preparer tax identification number when required
under section 6109(a)(4) of the Internal Revenue Code or section 289A.60, subdivision 28;

(5) fail or refuse to give a client a copy of any document requiring the client's signature
within a reasonable time after the client signs the document;

(6) fail to retain for at least four years a copy of a client's returns;

(7) fail to maintain a confidential relationship with clients or former clients;

(8) fail to take commercially reasonable measures to safeguard a client's nonpublic
personal information;

(9) make, authorize, publish, disseminate, circulate, or cause to make, either directly or
indirectly, any false, deceptive, or misleading statement or representation relating to or in
connection with the offering or provision of tax preparation services;

(10) require a client to enter into a loan arrangement in order to complete a client's return;

(11) claim credits or deductions on a client's return for which the tax preparer knows or
reasonably should know the client does not qualify;

(12) report a household income on a client's claim filed under chapter 290A that the tax
preparer knows or reasonably should know is not accurate;

(13) engage in any conduct that is subject to a penalty under section 289A.60, subdivision
13, 20, 20a, 26, or 28;

(14) whether or not acting as a taxpayer representative, fail to conform to the standards
of conduct required by Minnesota Rules, part 8052.0300, subpart 4;

(15) whether or not acting as a taxpayer representative, engage in any conduct that is
incompetent conduct under Minnesota Rules, part 8052.0300, subpart 5;

(16) whether or not acting as a taxpayer representative, engage in any conduct that is
disreputable conduct under Minnesota Rules, part 8052.0300, subpart 6;

(17) charge, offer to accept, or accept a fee based upon a percentage of an anticipated
refund for tax preparation services;

(18) under any circumstances, withhold or fail to return to a client a document provided
by the client for use in preparing the client's return;

(19) take control or ownership of a client's refund by any means, including:

(i) directly or indirectly endorsing or otherwise negotiating a check or other refund
instrument, including an electronic version of a check;

(ii) directing an electronic or direct deposit of the refund into an account unless the
client's name is on the account; and

(iii) establishing or using an account in the preparer's name to receive a client's refund
through a direct deposit or any other instrument unless the client's name is also on the
account deleted text begin , except that a taxpayer may assign the portion of a refund representing the Minnesota
education credit available under section 290.0674 to a bank account without the client's
name, as provided under section 290.0679 deleted text end ;

(20) fail to act in the best interests of the client;

(21) fail to safeguard and account for any money handled for the client;

(22) fail to disclose all material facts of which the preparer has knowledge which might
reasonably affect the client's rights and interests;

(23) violate any provision of section 332.37;

(24) include any of the following in any document provided or signed in connection
with the provision of tax preparation services:

(i) a hold harmless clause;

(ii) a confession of judgment or a power of attorney to confess judgment against the
client or appear as the client in any judicial proceeding;

(iii) a waiver of the right to a jury trial, if applicable, in any action brought by or against
a debtor;

(iv) an assignment of or an order for payment of wages or other compensation for
services;

(v) a provision in which the client agrees not to assert any claim or defense otherwise
available;

(vi) a waiver of any provision of this section or a release of any obligation required to
be performed on the part of the tax preparer; or

(vii) a waiver of the right to injunctive, declaratory, or other equitable relief or relief on
a class basis; or

(25) if making, providing, or facilitating a refund anticipation loan, fail to provide all
disclosures required by the federal Truth in Lending Act, United States Code, title 15, in a
form that may be retained by the client.

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

Sec. 7.

Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 36. new text end

new text begin Discharges of indebtedness; coerced debt. new text end

new text begin The amount of discharge of
indebtedness awarded to a claimant under section 332.74, subdivision 3, is a subtraction.
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, 2024.
new text end

Sec. 8.

Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 37. new text end

new text begin Foreign service pension; retirement pay. new text end

new text begin (a) Compensation received from
a pension or other retirement pay from the federal government for service in the foreign
service and established under United States Code, title 22, sections 4041 to 4069 and 4071,
is a subtraction.
new text end

new text begin (b) The subtraction equals the product of:
new text end

new text begin (1) the amount of compensation received under paragraph (a); and
new text end

new text begin (2) the number of years of foreign service divided by the total number of years of civil
service for which the taxpayer receives pension income.
new text end

new text begin (c) Any amount used to claim the subtraction in this subdivision must not be used to
claim the subtraction in subdivision 34.
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, 2024.
new text end

Sec. 9.

Minnesota Statutes 2024, section 290.06, subdivision 23, is amended to read:

Subd. 23.

Refund of contributions to political parties and candidates.

(a) A taxpayer
may claim a refund equal to the amount of the taxpayer's contributions made in the calendar
year to candidates and to a political party. The maximum new text begin total new text end refund new text begin per calendar year new text end for
an individual must not exceed $75 and for a married couple, filing jointly, must not exceed
$150. new text begin The commissioner must not issue a refund, whether in one payment or in aggregate,
to a taxpayer that exceeds the maximum refund amounts specified in this subdivision. new text end A
refund of a contribution is allowed only if the taxpayer files new text begin :
new text end

new text begin (1) new text end a form required by the commissioner and attaches to the form deleted text begin a copy of deleted text end an official
refund receipt deleted text begin form deleted text end issued by the candidate or party and signed by the candidate, the treasurer
of the candidate's principal campaign committee, or the chair or treasurer of the party unit,
after the contribution was received deleted text begin . The receipt forms must be numbered, and the data on
the receipt that are not public must be made available to the campaign finance and public
disclosure board upon its request. deleted text end new text begin ; or
new text end

new text begin (2) a claim using the electronic filing system authorized in paragraph (i).
new text end

new text begin The form or claim must include one or more unique receipt validation numbers from receipts
issued pursuant to section 10A.322, subdivision 4.
new text end

new text begin (b) new text end A claim must be filed with the commissioner no sooner than January 1 of the calendar
year in which the contribution was made and no later than April 15 of the calendar year
following the calendar year in which the contribution was made. deleted text begin A taxpayer may file only
one claim per calendar year. deleted text end new text begin A claim must be for a minimum of $10. new text end Amounts paid by the
commissioner after June 15 of the calendar year following the calendar year in which the
contribution was made must include interest at the rate specified in section 270C.405.

deleted text begin (b) deleted text end new text begin (c) new text end No refund is allowed under this subdivision for a contribution to a candidate
unless the candidate:

(1) has signed an agreement to limit campaign expenditures as provided in section
10A.322;

(2) is seeking an office for which voluntary spending limits are specified in section
10A.25; and

(3) has designated a principal campaign committee.

This subdivision does not limit the campaign expenditures of a candidate who does not
sign an agreement but accepts a contribution for which the contributor improperly claims
a refund.

deleted text begin (c) deleted text end new text begin (d) new text end For purposes of this subdivision, "political party" means a major political party
as defined in section 200.02, subdivision 7, or a minor political party qualifying for inclusion
on the income tax or property tax refund form under section 10A.31, subdivision 3a.

A "major party" or "minor party" includes the aggregate of that party's organization
within each house of the legislature, the state party organization, and the party organization
within congressional districts, counties, legislative districts, municipalities, and precincts.

"Candidate" means a candidate as defined in section 10A.01, subdivision 10, except a
candidate for judicial office.

"Contribution" means a gift of money.

deleted text begin (d) deleted text end new text begin (e) new text end The commissioner shall make copies of the form available to the public and
candidates upon request.

deleted text begin (e) deleted text end new text begin (f) new text end The following data collected or maintained by the commissioner under this
subdivision are private: the identities of individuals claiming a refund, the identities of
candidates to whom those individuals have made contributions, and the amount of each
contribution.

deleted text begin (f) deleted text end new text begin (g) new text end The commissioner shall report to the campaign finance and public disclosure
board by each August 1 a summary showing the total number and aggregate amount of
political contribution refunds made on behalf of each candidate and each political party.
These data are public.

deleted text begin (g) deleted text end new text begin (h) new text end The amount necessary to pay claims for the refund provided in this section is
appropriated from the general fund to the commissioner of revenue.

deleted text begin (h) For a taxpayer who files a claim for refund via the Internet or other electronic means,
the commissioner may accept the number on the official receipt as documentation that a
contribution was made rather than the actual receipt as required by paragraph (a).
deleted text end

new text begin (i) The commissioner must establish an electronic filing system by which refunds are
claimed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for contributions made after December
31, 2026.
new text end

Sec. 10.

Minnesota Statutes 2024, section 290.0693, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For the purposes of this section, the following terms have
the meanings given.

new text begin (b) "Combined exemption amount" means the sum of:
new text end

new text begin (1) for the taxpayer's first dependent, the exemption amount multiplied by 1.4;
new text end

new text begin (2) for the taxpayer's second dependent, the exemption amount multiplied by 1.3;
new text end

new text begin (3) for the taxpayer's third dependent, the exemption amount multiplied by 1.2;
new text end

new text begin (4) for the taxpayer's fourth dependent, the exemption amount multiplied by 1.1;
new text end

new text begin (5) for the taxpayer's fifth dependent, the exemption amount; and
new text end

new text begin (6) if the taxpayer or taxpayer's spouse had a disability or attained the age of 65 on or
before the close of the taxable year, the exemption amount.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end "Dependent" means any individual who is considered a dependent under sections
151 and 152 of the Internal Revenue Code.

deleted text begin (c) deleted text end new text begin (d) new text end "Disability" has the meaning given in section 290A.03, subdivision 10.

deleted text begin (d) deleted text end new text begin (e) new text end "Exemption amount" means the exemption amount under section 290.0121,
subdivision 1, paragraph (b).

deleted text begin (e) deleted text end new text begin (f) new text end "Gross rent" means rent paid for the right of occupancy, at arm's length, of a
homestead, exclusive of charges for any medical services furnished by the landlord as a
part of the rental agreement, whether expressly set out in the rental agreement or not. The
gross rent of a resident of a nursing home or intermediate care facility is $600 per month.
The gross rent of a resident of an adult foster care home is $930 per month. The commissioner
shall annually adjust the amounts in this paragraph as provided in section 270C.22. The
statutory year is 2023. If the landlord and tenant have not dealt with each other at arm's
length and the commissioner determines that the gross rent charged was excessive, the
commissioner may adjust the gross rent to a reasonable amount for purposes of this section.

deleted text begin (f) deleted text end new text begin (g) new text end "Homestead" has the meaning given in section 290A.03, subdivision 6.

deleted text begin (g) deleted text end new text begin (h) new text end "Household" has the meaning given in section 290A.03, subdivision 4.

deleted text begin (h) deleted text end new text begin (i) new text end "Household income" means all income received by all persons of a household in
a taxable year while members of the household, other than income of a dependent.

deleted text begin (i) deleted text end new text begin (j) new text end "Income" means adjusted gross income, minus:

(1) deleted text begin for the taxpayer's first dependent, the exemption amount multiplied by 1.4 deleted text end new text begin the
taxpayer's combined exemption amount new text end ; new text begin and
new text end

(2) deleted text begin for the taxpayer's second dependent, the exemption amount multiplied by 1.3; deleted text end new text begin the
amount of discharge of indebtedness subtracted under section 290.0132, subdivision 36.
new text end

deleted text begin (3) for the taxpayer's third dependent, the exemption amount multiplied by 1.2;
deleted text end

deleted text begin (4) for the taxpayer's fourth dependent, the exemption amount multiplied by 1.1;
deleted text end

deleted text begin (5) for the taxpayer's fifth dependent, the exemption amount; and
deleted text end

deleted text begin (6) if the taxpayer or taxpayer's spouse had a disability or attained the age of 65 on or
before the close of the taxable year, the exemption amount.
deleted text end

deleted text begin (j) deleted text end new text begin (k) new text end "Rent constituting property taxes" means 17 percent of the gross rent actually
paid in cash, or its equivalent, or the portion of rent paid in lieu of property taxes, in any
taxable year by a claimant for the right of occupancy of the claimant's Minnesota homestead
in the taxable year, and which rent constitutes the basis, in the succeeding taxable year of
a claim for a credit under this section by the claimant. If an individual occupies a homestead
with another person or persons not related to the individual as the individual's spouse or as
dependents, and the other person or persons are residing at the homestead under a rental or
lease agreement with the individual, the amount of rent constituting property tax for the
individual equals that portion not covered by the rental agreement.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 11.

Minnesota Statutes 2024, section 290.0695, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For deleted text begin purpose deleted text end new text begin purposes new text end of this section, the following terms
have the meanings given them.

new text begin (b) "Credit certificate" means the certificate issued by the commissioner of transportation
under subdivision 3, paragraph (a).
new text end

deleted text begin (b) deleted text end new text begin (c) new text end "Eligible taxpayer" means any railroad that is classified by the United States
Surface Transportation Board as a Class II or Class III railroad.

deleted text begin (c) deleted text end new text begin (d) new text end "Eligible transferee" means any taxpayer subject to tax under this chapter or
chapter 297I.

new text begin (e) "Eligible transferor" means an eligible taxpayer or a taxpayer to which the credit may
be passed through under subdivision 4.
new text end

deleted text begin (d) deleted text end new text begin (f) new text end "Qualified railroad reconstruction or replacement expenditures" means gross
expenditures in the taxable year for maintenance, reconstruction, or replacement of railroad
infrastructure, including track, roadbed, bridges, industrial leads and sidings, and track-related
structures owned or leased by a Class II or Class III railroad in Minnesota as of January 1,
2021. Qualified railroad reconstruction or replacement expenditures also includes new
construction of industrial leads, switches, spurs and sidings and extensions of existing sidings
in Minnesota by a Class II or Class III railroad.

new text begin (g) "Transfer credit certificate" means the certificate issued to a transferee by the
commissioner under subdivision 3, paragraph (d).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2023.
new text end

Sec. 12.

Minnesota Statutes 2024, section 290.0695, subdivision 3, is amended to read:

Subd. 3.

deleted text begin Transferability deleted text end new text begin Credit certificates new text end ; written agreement required; deleted text begin credit
certificate deleted text end new text begin transferability new text end .

(a) new text begin To qualify for a credit under this section, an eligible taxpayer
must apply to the commissioner of transportation for a credit certificate. The application
for the credit certificate must be in the form and manner prescribed by the commissioner
of transportation, in consultation with the commissioner. If the application is approved, the
commissioner of transportation must issue the credit certificate to the eligible transferor
designated in the application within 30 days of receipt of the application. The credit certificate
must state, at a minimum, the number of miles of qualified railroad reconstruction or
replacement expenditures in the taxable year and the total amount of credit calculated under
the provisions of subdivision 2, paragraph (a). The commissioner of transportation must
provide a copy of the credit certificate to the commissioner of revenue. The commissioner
of transportation must not issue more than one credit certificate to an eligible transferor in
a taxable year.
new text end

new text begin (b) By written agreement, new text end an eligible deleted text begin taxpayer deleted text end new text begin transferor new text end may transfer the credit allowed
under this section deleted text begin by written agreement deleted text end to an eligible transferee deleted text begin . The amount of the
transferred credit is limited to the unused, remaining portion of the credit deleted text end new text begin as follows:
new text end

new text begin (1) any amount of the credit allowed that is stated in the credit certificate before any of
the credit is claimed; or
new text end

new text begin (2) the entire amount of the credit carryover in each of the five succeeding taxable years new text end .

deleted text begin (b) deleted text end new text begin (c) new text end The eligible deleted text begin taxpayer deleted text end new text begin transferor new text end and the eligible transferee must jointly file a copy
of the written transfer agreement with the commissioner within 30 days of the transfer. The
written agreement must contain the name, address, and taxpayer identification number of
the parties to the transfer; the taxable year the eligible taxpayer incurred the qualified
expenditures; the amount of credit being transferred; and the taxable year or years for which
the transferred credit may be claimed.

deleted text begin (c) deleted text end new text begin (d) new text end The commissioner must issue a new text begin transfer new text end credit certificate to the transferee within
30 days of the joint filing of a copy of the written transfer agreement with the commissioner.

deleted text begin (d) In the case of an audit or assessment, the transferee is liable for repayment of credits
claimed in excess of the allowed amount.
deleted text end

new text begin (e) An eligible transferor must not transfer a credit to an eligible transferee more than
once in a taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2023.
new text end

Sec. 13.

Minnesota Statutes 2024, section 290.091, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given.

(a) "Alternative minimum taxable income" means the sum of the following for the taxable
year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(1)(D) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a person with a disability;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue
Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
to the extent not included in federal alternative minimum taxable income, the excess of the
deduction for depletion allowable under section 611 of the Internal Revenue Code for the
taxable year over the adjusted basis of the property at the end of the taxable year (determined
without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount
of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2;

(6) the amount of addition required by section 290.0131, subdivisions 9, 10, and 16;

(7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
not included in the addition required under clause (6); and

(8) to the extent not included in federal alternative minimum taxable income, the amount
of foreign-derived intangible income deducted under section 250 of the Internal Revenue
Code;

less the sum of the amounts determined under the following:

(i) interest income as defined in section 290.0132, subdivision 2;

(ii) an overpayment of state income tax as provided by section 290.0132, subdivision
3, to the extent included in federal alternative minimum taxable income;

(iii) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as defined
in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
in computing federal adjusted gross income;

(iv) amounts subtracted from federal taxable or adjusted gross income as provided by
section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, 26 to 29, 31, 34 deleted text begin , and deleted text end new text begin to new text end 35 new text begin and
37 new text end ;

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c); and

(vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
subdivision 7.

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Code, except alternative minimum
taxable income must be increased by the addition in section 290.0131, subdivision 16.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of
the Internal Revenue Code.

(c) "Net minimum tax" means the minimum tax imposed by this section.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section, section 290.033, and section 290.032), reduced by the sum of the
nonrefundable credits allowed under this chapter.

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 14. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2024, sections 13.4967, subdivision 2a; and 290.0679, new text end new text begin are repealed.
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

ARTICLE 2

PROPERTY TAXES

Section 1.

Minnesota Statutes 2024, section 272.01, subdivision 2, is amended to read:

Subd. 2.

Exempt property used by private entity for profit.

(a) When any real or
personal property which is exempt from ad valorem taxes, and taxes in lieu thereof, is leased,
loaned, or otherwise made available and used by a private individual, association, or
corporation in connection with a business conducted for profit, there shall be imposed a
tax, for the privilege of so using or possessing such real or personal property, in the same
amount and to the same extent as though the lessee or user was the owner of such property.

(b) The tax imposed by this subdivision shall not apply to:

(1) property leased or used as a concession in or relative to the use in whole or part of
a public park, market, fairgrounds, port authority, economic development authority
established under chapter 469, municipal auditorium, municipal parking facility, municipal
museum, or municipal stadium;

(2) property of an airport owned by a city, town, county, or group thereof which is:

(i) leased to or used by any person or entity including a fixed base operator; and

(ii) used as a hangar for the storage or repair of aircraft or to provide aviation goods,
services, or facilities to the airport or general public;

the exception from taxation provided in this clause does not apply to:

(i) property located at an airport owned or operated by the Metropolitan Airports
Commission or by a city of over 50,000 population according to the most recent federal
census or such a city's airport authority; or

(ii) hangars leased by a private individual, association, or corporation in connection with
a business conducted for profit other than an aviation-related business;

(3) property constituting or used as a public pedestrian ramp or concourse in connection
with a public airport;

(4) property constituting or used as a passenger check-in area or ticket sale counter,
boarding area, or luggage claim area in connection with a public airport but not the airports
owned or operated by the Metropolitan Airports Commission or cities of over 50,000
population or an airport authority therein. Real estate owned by a municipality in connection
with the operation of a public airport and leased or used for agricultural purposes is not
exempt;

(5) property leased, loaned, or otherwise made available to a private individual,
corporation, or association under a cooperative farming agreement made pursuant to section
97A.135; deleted text begin or
deleted text end

(6) property leased, loaned, or otherwise made available to a private individual,
corporation, or association under section 272.68, subdivision 4 deleted text begin . deleted text end new text begin ; or
new text end

new text begin (7) property owned by a nonprofit conservation organization that is leased, loaned, or
otherwise made available to a private individual, corporation, or association for grazing
activities that further the nonprofit conservation organization's conservation objectives for
the property.
new text end

(c) Taxes imposed by this subdivision are payable as in the case of personal property
taxes and shall be assessed to the lessees or users of real or personal property in the same
manner as taxes assessed to owners of real or personal property, except that such taxes shall
not become a lien against the property. When due, the taxes shall constitute a debt due from
the lessee or user to the state, township, city, county, and school district for which the taxes
were assessed and shall be collected in the same manner as personal property taxes. If
property subject to the tax imposed by this subdivision is leased or used jointly by two or
more persons, each lessee or user shall be jointly and severally liable for payment of the
tax.

(d) The tax on real property of the federal government, the state or any of its political
subdivisions that is leased, loaned, or otherwise made available to a private individual,
association, or corporation and becomes taxable under this subdivision or other provision
of law must be assessed and collected as a personal property assessment. The taxes do not
become a lien against the real property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with property taxes payable
in 2026.
new text end

Sec. 2.

Minnesota Statutes 2024, section 272.02, subdivision 19, is amended to read:

Subd. 19.

Property used to distribute electricity to farmers.

Electric power distribution deleted text begin
lines and their attachments and appurtenances deleted text end new text begin systems, not including substations, or
transmission or generation equipment new text end , that are used primarily for supplying electricity to
farmers at retail, are exempt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2025
and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2024, section 272.02, is amended by adding a subdivision to
read:

new text begin Subd. 106. new text end

new text begin Certain property owned by an Indian Tribe. new text end

new text begin (a) Property is exempt that:
new text end

new text begin (1) was classified as class 3a under section 273.13, subdivision 24, for taxes payable in
2025;
new text end

new text begin (2) is located in a city of the first class with a population greater than 400,000 as of the
2020 federal census;
new text end

new text begin (3) was on January 1, 2024, and is for the current assessment, owned by a federally
recognized Indian Tribe, or its instrumentality, that is located within the state of Minnesota;
and
new text end

new text begin (4) is used exclusively for Tribal purposes or institutions of purely public charity as
defined in subdivision 7.
new text end

new text begin (b) Property that qualifies for the exemption under this subdivision is limited to one
parcel that does not exceed 40,000 square feet. Property used for single-family housing,
market-rate apartments, agriculture, or forestry does not qualify for this exemption.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2026.
new text end

Sec. 4.

Minnesota Statutes 2024, section 272.02, is amended by adding a subdivision to
read:

new text begin Subd. 107. new text end

new text begin Certain property owned by an Indian Tribe. new text end

new text begin Property is exempt that:
new text end

new text begin (1) was classified as class 2b under section 273.13, subdivision 23, for taxes payable in
2025;
new text end

new text begin (2) is located within a county with a population greater than 5,580 but less than 5,620
according to the 2020 federal census;
new text end

new text begin (3) is located in an unorganized territory with a population less than 800 according to
the 2020 federal census; and
new text end

new text begin (4) was on January 2, 2023, and is for the current assessment, owned by a federally
recognized Indian Tribe, or its instrumentality, that is located within the state of Minnesota.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2026.
new text end

Sec. 5.

Minnesota Statutes 2024, section 273.124, subdivision 8, is amended to read:

Subd. 8.

Homestead owned by or leased to family farm corporation, joint farm
venture, limited liability company, or partnership.

(a) Each family farm corporation;
each joint family farm venture; and each limited liability company or partnership which
operates a family farm; is entitled to class 1b under section 273.13, subdivision 22, paragraph
(b), or class 2a assessment for one homestead occupied by a shareholder, member, or partner
thereof who is residing on the land, and actively engaged in farming of the land owned by
the family farm corporation, joint family farm venture, limited liability company, or
partnership. Homestead treatment applies even if:

(1) legal title to the property is in the name of the family farm corporation, joint family
farm venture, limited liability company, or partnership, and not in the name of the person
residing on it; or

(2) the family farm is operated by a family farm corporation, joint family farm venture,
partnership, or limited liability company other than the family farm corporation, joint family
farm venture, partnership, or limited liability company that owns the land, provided that:

(i) the shareholder, member, or partner residing on and actively engaged in farming the
land is a shareholder, member, or partner of the family farm corporation, joint family farm
venture, partnership, or limited liability company that is operating the farm; and

(ii) more than half of the shareholders, members, or partners of each family farm
corporation, joint family farm venture, partnership, or limited liability company are persons
or spouses of persons who are a qualifying relative under section 273.124, subdivision 1,
paragraphs (c) and (d).

"Family farm corporation," "family farm," and "partnership operating a family farm"
have the meanings given in section 500.24, except that the number of allowable shareholders,
members, or partners under this subdivision shall not exceed deleted text begin 12 deleted text end new text begin 18 new text end . "Limited liability
company" has the meaning contained in sections 322C.0102, subdivision 12, and 500.24,
subdivision 2, paragraphs (l) and (m). "Joint family farm venture" means a cooperative
agreement among two or more farm enterprises authorized to operate a family farm under
section 500.24.

(b) In addition to property specified in paragraph (a), any other residences owned by
family farm corporations, joint family farm ventures, limited liability companies, or
partnerships described in paragraph (a) which are located on agricultural land and occupied
as homesteads by its shareholders, members, or partners who are actively engaged in farming
on behalf of that corporation, joint farm venture, limited liability company, or partnership
must also be assessed as class 2a property or as class 1b property under section 273.13.

(c) Agricultural property that is owned by a member, partner, or shareholder of a family
farm corporation or joint family farm venture, limited liability company operating a family
farm, or by a partnership operating a family farm and leased to the family farm corporation,
limited liability company, partnership, or joint farm venture, as defined in paragraph (a), is
eligible for classification as class 1b or class 2a under section 273.13, if the owner is actually
residing on the property, and is actually engaged in farming the land on behalf of that
corporation, joint farm venture, limited liability company, or partnership. This paragraph
applies without regard to any legal possession rights of the family farm corporation, joint
family farm venture, limited liability company, or partnership under the lease.

(d) Nonhomestead agricultural property that is owned by a family farm corporation,
joint farm venture, limited liability company, or partnership; and located not farther than
four townships or cities, or combination thereof, from agricultural land that is owned, and
used for the purposes of a homestead by an individual who is a shareholder, member, or
partner of the corporation, venture, company, or partnership; is entitled to receive the first
tier homestead classification rate on any remaining market value in the first homestead class
tier that is in excess of the market value of the shareholder's, member's, or partner's class 2
agricultural homestead property, if the owner, or someone acting on the owner's behalf
notifies the county assessor by July 1 that the property may be eligible under this paragraph
for the current assessment year, for taxes payable in the following year. As used in this
paragraph, "agricultural property" means property classified as 2a under section 273.13,
along with any contiguous property classified as 2b under section 273.13, if the contiguous
2a and 2b properties are under the same ownership.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for homestead applications in 2025 and
thereafter.
new text end

Sec. 6.

Minnesota Statutes 2024, section 273.124, subdivision 14, is amended to read:

Subd. 14.

Agricultural homesteads; special provisions.

(a) Real estate of less than ten
acres that is the homestead of its owner must be classified as class 2a under section 273.13,
subdivision 23, paragraph (a), if:

(1) the parcel on which the house is located is contiguous on at least two sides to (i)
agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
Service, or (iii) land administered by the Department of Natural Resources on which in lieu
taxes are paid under sections 477A.11 to 477A.14 or section 477A.17;

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least 20
acres;

(3) the noncontiguous land is located not farther than four townships or cities, or a
combination of townships or cities from the homestead; and

(4) the agricultural use value of the noncontiguous land and farm buildings is equal to
at least 50 percent of the market value of the house, garage, and one acre of land.

Homesteads initially classified as class 2a under the provisions of this paragraph shall
remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
properties, as long as the homestead remains under the same ownership, the owner owns a
noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
value qualifies under clause (4). Homestead classification under this paragraph is limited
to property that qualified under this paragraph for the 1998 assessment.

(b)(i) Agricultural property shall be classified as the owner's homestead, to the same
extent as other agricultural homestead property, if all of the following criteria are met:

(1) the agricultural property consists of at least 40 acres including undivided government
lots and correctional 40's;

(2) the owner, the owner's spouse, or a new text begin grandparent, new text end grandchild, child, new text begin stepchild, new text end sibling,
deleted text begin or deleted text end new text begin uncle, aunt, nephew, niece, new text end parent new text begin , or stepparent new text end of the owner or of the owner's spouse,
is actively farming the agricultural property, either on the person's own behalf as an individual
or on behalf of a partnership operating a family farm, family farm corporation, joint family
farm venture, or limited liability company of which the person is a partner, shareholder, or
member;

(3) both the owner of the agricultural property and the person who is actively farming
the agricultural property under clause (2), are Minnesota residents;

(4) neither the owner nor the spouse of the owner claims another agricultural homestead
in Minnesota; and

(5) neither the owner nor the person actively farming the agricultural property lives
farther than four townships or cities, or a combination of four townships or cities, from the
agricultural property, except that if the owner or the owner's spouse is required to live in
employer-provided housing, the owner or owner's spouse, whichever is actively farming
the agricultural property, may live more than four townships or cities, or combination of
four townships or cities from the agricultural property.

The relationship under this paragraph may be either by blood or marriage.

(ii) Property containing the residence of an owner who owns qualified property under
clause (i) shall be classified as part of the owner's agricultural homestead, if that property
is also used for noncommercial storage or drying of agricultural crops.

(iii) As used in this paragraph, "agricultural property" means class 2a property and any
class 2b property that is contiguous to and under the same ownership as the class 2a property.

(c) Noncontiguous land shall be included as part of a homestead under section 273.13,
subdivision 23, paragraph (a), only if the homestead is classified as class 2a and the detached
land is located in the same township or city, or not farther than four townships or cities or
combination thereof from the homestead. Any taxpayer of these noncontiguous lands must
notify the county assessor that the noncontiguous land is part of the taxpayer's homestead,
and, if the homestead is located in another county, the taxpayer must also notify the assessor
of the other county.

(d) Agricultural land used for purposes of a homestead and actively farmed by a person
holding a vested remainder interest in it must be classified as a homestead under section
273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a, any other
dwellings on the land used for purposes of a homestead by persons holding vested remainder
interests who are actively engaged in farming the property, and up to one acre of the land
surrounding each homestead and reasonably necessary for the use of the dwelling as a home,
must also be assessed class 2a.

(e) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain classified as
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the April 1997 floods;

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, or
Wilkin;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 1997 assessment year and continue to be used for
agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 30 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 1997 floods,
and the owner furnishes the assessor any information deemed necessary by the assessor in
verifying the change in dwelling. Further notifications to the assessor are not required if the
property continues to meet all the requirements in this paragraph and any dwellings on the
agricultural land remain uninhabited.

(f) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain classified
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by a March 29, 1998, tornado;

(2) the property is located in the county of Blue Earth, Brown, Cottonwood, Le Sueur,
Nicollet, Nobles, or Rice;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 1998 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of
one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to a March 29,
1998, tornado, and the owner furnishes the assessor any information deemed necessary by
the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the
owner must notify the assessor by December 1, 1998. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph and
any dwellings on the agricultural land remain uninhabited.

(g) Agricultural property of a family farm corporation, joint family farm venture, family
farm limited liability company, or partnership operating a family farm as described under
subdivision 8 shall be classified homestead, to the same extent as other agricultural homestead
property, if all of the following criteria are met:

(1) the property consists of at least 40 acres including undivided government lots and
correctional 40's;

(2) a shareholder, member, or partner of that entity is actively farming the agricultural
property;

(3) that shareholder, member, or partner who is actively farming the agricultural property
is a Minnesota resident;

(4) neither that shareholder, member, or partner, nor the spouse of that shareholder,
member, or partner claims another agricultural homestead in Minnesota; and

(5) that shareholder, member, or partner does not live farther than four townships or
cities, or a combination of four townships or cities, from the agricultural property.

Homestead treatment applies under this paragraph even if:

(i) the shareholder, member, or partner of that entity is actively farming the agricultural
property on the shareholder's, member's, or partner's own behalf; or

(ii) the family farm is operated by a family farm corporation, joint family farm venture,
partnership, or limited liability company other than the family farm corporation, joint family
farm venture, partnership, or limited liability company that owns the land, provided that:

(A) the shareholder, member, or partner of the family farm corporation, joint family
farm venture, partnership, or limited liability company that owns the land who is actively
farming the land is a shareholder, member, or partner of the family farm corporation, joint
family farm venture, partnership, or limited liability company that is operating the farm;
and

(B) more than half of the shareholders, members, or partners of each family farm
corporation, joint family farm venture, partnership, or limited liability company are persons
or spouses of persons who are a qualifying relative under section 273.124, subdivision 1,
paragraphs (c) and (d).

Homestead treatment applies under this paragraph for property leased to a family farm
corporation, joint farm venture, limited liability company, or partnership operating a family
farm if legal title to the property is in the name of an individual who is a member, shareholder,
or partner in the entity.

(h) To be eligible for the special agricultural homestead under this subdivision, an initial
full application must be submitted to the county assessor where the property is located.
Owners and the persons who are actively farming the property shall be required to complete
only a one-page abbreviated version of the application in each subsequent year provided
that none of the following items have changed since the initial application:

(1) the day-to-day operation, administration, and financial risks remain the same;

(2) the owners and the persons actively farming the property continue to live within the
four townships or city criteria and are Minnesota residents;

(3) the same operator of the agricultural property is listed with the Farm Service Agency;

(4) a Schedule F or equivalent income tax form was filed for the most recent year;

(5) the property's acreage is unchanged; and

(6) none of the property's acres have been enrolled in a federal or state farm program
since the initial application.

The owners and any persons who are actively farming the property must include the
appropriate Social Security numbers or individual taxpayer identification numbers, and sign
and date the application. If any of the specified information has changed since the full
application was filed, the owner must notify the assessor, and must complete a new
application to determine if the property continues to qualify for the special agricultural
homestead. The commissioner of revenue shall prepare a standard reapplication form for
use by the assessors.

(i) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain classified
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by the August 2007 floods;

(2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted, Steele,
Wabasha, or Winona;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 2007 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of
one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the August 2007
floods, and the owner furnishes the assessor any information deemed necessary by the
assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the
owner must notify the assessor by December 1, 2008. Further notifications to the assessor
are not required if the property continues to meet all the requirements in this paragraph and
any dwellings on the agricultural land remain uninhabited.

(j) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 2008 assessment shall remain classified as
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the March 2009 floods;

(2) the property is located in the county of Marshall;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 2008 assessment year and continue to be used for
agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 50 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 2009 floods,
and the owner furnishes the assessor any information deemed necessary by the assessor in
verifying the change in dwelling. Further notifications to the assessor are not required if the
property continues to meet all the requirements in this paragraph and any dwellings on the
agricultural land remain uninhabited.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2026.
new text end

Sec. 7.

Minnesota Statutes 2024, section 273.13, subdivision 22, is amended to read:

Subd. 22.

Class 1.

(a) Except as provided in subdivision 23 and in paragraphs (b) and
(c), real estate which is residential and used for homestead purposes is class 1a. In the case
of a duplex or triplex in which one of the units is used for homestead purposes, the entire
property is deemed to be used for homestead purposes. The market value of class 1a property
must be determined based upon the value of the house, garage, and land.

The first $500,000 of market value of class 1a property has a net classification rate of
one percent of its market value; and the market value of class 1a property that exceeds
$500,000 has a classification rate of 1.25 percent of its market value.

(b) Class 1b property includes homestead real estate or homestead manufactured homes
used for the purposes of a homestead by:

(1) any person who is blind as defined in section 256D.35, or the person who is blind
and the spouse of the person who is blind;

(2) any person who is permanently and totally disabled or by the person with a disability
and the spouse of the person with a disability; or

(3) the surviving spouse of a veteran who was permanently and totally disabled
homesteading a property classified under this paragraph for taxes payable in 2008.

Property is classified and assessed under clause (2) only if the government agency or
income-providing source certifies, upon the request of the homestead occupant, that the
homestead occupant satisfies the disability requirements of this paragraph, and that the
property is not eligible for the valuation exclusion under subdivision 34.

Property is classified and assessed under paragraph (b) only if the commissioner of
revenue or the county assessor certifies that the homestead occupant satisfies the requirements
of this paragraph.

Permanently and totally disabled for the purpose of this subdivision means a condition
which is permanent in nature and totally incapacitates the person from working at an
occupation which brings the person an income. The first $50,000 market value of class 1b
property has a net classification rate of .45 percent of its market value. The remaining market
value of class 1b property is classified as class 1a or class 2a property, whichever is
appropriate.

(c) Class 1c property is commercial use real and personal property that abuts public
water as defined in section 103G.005, subdivision 15, or abuts a state trail administered by
the Department of Natural Resources, and is devoted to temporary and seasonal residential
occupancy for recreational purposes but not devoted to commercial purposes for more than
250 days in the year preceding the year of assessment, and that includes a portion used as
a homestead by the owner, which includes a dwelling occupied as a homestead by a
shareholder of a corporation that owns the resort, a partner in a partnership that owns the
resort, or a member of a limited liability company that owns the resort even if the title to
the homestead is held by the corporation, partnership, or limited liability company. For
purposes of this paragraph, property is devoted to a commercial purpose on a specific day
if any portion of the property, excluding the portion used exclusively as a homestead, is
used for residential occupancy and a fee is charged for residential occupancy. Class 1c
property must contain three or more rental units. A "rental unit" is defined as a cabin,
condominium, townhouse, sleeping room, or individual camping site equipped with water
and electrical hookups for recreational vehicles. Class 1c property must provide recreational
activities such as the rental of ice fishing houses, boats and motors, snowmobiles, downhill
or cross-country ski equipment; provide marina services, launch services, or guide services;
or sell bait and fishing tackle. Any unit in which the right to use the property is transferred
to an individual or entity by deeded interest, or the sale of shares or stock, no longer qualifies
for class 1c even though it may remain available for rent. A camping pad offered for rent
by a property that otherwise qualifies for class 1c is also class 1c, regardless of the term of
the rental agreement, as long as the use of the camping pad does not exceed 250 days. If
the same owner owns two separate parcels that are located in the same township, and one
of those properties is classified as a class 1c property and the other would be eligible to be
classified as a class 1c property if it was used as the homestead of the owner, both properties
will be assessed as a single class 1c property; for purposes of this sentence, properties are
deemed to be owned by the same owner if each of them is owned by a limited liability
company, and both limited liability companies have the same membership. The portion of
the property used as a homestead is class 1a property under paragraph (a). The remainder
of the property is classified as follows: the first deleted text begin $600,000 deleted text end new text begin $1,500,000 new text end of market value is tier
I, the next deleted text begin $1,700,000 deleted text end new text begin $3,000,000 new text end of market value is tier II, and any remaining market value
is tier III. The classification rates for class 1c are: tier I, 0.50 percent; tier II, 1.0 percent;
and tier III, 1.25 percent. Owners of real and personal property devoted to temporary and
seasonal residential occupancy for recreation purposes in which all or a portion of the
property was devoted to commercial purposes for not more than 250 days in the year
preceding the year of assessment desiring classification as class 1c, must submit a declaration
to the assessor designating the cabins or units occupied for 250 days or less in the year
preceding the year of assessment by January 15 of the assessment year. Those cabins or
units and a proportionate share of the land on which they are located must be designated as
class 1c as otherwise provided. The remainder of the cabins or units and a proportionate
share of the land on which they are located must be designated as class 3a commercial. The
owner of property desiring designation as class 1c property must provide guest registers or
other records demonstrating that the units for which class 1c designation is sought were not
occupied for more than 250 days in the year preceding the assessment if so requested. The
portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center
or meeting room, and (5) other nonresidential facility operated on a commercial basis not
directly related to temporary and seasonal residential occupancy for recreation purposes
does not qualify for class 1c.

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under
section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time when
they work on that farm, and the occupants are not charged rent for the privilege of occupying
the property, provided that use of the structure for storage of farm equipment and produce
does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the appropriate
season; and

(4) the structure is not salable as residential property because it does not comply with
local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same classification rates as class 1a property
under paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2026.
new text end

Sec. 8.

Minnesota Statutes 2024, section 273.38, is amended to read:

273.38 PERCENTAGE OF ASSESSMENTS; EXCEPTIONS.

The distribution deleted text begin lines and the attachments and appurtenances thereto deleted text end new text begin systems, not
including substations, or transmission or generation equipment, new text end of cooperative associations new text begin
new text end organized under the provisions of Laws 1923, chapter 326, and laws amendatory thereof
and supplemental thereto, and engaged in the electrical heat, light and power business, upon
a mutual, nonprofit and cooperative plan, shall be assessed and taxed as provided in sections
273.40 and 273.41.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2025
and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2024, section 273.41, is amended to read:

273.41 AMOUNT OF TAX; DISTRIBUTION.

There is hereby imposed upon each such cooperative association on December 31 of
each year a tax of $10 for each 100 members, or fraction thereof, of such association. The
tax, when paid, shall be in lieu of all personal property taxes, state, county, or local, upon deleted text begin
distribution lines and the attachments and appurtenances thereto of such associations deleted text end new text begin that
part of the association's distribution system, not including substations, or transmission or
generation equipment, new text end located in rural areas. The tax shall be payable on or before March
1 of the next succeeding year, to the commissioner of revenue. If the tax, or any portion
thereof, is not paid within the time herein specified for the payment thereof, there shall be
added thereto a specific penalty equal to ten percent of the amount so remaining unpaid.
Such penalty shall be collected as part of said tax, and the amount of said tax not timely
paid, together with said penalty, shall bear interest at the rate specified in section 270C.40
from the time such tax should have been paid until paid. The commissioner shall deposit
the amount so received in the general fund of the state treasury.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2025
and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2024, section 290A.03, subdivision 3, is amended to read:

Subd. 3.

Income.

(a) "Income" means the sum of the following:

(1) federal adjusted gross income as defined in the Internal Revenue Code; and

(2) the sum of the following amounts to the extent not included in clause (1):

(i) all nontaxable income;

(ii) the amount of a passive activity loss that is not disallowed as a result of section 469,
paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss
carryover allowed under section 469(b) of the Internal Revenue Code;

(iii) an amount equal to the total of any discharge of qualified farm indebtedness of a
solvent individual excluded from gross income under section 108(g) of the Internal Revenue
Code;

(iv) cash public assistance and relief;

(v) any pension or annuity (including railroad retirement benefits, all payments received
under the federal Social Security Act, Supplemental Security Income, and veterans benefits),
which was not exclusively funded by the claimant or spouse, or which was funded exclusively
by the claimant or spouse and which funding payments were excluded from federal adjusted
gross income in the years when the payments were made;

(vi) interest received from the federal or a state government or any instrumentality or
political subdivision thereof;

(vii) workers' compensation;

(viii) nontaxable strike benefits;

(ix) the gross amounts of payments received in the nature of disability income or sick
pay as a result of accident, sickness, or other disability, whether funded through insurance
or otherwise;

(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
1986, as amended through December 31, 1995;

(xi) contributions made by the claimant to an individual retirement account, including
a qualified voluntary employee contribution; simplified employee pension plan;
self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of
the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal
Revenue Code, to the extent the sum of amounts exceeds the retirement base amount for
the claimant and spouse;

(xii) to the extent not included in federal adjusted gross income, distributions received
by the claimant or spouse from a traditional or Roth style retirement account or plan;

(xiii) nontaxable scholarship or fellowship grants;

(xiv) alimony received to the extent not included in the recipient's income;

(xv) the amount of deduction allowed under section 220 or 223 of the Internal Revenue
Code;

(xvi) the amount deducted for tuition expenses under section 222 of the Internal Revenue
Code; and

(xvii) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code.

In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" shall mean federal adjusted gross income reflected in
the fiscal year ending in the calendar year. Federal adjusted gross income shall not be reduced
by the amount of a net operating loss carryback or carryforward or a capital loss carryback
or carryforward allowed for the year.

(b) "Income" does not include:

(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;

(2) amounts of any pension or annuity which was exclusively funded by the claimant
or spouse and which funding payments were not excluded from federal adjusted gross
income in the years when the payments were made;

(3) to the extent included in federal adjusted gross income, amounts contributed by the
claimant or spouse to a traditional or Roth style retirement account or plan, but not to exceed
the retirement base amount reduced by the amount of contributions excluded from federal
adjusted gross income, but not less than zero;

(4) surplus food or other relief in kind supplied by a governmental agency;

(5) relief granted under this chapter;

(6) child support payments received under a temporary or final decree of dissolution or
legal separation;

(7) restitution payments received by eligible individuals and excludable interest as
defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 2001,
Public Law 107-16;

(8) alimony paid; deleted text begin or
deleted text end

(9) veterans disability compensation paid under title 38 of the United States Code new text begin ; or
new text end

new text begin (10) to the extent included in federal adjusted gross income, the amount of discharge of
indebtedness awarded to the claimant under section 332.74, subdivision 3 new text end .

(c) The sum of the following amounts may be subtracted from income:

(1) for the claimant's first dependent, the exemption amount multiplied by 1.4;

(2) for the claimant's second dependent, the exemption amount multiplied by 1.3;

(3) for the claimant's third dependent, the exemption amount multiplied by 1.2;

(4) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;

(5) for the claimant's fifth dependent, the exemption amount; and

(6) if the claimant or claimant's spouse had a disability or attained the age of 65 on or
before December 31 of the year for which the taxes were levied, the exemption amount.

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

(1) "exemption amount" means the exemption amount under section 290.0121,
subdivision 1, paragraph (b), for the taxable year for which the income is reported;

(2) "retirement base amount" means the deductible amount for the taxable year for the
claimant and spouse under section 219(b)(5)(A) of the Internal Revenue Code, adjusted for
inflation as provided in section 219(b)(5)(C) of the Internal Revenue Code, without regard
to whether the claimant or spouse claimed a deduction; and

(3) "traditional or Roth style retirement account or plan" means retirement plans under
sections 401, 403, 408, 408A, and 457 of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with property taxes payable
in 2026.
new text end

ARTICLE 3

AIDS AND CREDITS

Section 1.

Laws 2023, chapter 64, article 4, section 27, is amended by adding a subdivision
to read:

new text begin Subd. 9. new text end

new text begin Report. new text end

new text begin (a) By January 15, 2026, each: (1) local unit that receives aid in an
amount greater than $10,000; (2) county; and (3) Tribal government must report the following
information to the commissioner of public safety in the form and manner approved by that
commissioner:
new text end

new text begin (i) the amount of aid received; and
new text end

new text begin (ii) the ways in which the aid was used or is intended to be used.
new text end

new text begin (b) By February 15, 2026, the commissioner of public safety must compile the information
received from counties, Tribal governments, or local units pursuant to paragraph (a) and
submit the compiled data in a report to the chairs and ranking minority members of the
legislative committees and divisions with jurisdiction over public safety finance and policy
and taxes and property taxes. The report must comply with the requirements of Minnesota
Statutes, sections 3.195 and 3.197.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2. new text begin 2023 AID PENALTY FORGIVENESS; CITY OF STEWART.
new text end

new text begin Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the city of Stewart
must receive its aid payment for calendar year 2023 under Minnesota Statutes, section
477A.013, that was withheld under Minnesota Statutes, section 477A.017, subdivision 3,
provided that the state auditor certifies to the commissioner of revenue that the state auditor
received the annual financial reporting form for 2022 from the city by June 1, 2025. The
commissioner of revenue must make a payment of $87,501.50 to the city of Stewart by June
30, 2025. An amount sufficient to pay aid under this section is appropriated in fiscal year
2025 from the general fund to the commissioner of revenue. This is a onetime appropriation.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

ARTICLE 4

PUBLIC FINANCE

Section 1.

Minnesota Statutes 2024, section 446A.086, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) As used in this section, the following terms have the
meanings given.

(b) "Authority" means the Minnesota Public Facilities Authority.

(c) "Commissioner" means the commissioner of management and budget.

(d) "Debt obligation" means:

(1) a general obligation bond or note issued by a county, a bond or note to which the
general obligation of a county is pledged under section 469.034, subdivision 2, or a bond
or note payable from a county lease obligation under section 641.24, to provide funds for
the construction of:

(i) jails;

(ii) correctional facilities;

(iii) law enforcement facilities;

new text begin (iv) a court house or justice center, if connected to a jail, correctional facility, or other
law enforcement facility;
new text end

deleted text begin (iv) deleted text end new text begin (v) new text end social services and human services facilities;

deleted text begin (v) deleted text end new text begin (vi) new text end solid waste facilities; or

deleted text begin (vi) deleted text end new text begin (vii) new text end qualified housing development projects as defined in section 469.034,
subdivision 2; or

(2) a general obligation bond or note issued by a governmental unit to provide funds for
the construction, improvement, or rehabilitation of:

(i) wastewater facilities;

(ii) drinking water facilities;

(iii) stormwater facilities; or

(iv) any publicly owned building or infrastructure improvement that has received partial
funding from grants awarded by the commissioner of employment and economic development
related to redevelopment, contaminated site cleanup, bioscience, small cities development
programs, and rural business infrastructure programs, for which bonds are issued by the
authority under section 446A.087.

(e) "Governmental unit" means a county or a statutory or home rule charter city.

Sec. 2.

Minnesota Statutes 2024, section 469.104, is amended to read:

469.104 SECTIONS THAT APPLY IF FEDERAL LIMIT APPLIES.

Sections 474A.01 to 474A.21 apply to obligations issued under sections 469.090 to
469.108 that are deleted text begin limited deleted text end new text begin required new text end by federal tax law as defined in section 474A.02,
subdivision 8 new text begin to obtain an allocation of volume cap new text end .

Sec. 3.

Minnesota Statutes 2024, section 474A.091, subdivision 2, is amended to read:

Subd. 2.

Application for residential rental projects.

(a) Issuers may apply for an
allocation for residential rental bonds under this section by submitting to the department an
application on forms provided by the department accompanied by:

(1) a preliminary resolution;

(2) a statement of bond counsel that the proposed issue of obligations requires an
allocation under this chapter and the Internal Revenue Code;

(3) an application deposit in the amount of two percent of the requested allocation;

(4) a sworn statement from the applicant identifying the project as a preservation project,
30 percent AMI residential rental project, 50 percent AMI residential rental project, 100
percent LIHTC project, 20 percent LIHTC project, or any other residential rental project;
and

(5) a certification from the applicant or its accountant stating that the requested allocation
does not exceed the aggregate bond limitation.

The issuer must pay the application deposit to the Department of Management and Budget.
An entitlement issuer may not apply for an allocation for residential rental project bonds
under this section unless it has either permanently issued bonds equal to the amount of its
entitlement allocation for the current year plus any amount carried forward from previous
years or returned for reallocation all of its unused entitlement allocation. For purposes of
this subdivision, its entitlement allocation includes an amount obtained under section
474A.04, subdivision 6.

(b) An issuer that receives an allocation under this subdivision must permanently issue
obligations equal to all or a portion of the allocation received on or before new text begin the earlier of: (i) new text end
180 days of the allocation new text begin , or (ii) the last business day of December new text end . If an issuer that receives
an allocation under this subdivision does not permanently issue obligations equal to all or
a portion of the allocation received within the time period provided in this paragraph or
returns the allocation to the commissioner, the amount of the allocation is canceled and
returned for reallocation through the unified pool.

(c) The Minnesota Housing Finance Agency may apply for and receive an allocation
under this section without submitting an application deposit.

Sec. 4.

Minnesota Statutes 2024, section 474A.091, subdivision 2a, is amended to read:

Subd. 2a.

Application for all other types of qualified bonds.

(a) Issuers may apply
for an allocation for all types of qualified bonds other than residential rental bonds under
this section by submitting to the department an application on forms provided by the
department accompanied by:

(1) a preliminary resolution;

(2) a statement of bond counsel that the proposed issue of obligations requires an
allocation under this chapter and the Internal Revenue Code;

(3) the type of qualified bonds to be issued;

(4) an application deposit in the amount of two percent of the requested allocation; and

(5) a public purpose scoring worksheet for manufacturing and enterprise zone
applications.

The issuer must pay the application deposit to the Department of Management and Budget.
An entitlement issuer may not apply for an allocation for public facility bonds or mortgage
bonds under this section unless it has either permanently issued bonds equal to the amount
of its entitlement allocation for the current year plus any amount carried forward from
previous years or returned for reallocation all of its unused entitlement allocation. For
purposes of this subdivision, an entitlement allocation includes an amount obtained under
section 474A.04, subdivision 6.

(b) An issuer that receives an allocation under this subdivision must permanently issue
obligations equal to all or a portion of the allocation received on or before new text begin the earlier of: (i) new text end
120 days of the allocation new text begin , or (ii) the last business day of December new text end . If an issuer that receives
an allocation under this subdivision does not permanently issue obligations equal to all or
a portion of the allocation received within the time period provided in this paragraph or
returns the allocation to the commissioner, the amount of the allocation is canceled and
returned for reallocation through the unified pool.

(c) Notwithstanding the restrictions imposed on entitlement issuers under this subdivision,
the Minnesota Housing Finance Agency may not receive an allocation for mortgage bonds
under this section prior to the first Monday in October, but may be awarded allocations for
mortgage bonds from the unified pool on or after the first Monday in October. The Minnesota
Housing Finance Agency, the Minnesota Office of Higher Education, and the Minnesota
Rural Finance Authority may apply for and receive an allocation under this section without
submitting an application deposit.

APPENDIX

Repealed Minnesota Statutes: S0132-1

13.4967 OTHER TAX DATA CODED ELSEWHERE.

No active language found for: 13.4967.2a

No active language found for: 290.0679