SF 3931

Introduction - 94th Legislature (2025 - 2026)

Posted on 02/27/2026 10:24 a.m.

A bill for an act
relating to taxation; prohibiting withholding of federal income tax from state
employee pay; amending Minnesota Statutes 2024, section 290.92, by adding a
subdivision; repealing Minnesota Statutes 2024, section 16A.13.

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

Section 1.

Minnesota Statutes 2024, section 290.92, is amended by adding a subdivision
to read:

new text begin Subd. 32. new text end

new text begin No federal tax withholding; state employees. new text end

new text begin When the commissioner of
management and budget prepares state employee payroll under section 16A.17, or the head
of an agency pays its employees directly, the commissioner or agency head must not withhold
or remit federal income tax.
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 REPEALER.
new text end

new text begin Minnesota Statutes 2024, section 16A.13, new text end new text begin is repealed.
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

APPENDIX

Repealed Minnesota Statutes: 26-07198

16A.13 FEDERAL TAX WITHHOLDING.

Subdivision 1.

Custodian; bond.

The commissioner of management and budget is the custodian of all money deposited with the commissioner of management and budget for federal tax withheld from the pay of any officer or employee of the state of Minnesota. The commissioner of management and budget's bond to the state shall cover the liability for the custodian's acts. The deposits are subject to laws on keeping and paying out state money.

Subd. 2.

Commissioner as federal agent.

The commissioner may cooperate with and act as agent for the United States of America in collecting federal tax from the pay of employees.

Subd. 2a.

Procedure.

The commissioner shall see that the deduction for the withheld tax is made from an employee's pay on the payroll abstract. The commissioner shall approve one payment to the commissioner for the total amount deducted on the abstract. Deductions from the pay of an employee paid direct by an agency shall be made by the employee's payroll authority. A later deduction must correct an error made on an earlier deduction. The paying authority shall see that a payment for the deductions is promptly sent to the commissioner. The commissioner shall deposit the amount of the payment to the credit of the proper federal authority or other person authorized by federal law to receive it.

Subd. 2b.

Appropriation.

There is appropriated the amount necessary to discharge the state's obligation under federal law requiring the deductions from pay in this section.

Subd. 3.

Reports; payments.

The commissioner shall report as required by federal law on the deductions made under this section and see that the deducted money is paid out as required.

Subd. 4.

Employees to provide information.

An employee shall prepare and send to the commissioner the information and forms the commissioner requires under this section.