SF 5116

Introduction - 94th Legislature (2025 - 2026)

Posted on 04/14/2026 09:33 a.m.

A bill for an act
relating to taxation; property; establishing a state general levy for certain residential
homestead property; modifying the city aid formula for certain cities; amending
Minnesota Statutes 2024, sections 275.025, subdivisions 1, 4, by adding
subdivisions; 477A.013, subdivision 9; 477A.03, subdivision 2a; repealing
Minnesota Statutes 2024, section 477A.013, subdivision 8.

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

Section 1.

Minnesota Statutes 2024, section 275.025, subdivision 1, is amended to read:

Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property deleted text begin and deleted text end new text begin , new text end seasonal residential recreational property, new text begin and residential
homestead property, new text end as defined in this section. The state general levy for
commercial-industrial property is $716,990,000 deleted text begin for taxes payable in 2023 and thereafter deleted text end .
The state general levy for seasonal-recreational property is $41,690,000 deleted text begin for taxes payable
in 2020 and thereafter deleted text end . new text begin The state general levy for residential homestead property shall be
the amount determined under subdivision 3a. new text end The tax under this section is not treated as a
local tax rate under section 469.177 and is not the levy of a governmental unit under chapters
276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year as
necessary to account for errors and tax base changes that affected a preliminary or final rate
for either of the two preceding years. Adjustments are allowed to the extent that the necessary
information is available to the commissioner at the time the rates for a year must be certified,
and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported to the commissioner under section 270C.85,
subdivision 2, clause (4), for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes payable in 2027 and
thereafter.
new text end

Sec. 2.

Minnesota Statutes 2024, section 275.025, is amended by adding a subdivision to
read:

new text begin Subd. 3a. new text end

new text begin Residential homestead levy amount. new text end

new text begin By August 1 each year, the commissioner
of revenue shall determine the amount necessary to pay city aid distributions under section
477A.013, subdivision 9, for aids payable in the following calendar year. The amount
determined, minus $644,398,012, is the levy amount for residential homestead property
under subdivision 1 and is payable in the following taxes payable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes payable in 2027 and
thereafter.
new text end

Sec. 3.

Minnesota Statutes 2024, section 275.025, is amended by adding a subdivision to
read:

new text begin Subd. 3b. new text end

new text begin Residential homestead tax capacity. new text end

new text begin For purposes of this section, "residential
homestead tax capacity" means the tax capacity of all taxable property classified as class
1a under section 273.13, subdivision 22, that has a market value exceeding $1,000,000.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes payable in 2027 and
thereafter.
new text end

Sec. 4.

Minnesota Statutes 2024, section 275.025, subdivision 4, is amended to read:

Subd. 4.

Apportionment and levy of state general tax.

The state general tax must be
levied by applying a uniform rate to all commercial-industrial tax capacity deleted text begin and a uniform
rate to deleted text end new text begin , new text end all seasonal residential recreational tax capacity new text begin , and all residential homestead tax
capacity new text end . On or before October 1 each year, the commissioner of revenue shall certify the
preliminary state general levy rates to each county auditor that must be used to prepare the
notices of proposed property taxes for taxes payable in the following year. By January 1 of
each year, the commissioner shall certify the final state general levy rates to each county
auditor that shall be used in spreading taxes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes payable in 2027 and
thereafter.
new text end

Sec. 5.

Minnesota Statutes 2024, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

deleted text begin (a) In calendar year 2024 and thereafter, if a city's
certified aid for the previous year is less than its current unmet need, the city shall receive
an aid distribution equal to the sum of (1) its certified aid in the previous year, and (2) the
city formula aid under subdivision 8.
deleted text end

deleted text begin (b) For aids payable in 2024 and thereafter, if a city's certified aid for the previous year
is equal to or greater than its current unmet need, the total aid for a city is deleted text end new text begin Each city shall
receive an aid distribution new text end equal to the greater of (1) its unmet need, or (2) the amount it
was certified to receive in the previous year minus the lesser of (i) $10 multiplied by its
population, or (ii) five percent of its net levy in the year prior to the aid distribution. No city
may have a total aid amount less than $0.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2027 and thereafter.
new text end

Sec. 6.

Minnesota Statutes 2024, section 477A.03, subdivision 2a, is amended to read:

Subd. 2a.

Cities.

deleted text begin For aids payable in 2021 through 2023, the total aid payable under
section 477A.013, subdivision 9, is $564,398,012. For aids payable in 2024 and thereafter,
the total aid payable under section 477A.013, subdivision 9, is $644,398,012 deleted text end new text begin An amount
sufficient to pay city aid distributions under section 477A.013, subdivision 9, is annually
appropriated from the general fund to the commissioner of revenue new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2027 and thereafter.
new text end

Sec. 7. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2024, section 477A.013, subdivision 8, 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 for aids payable in 2027 and thereafter.
new text end

APPENDIX

Repealed Minnesota Statutes: 26-08187

477A.013 MUNICIPAL GOVERNMENT DISTRIBUTIONS.

Subd. 8.

City formula aid.

(a) For aids payable in 2024 and thereafter, the formula aid for a city is equal to the product of (1) the difference between its unmet need and its certified aid in the previous year, and (2) the aid gap percentage.

(b) The applicable aid gap percentage must be calculated by the Department of Revenue so that the total of the aid under subdivision 9 equals the total amount available for aid under section 477A.03. The aid gap percentage must be the same for all cities subject to paragraph (a). Data used in calculating aids to cities under sections 477A.011 to 477A.013 shall be the most recently available data as of January 1 in the year in which the aid is calculated.