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HF2723 (Legislative Session 94 (2025-2026))

Small business income tax investment credit requirements modified, and credit allocation extended.

Related bill: SF2879

AI Generated Summary

Purpose of the Bill

This bill aims to modify the requirements for the small business investment tax credit in Minnesota, making it more accessible for small businesses, including those in greater Minnesota. It seeks to extend credit allocations and streamline the certification process for businesses to qualify for these tax credits.

Main Provisions

  • Certification for Small Businesses: Businesses can apply for certification as qualified small businesses, with applications available online. They must pay a $150 application fee.
  • Eligibility Requirements: To be certified, a business must have its headquarters in Minnesota, with at least 51% of employees working and payroll based in the state. The business must engage in innovation, primarily in high-technology fields, agriculture, or new proprietary technologies.
  • Employee Criteria: Businesses must have fewer than 25 employees who are paid at least 175% of the federal poverty guideline or minimum wage unless exempt.
  • Operational Limits: Businesses should not have been operating for more than 10 years, or 20 years if involved in medical devices or pharmaceuticals.
  • Investment Limits: The bill raises the cap on previous private equity investments from $4 million to $15 million.
  • Prohibition on Certain Activities: Real estate development, insurance, banking, and certain professional services businesses do not qualify.

Significant Changes to Existing Law

  • The bill increases the limit on prior equity investment from $4 million to $15 million for qualification as a small business.
  • It introduces a new certification process specifically for businesses headquartered outside the metropolitan area, termed "greater Minnesota businesses," which must meet similar criteria but focus outside the metropolitan area.

Relevant Terms

small business investment credit, certification, qualified small business, greater Minnesota, high-technology field, proprietary technology, equity investments, federal poverty guideline, federal minimum wage, private equity investments.

Bill text versions

Past committee meetings

  • Taxes on: April 03, 2025 10:15

Actions

DateChamberWhereTypeNameCommittee Name
March 23, 2025HouseFloorActionIntroduction and first reading, referred toTaxes
March 23, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarifies application procedures for certification as a qualified small business."
      ],
      "removed": [],
      "summary": "This bill modifies the small business investment credit requirements under section 116J.8737.",
      "modified": [
        "Extends credit allocation, modifies conditions for certification and requirements for employee payroll."
      ]
    },
    "citation": "116J.8737",
    "subdivision": "subdivision 2"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill references the definition of unitary business under section 290.17 in relation to employee count limits.",
      "modified": []
    },
    "citation": "290.17",
    "subdivision": "subdivision 4"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Defines the metropolitan area as per section 473.121 for greater Minnesota qualifications.",
      "modified": []
    },
    "citation": "473.121",
    "subdivision": "subdivision 2"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Excludes certain disqualified entities from private equity investments as per referenced section 80A.50.",
      "modified": []
    },
    "citation": "80A.50",
    "subdivision": ""
  }
]

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