SF 4834

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/26/2026 09:24 a.m.

A bill for an act
relating to taxation; sales and use; providing an exemption for local governments
on the purchase of motor vehicle leases and construction materials when purchased
by a contractor or subcontractor; amending Minnesota Statutes 2024, section
297A.70, subdivision 2.

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

Section 1.

Minnesota Statutes 2024, section 297A.70, subdivision 2, is amended to read:

Subd. 2.

Sales to government.

(a) All sales, except those listed in paragraph (b), to the
following governments and political subdivisions, or to the listed agencies or instrumentalities
of governments and political subdivisions, are exempt:

(1) the United States and its agencies and instrumentalities;

(2) school districts, local governments, the University of Minnesota, state universities,
community colleges, technical colleges, state academies, the Perpich Minnesota Center for
Arts Education, and an instrumentality of a political subdivision that is accredited as an
optional/special function school by the North Central Association of Colleges and Schools;

(3) hospitals and nursing homes owned and operated by political subdivisions of the
state of tangible personal property and taxable services used at or by hospitals and nursing
homes;

(4) other states or political subdivisions of other states, if the sale would be exempt from
taxation if it occurred in that state; and

(5) public libraries, public library systems, multicounty, multitype library systems as
defined in section 134.001, county law libraries under chapter 134A, state agency libraries,
the state library under section 480.09, and the Legislative Reference Library.

(b) This exemption does not apply to the sales of the following products and services:

(1) building, construction, or reconstruction materials purchased by a contractor or a
subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed
maximum price covering both labor and materials for use in the construction, alteration, or
repair of a building or facility new text begin , except for materials purchased on behalf of local governments new text end ;

(2) construction materials purchased by tax exempt entities or their contractors to be
used in constructing buildings or facilities which will not be used principally by the tax
exempt entities;

(3) the leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
for leases entered into by the United States or its agencies or instrumentalities new text begin or by local
governments new text end ;

(4) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause (2),
prepared food, candy, soft drinks, alcoholic beverages as defined in section 297A.67,
subdivision 2, and taxable cannabis products as defined under section 295.81, subdivision
1, paragraph (r), except for lodging, prepared food, candy, soft drinks, alcoholic beverages,
and taxable cannabis products purchased directly by the United States or its agencies or
instrumentalities; or

(5) goods or services purchased by a local government as inputs to a liquor store, taxable
cannabis product retailer as defined under section 295.81, subdivision 1, paragraph (p), gas
or electric utility, solid waste hauling service, solid waste recycling service, landfill, golf
course, marina, campground, cafe, or laundromat.

(c) As used in this subdivision, "school districts" means public school entities and districts
of every kind and nature organized under the laws of the state of Minnesota, and any
instrumentality of a school district, as defined in section 471.59.

(d) For purposes of the exemption granted under this subdivision, "local governments"
has the following meaning:

(1) for the period prior to January 1, 2017, local governments means statutory or home
rule charter cities, counties, and townships; and

(2) beginning January 1, 2017, local governments means statutory or home rule charter
cities, counties, and townships; special districts as defined under section 6.465; any
instrumentality of a statutory or home rule charter city, county, or township as defined in
section 471.59; and any joint powers board or organization created under section 471.59.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2026.
new text end