HF 3490

Introduction - 94th Legislature (2025 - 2026)

Posted on 02/19/2026 03:23 p.m.

A bill for an act
relating to education finance; authorizing scholarship-granting organizations;
amending Minnesota Statutes 2024, section 290.01, subdivision 31; proposing
coding for new law in Minnesota Statutes, chapter 127A.

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

Section 1.

new text begin [127A.135] SCHOLARSHIP-GRANTING ORGANIZATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Minnesota is a covered state. new text end

new text begin Minnesota elects to participate in the tax
credit under Public Law 119-21, section 70411.
new text end

new text begin Subd. 2. new text end

new text begin Scholarship-granting organization defined. new text end

new text begin (a) For purposes of this section,
"scholarship-granting organization" means a nonprofit corporation operated exclusively for
charitable purposes exempt from federal income taxation under section 501(c)(3) of the
United States Internal Revenue Code that:
new text end

new text begin (1) is in compliance with the United States Department of Treasury rules and guidance
for scholarship-granting organizations;
new text end

new text begin (2) maintains separate accounts for qualified contributions;
new text end

new text begin (3) awards scholarships to at least ten students, not all of whom must attend the same
school;
new text end

new text begin (4) spends at least 90 percent of the income the organization receives on student
scholarships;
new text end

new text begin (5) prioritizes returning students and siblings of current recipients;
new text end

new text begin (6) does not earmark funding for specific students;
new text end

new text begin (7) verifies household income and family size; and
new text end

new text begin (8) avoids self-dealing and does not award scholarships to disqualified persons.
new text end

new text begin (b) By July 1 of each year, a scholarship-granting organization must annually notify the
Department of Education of the organization's compliance with the United States Department
of Treasury rules and guidance.
new text end

new text begin Subd. 3. new text end

new text begin List of eligible scholarship-granting organizations. new text end

new text begin The Department of
Education must post to the department's website a list of qualifying scholarship-granting
organizations that have reported their eligibility to the department under subdivision 2.
new text end

new text begin Subd. 4. new text end

new text begin Effect on nonpublic schooling. new text end

new text begin Nothing in this section authorizes the
Department of Education or any school district to exercise any additional control or
supervision over, or to impose any additional requirements or restrictions on, any nonpublic
school, nonpublic school student, or parent of any nonpublic school student.
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.

Minnesota Statutes 2024, section 290.01, subdivision 31, is amended to read:

Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through May 1,
2023 new text begin , and also includes section 70411 of Public Law 119-21 new text end . Internal Revenue Code also
includes any uncodified provision in federal law that relates to provisions of the Internal
Revenue Code that are incorporated into Minnesota law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment, except
the changes incorporated by federal changes are effective retroactively at the same time the
changes were effective for federal purposes.
new text end