HF 4123
Introduction - 94th Legislature (2025 - 2026)
Posted on 03/09/2026 03:39 p.m.
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A bill for an act
relating to taxation; individual income; expanding the net investment income tax
to apply to all trade or business income that is exempt from self-employment taxes;
amending Minnesota Statutes 2024, section 290.033.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2024, section 290.033, is amended to read:
290.033 NET INVESTMENT INCOME TAX.
(a) For purposes of this section, "net investment income" has the meaning given in
section 1411(c) of the Internal Revenue Code, deleted text begin excludingdeleted text end new text begin except:
new text end
new text begin (1) it excludesnew text end the net gain attributable to the disposition of property classified as class
2a under section 273.13, subdivision 23deleted text begin .deleted text end new text begin ; and
new text end
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(2) notwithstanding section 1411(c)(2) of the Internal Revenue Code, it includes all
income from a trade or business that is not excluded from net investment income under
section 1411(c)(6) of the Internal Revenue Code.
new text end
(b) In addition to the tax computed under section 290.06, subdivision 2c, a tax is imposed
on the net investment income of individuals, estates, and trusts in excess of $1,000,000 at
a rate of one percent.
(c) For an individual who is not a Minnesota resident for the entire taxable year, the tax
under this subdivision must be calculated as if the individual is a Minnesota resident for the
entire year, and that amount must be multiplied by a fraction in which:
(1) the numerator is net investment income allocable under section 290.17 to Minnesota;
and
(2) the denominator is the total amount of net investment income for the taxable year.
(d) For an estate or trust, the tax on net investment income must be computed by
multiplying the net investment income tax liability by a fraction, the numerator of which is
the amount of the estate or trust's net investment income allocated to the state pursuant to
the provisions of sections 290.17, 290.191, and 290.20, and the denominator of which is
the taxpayer's total net investment income.
new text begin EFFECTIVE DATE. new text end
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This section is effective for taxable years beginning after December
31, 2025.
new text end