1.1 	A bill for an act
1.2 	relating to financing state and local government; modifying individual income tax 
1.3 	rates; increasing county program aid to offset county costs associated with federal 
1.4 	Supplemental Nutrition Assistance Program changes; adjusting school district 
1.5 	revenue for changes in the Supplemental Nutrition Assistance Program; requiring 
1.6 	the commissioner of management and budget to estimate certain costs; appropriating 
1.7 	money;amending Minnesota Statutes 2024, sections 290.06, subdivision 2d; 
1.8 	477A.03, subdivision 2b; Minnesota Statutes 2025 Supplement, sections 126C.10, 
1.9 	subdivision 3; 290.06, subdivision 2c.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	Section 1. Minnesota Statutes 2025 Supplement, section 126C.10, subdivision 3, is amended 
1.12 	to read:
1.13 		Subd. 3.Compensatory education revenue. (a) A district's compensatory revenue 
1.14 	equals the sum of its compensatory revenue for each building in the district and the amounts 
1.15 	designated under Laws 2015, First Special Session chapter 3, article 2, section 70, subdivision 
1.16 	8, for fiscal year 2017. Revenue shall be paid to the district and must be allocated according 
1.17 	to section 126C.15, subdivision 2.
1.18 	(b) For fiscal years 2024, 2025, and 2026, the compensatory education revenue for each 
1.19 	building in the district equals the formula allowance minus $839 times the compensation 
1.20 	revenue pupil units computed according to section 126C.05, subdivision 3.
1.21 	(c) For fiscal year 2027 and later, the compensatory education revenue for each building 
1.22 	in the district equals its the product of the: (1) compensatory pupils multiplied by the; (2)
1.23 	building compensatory allowance; and (3) statewide compensatory Supplemental Nutrition 
1.24 	Assistance Program adjustment factor.
2.1 	(d) When the district contracting with an alternative program under section 124D.69 
2.2 	changes prior to the start of a school year, the compensatory revenue generated by pupils 
2.3 	attending the program shall be paid to the district contracting with the alternative program 
2.4 	for the current school year, and shall not be paid to the district contracting with the alternative 
2.5 	program for the prior school year.
2.6 	(e) When the fiscal agent district for an area learning center changes prior to the start of 
2.7 	a school year, the compensatory revenue shall be paid to the fiscal agent district for the 
2.8 	current school year, and shall not be paid to the fiscal agent district for the prior school year.
2.9 	(f) Notwithstanding paragraph (c), for fiscal year 2026, if the sum of the amounts 
2.10 	calculated under paragraph (c) is less than $838,947,000, the commissioner must 
2.11 	proportionately increase the revenue to each building until the total statewide revenue 
2.12 	calculated for each building equals $838,947,000.
2.13 	(g) Notwithstanding paragraph (c), for fiscal year 2027 and later, if the sum of the 
2.14 	amounts calculated under paragraph (c) is less than $857,152,000, the commissioner must 
2.15 	proportionately increase the revenue to each building until the total statewide revenue 
2.16 	calculated for each building equals $857,152,000.
2.17 	(h) For fiscal year 2027 and later, the Department of Education must calculate the 
2.18 	statewide compensatory Supplemental Nutrition Assistance Program adjustment factor. The 
2.19 	adjustment factor equals:
2.20 	(1) one; plus
2.21 	(2) the ratio of the compensatory loss adjustment to the total number of pupils identified 
2.22 	through direct certification for that year.
2.23 	The compensatory loss adjustment equals the greater of zero or the difference between the 
2.24 	number of pupils identified through direct certification on the basis of participation in the 
2.25 	Supplemental Nutrition Assistance Program during the fall of 2024 and the number of pupils 
2.26 	identified through direct certification on the basis of participation in the Supplemental 
2.27 	Nutrition Assistance Program during the fall of the previous fiscal year.

2.28 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2027 and later.

2.29 	Sec. 2. Minnesota Statutes 2025 Supplement, section 290.06, subdivision 2c, is amended 
2.30 	to read:
2.31 		Subd. 2c.Schedules of rates for individuals, estates, and trusts. (a) The income taxes 
2.32 	imposed by this chapter upon married individuals filing joint returns and surviving spouses 
3.1 	as defined in section 2(a) of the Internal Revenue Code must be computed by applying to 
3.2 	their taxable net income the following schedule of rates:
3.3 	(1) On the first $38,770 $48,700, 5.35 percent;
3.4 	(2) On all over $38,770 $48,700, but not over $154,020 $193,480, 6.8 percent;
3.5 	(3) On all over $154,020 $193,480, but not over $269,010 $337,930, 7.85 percent;
3.6 	(4) On all over $269,010 $337,930, but not over $1,667,000, 9.85 percent.; and
3.7 	(5) On all over $1,667,000, the percentage determined under paragraph (g).
3.8 	Married individuals filing separate returns, estates, and trusts must compute their income 
3.9 	tax by applying the above rates to their taxable income, except that the income brackets 
3.10 	will be one-half of the above amounts after the adjustment required in subdivision 2d.
3.11 	(b) The income taxes imposed by this chapter upon unmarried individuals must be 
3.12 	computed by applying to taxable net income the following schedule of rates:
3.13 	(1) On the first $26,520 $33,310, 5.35 percent;
3.14 	(2) On all over $26,520 $33,310, but not over $87,110 $109,430, 6.8 percent;
3.15 	(3) On all over $87,110 $109,430, but not over $161,720 $203,150, 7.85 percent;
3.16 	(4) On all over $161,720 $203,150, but not over $1,000,000, 9.85 percent.; and
3.17 	(5) On all over $1,000,000, the percentage determined under paragraph (g).
3.18 	(c) The income taxes imposed by this chapter upon unmarried individuals qualifying as 
3.19 	a head of household as defined in section 2(b) of the Internal Revenue Code must be 
3.20 	computed by applying to taxable net income the following schedule of rates:
3.21 	(1) On the first $32,650 $41,010, 5.35 percent;
3.22 	(2) On all over $32,650 $41,010, but not over $131,190 $164,800, 6.8 percent;
3.23 	(3) On all over $131,190 $164,800, but not over $214,980 $270,060, 7.85 percent;
3.24 	(4) On all over $214,980 $270,060, but not over $1,334,000, 9.85 percent.; and
3.25 	(5) On all over $1,334,000, the percentage determined under paragraph (g).
3.26 	(d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax 
3.27 	of any individual taxpayer whose taxable net income for the taxable year is less than an 
3.28 	amount determined by the commissioner must be computed in accordance with tables 
3.29 	prepared and issued by the commissioner of revenue based on income brackets of not more 
3.30 	than $100. The amount of tax for each bracket shall be computed at the rates set forth in 
4.1 	this subdivision, provided that the commissioner may disregard a fractional part of a dollar 
4.2 	unless it amounts to 50 cents or more, in which case it may be increased to $1.
4.3 	(e) An individual who is not a Minnesota resident for the entire year must compute the 
4.4 	individual's Minnesota income tax as provided in this subdivision. After the application of 
4.5 	the nonrefundable credits provided in this chapter, the tax liability must then be multiplied 
4.6 	by a fraction in which:
4.7 	(1) the numerator is the individual's Minnesota source federal adjusted gross income as 
4.8 	defined in section 62 of the Internal Revenue Code and increased by:
4.9 	(i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, 17, 19, 
4.10 	and 20, and 290.0137, paragraph (a); and reduced by
4.11 	(ii) the Minnesota assignable portion of the subtraction for United States government 
4.12 	interest under section 290.0132, subdivision 2, the subtractions under sections 290.0132, 
4.13 	subdivisions 9, 14, 15, 18, 27, 31, and 32, and 290.0137, paragraph (c), after applying the 
4.14 	allocation and assignability provisions of section 290.081, clause (a), or 290.17; and
4.15 	(2) the denominator is the individual's federal adjusted gross income as defined in section 
4.16 	62 of the Internal Revenue Code, increased by:
4.17 	(i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, 17, 19, 
4.18 	and 20, and 290.0137, paragraph (a); and reduced by
4.19 	(ii) the subtractions under sections 290.0132, subdivisions 2, 9, 14, 15, 18, 27, 31, and 
4.20 	32, and 290.0137, paragraph (c).
4.21 	(f) If an individual who is not a Minnesota resident for the entire year is a qualifying 
4.22 	owner of a qualifying entity that elects to pay tax as provided in section 289A.08, subdivision 
4.23 	7a, paragraph (b), the individual must compute the individual's Minnesota income tax as 
4.24 	provided in paragraph (e), and also must include, to the extent attributed to the electing 
4.25 	qualifying entity:
4.26 	(1) in paragraph (e), clause (1), item (i), and paragraph (e), clause (2), item (i), the 
4.27 	addition under section 290.0131, subdivision 5; and
4.28 	(2) in paragraph (e), clause (1), item (ii), and paragraph (e), clause (2), item (ii), the 
4.29 	subtraction under section 290.0132, subdivision 3.
4.30 	(g) For taxable years beginning after December 31, 2025, and before January 1, 2028, 
4.31 	the commissioner of revenue must calculate the tax rate that applies under paragraphs (a), 
4.32 	clause (5); (b), clause (5); and (c), clause (5). The commissioner must set the rate at the 
5.1 	level the commissioner estimates would be necessary to raise an amount of revenue in fiscal 
5.2 	years 2027 and 2028 equal to the cost of the changes described in section 5, as certified by 
5.3 	the commissioner of management and budget. The rate established by the commissioner 
5.4 	for taxable years beginning after December 31, 2025, and before January 1, 2028, remains 
5.5 	in effect for taxable years beginning after December 31, 2027.

5.6 	EFFECTIVE DATE. This section is effective for taxable years beginning after December 
5.7 	31, 2025.

5.8 	Sec. 3. Minnesota Statutes 2024, section 290.06, subdivision 2d, is amended to read:
5.9 		Subd. 2d.Inflation adjustment of brackets. The commissioner shall annually adjust 
5.10 	the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed 
5.11 	in subdivision 2c, except the fifth tier under paragraphs (a), clause (5); (b), clause (5); and 
5.12 	(c), clause (5), as provided in section 270C.22. The statutory year is taxable year 2019 2026. 
5.13 	The rate applicable to any rate bracket must not be changed. The dollar amounts setting 
5.14 	forth the tax shall be adjusted to reflect the changes in the rate brackets. The rate brackets 
5.15 	as adjusted must be rounded to the nearest $10 amount. If the rate bracket ends in $5, it 
5.16 	must be rounded up to the nearest $10 amount. The commissioner shall determine the rate 
5.17 	bracket for married filing separate returns after this adjustment is done. The rate bracket 
5.18 	for married filing separate must be one-half of the rate bracket for married filing joint.

5.19 	EFFECTIVE DATE. This section is effective for taxable years beginning after December 
5.20 	31, 2025.

5.21 	Sec. 4. Minnesota Statutes 2024, section 477A.03, subdivision 2b, is amended to read:
5.22 		Subd. 2b.Counties. (a) For aids payable in 2021 through 2023, the total aid payable 
5.23 	under section 477A.0124, subdivision 3, is $118,795,000, of which $3,000,000 shall be 
5.24 	allocated as required under Laws 2014, chapter 150, article 4, section 6. For aids payable 
5.25 	in 2024, the total aid payable under section 477A.0124, subdivision 3, is $154,197,053, of 
5.26 	which $3,000,000 shall be allocated as required under Laws 2014, chapter 150, article 4, 
5.27 	section 6. For aids payable in 2025 and thereafter, the total aid payable under section 
5.28 	477A.0124, subdivision 3, is $151,197,053. On or before the first installment date provided 
5.29 	in section 477A.015, paragraph (a), $500,000 of this appropriation shall be transferred each 
5.30 	year by the commissioner of revenue to the Board of Public Defense for the payment of 
5.31 	services under section 611.27. Any transferred amounts not expended or encumbered in a 
5.32 	fiscal year shall be certified by the Board of Public Defense to the commissioner of revenue 
5.33 	on or before October 1 and shall be included in the next certification of county need aid.
6.1 	(b) For aids payable in 2021 through 2023, the total aid under section 477A.0124, 
6.2 	subdivision 4, is $145,873,444. For aids payable in 2024 and thereafter, the total aid under 
6.3 	section 477A.0124, subdivision 4, is $190,471,391. The commissioner of revenue shall 
6.4 	transfer to the Legislative Budget Office $207,000 annually for the cost of preparation of 
6.5 	local impact notes as required by section 3.987, and other local government activities. The 
6.6 	commissioner of revenue shall transfer to the commissioner of education $7,000 annually 
6.7 	for the cost of preparation of local impact notes for school districts as required by section 
6.8 	3.987. The commissioner of revenue shall deduct the amounts transferred under this 
6.9 	paragraph from the appropriation under this paragraph. The amounts transferred are 
6.10 	appropriated to the Legislative Coordinating Commission and the commissioner of education 
6.11 	respectively.
6.12 	(c) No later than June 30, 2026, the commissioner of management and budget must 
6.13 	certify to the commissioner of revenue an estimate of the cost to Minnesota counties of 
6.14 	changes to Supplemental Nutrition Assistance Program work requirements under Public 
6.15 	Law 119-21. This cost estimate must include county costs for upgrades to the MAXIS 
6.16 	system. For aids payable in 2026 and later, the amount of aid payable under this subdivision 
6.17 	is increased by the amount certified under this paragraph. The increase under this section 
6.18 	must be allocated proportionally between county need aid under paragraph (a) and county 
6.19 	tax-base equalization aid under paragraph (b) based on each aid's share of total county 
6.20 	program aid for aids payable in 2026.

6.21 	EFFECTIVE DATE. This section is effective for aids payable in 2026 and later.

6.22 	Sec. 5. COMMISSIONER OF MANAGEMENT AND BUDGET TO ESTIMATE 
6.23 	FEDERAL FUNDING LOSS.
 6.24 	(a) No later than June 30, 2026, the commissioner of management and budget must 
6.25 	calculate and certify to the commissioner of revenue an estimate of the total cost in fiscal 
6.26 	years 2027 and 2028 of:
6.27 	(1) the statewide compensatory Supplemental Nutrition Assistance Program adjustment 
6.28 	factor under Minnesota Statutes, section 126C.10, subdivision 3;
6.29 	(2) the amount of the aid increase under Minnesota Statutes, section 477A.03, subdivision 
6.30 	2b, paragraph (c); and
6.31 	(3) additional costs to the state related to:
6.32 	(i) the elimination of federal funding for SNAP-Education;
7.1 	(ii) the reduction of federal funding for Supplemental Nutrition Assistance Program 
7.2 	administrative costs;
7.3 	(iii) Supplemental Nutrition Assistance Program state matching funds required based 
7.4 	on the state's payment error rate; and
7.5 	(iv) increased school meal costs due to changes to the Supplemental Nutrition Assistance 
7.6 	Program under Public Law 119-21.
7.7 	(b) The commissioner of revenue must use the amount certified under this section to 
7.8 	calculate the rate for the fifth tier of the individual income tax, as provided in Minnesota 
7.9 	Statutes, section 290.06, subdivision 2c, paragraph (g).

7.10 	Sec. 6. APPROPRIATION; GENERAL EDUCATION AID.
 7.11 		Subdivision 1.Department of Education. The sums indicated in this section are 
7.12 	appropriated from the general fund to the Department of Education in the fiscal years 
7.13 	designated.
7.14 		Subd. 2.Additional general education aid. For additional general education aid under 
7.15 	Minnesota Statutes, section 126C.13, subdivision 4:

7.16		$
	.......
	.....
	2027