Purpose of the Bill

The purpose of this bill is to phase out the individual income tax and corporate franchise tax in Minnesota over several years. This action aims to significantly reduce taxation on individuals and businesses, potentially increasing disposable income and business investments.

Main Provisions

• Tax Reduction Schedule: The bill establishes a clear timeline for reducing tax liabilities under Minnesota Statutes, Chapter 290.

  • For the taxable year beginning after December 31, 2025, taxpayers will pay only 80% of the current tax liability.
  • This liability further reduces to 60% after December 31, 2026.
  • After December 31, 2027, it decreases to 40%, and
  • Finally, after December 31, 2028, the liability drops to 20% of the current tax calculation.

• Refundable Credits: Tax credits that exceed a taxpayer's liability will also be reduced in accordance with the scheduled tax liability reductions. This means any refunds from credits will also decrease over time as tax liabilities are phased out.

Significant Changes to Existing Law

• The bill proposes the repeal of numerous sections within the Minnesota Statutes that govern income and corporate taxes. These repeals would effectively eliminate the existing legal structures that impose and regulate these taxes as the phase-out progresses.

Relevant Terms

income tax, corporate franchise tax, tax phase-out, tax liability reduction, refundable tax credit, Minnesota Statutes Chapter 290, tax repeal