Minneslate Logo

HF950 (Legislative Session 94 (2025-2026))

Individual income tax exemption provided for income earned by certain nonresident employees.

Related bill: SF46

AI Generated Summary

The bill introduced in the Minnesota House of Representatives is aimed at modifying taxation for certain nonresident employees. It proposes that income earned by qualifying nonresident individuals for employment duties performed in Minnesota be exempt from state income tax, under specific conditions. Here is a simplified breakdown of the changes proposed:

  1. Exemption Details:

    • Income earned by nonresident individuals for their employment duties in Minnesota is exempt from Minnesota state income tax if the individual works in Minnesota for 30 or fewer days in a tax year.

  2. Definitions:

    • Employee and Employer: Defined according to existing state tax regulations.
    • Employment Duties: Professional or personal services performed for an employer.
    • Entertainer: As previously defined under state tax law.
    • Qualifying nonresident individual: A nonresident who works in multiple states during the year and whose primary residence (and tax obligations) is in another state that either has a similar tax exemption or no state income tax.

  3. Withholding Exemption Limitation:

    • Wages paid to qualifying nonresident individuals are not subject to state tax withholding unless they work more than 30 days in Minnesota during the tax year. If this threshold is exceeded, normal withholding and tax filing requirements apply.

  4. Employer Compliance and Penalties:

    • Penalties for non-compliance with withholding requirements will not be imposed if the employer either uses a time and attendance system or credible records to establish employee work locations.

  5. Determination of Employment Location:

    • A day counts as performing duties within Minnesota if the majority of work on that day is performed in the state. Transit time is not considered work time in this determination.

  6. Severability:

    • If part of this law is found unconstitutional, the remainder will still be valid unless otherwise challenged.

This legislation simplifies the tax requirements for nonresident employees who work in Minnesota temporarily, aiming to reduce the administrative burden on both employers and employees. It ensures flexibility and clarity in taxation for modern working arrangements such as short-term assignments and multi-state employment.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 16, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Introduction of nonresident employee exemption criteria."
      ],
      "removed": [],
      "summary": "This bill references existing withholding exemption limitations for nonresident employees under section 290.92.",
      "modified": [
        "Adjustment in withholding requirements based on days worked in Minnesota."
      ]
    },
    "citation": "290.92"
  },
  {
    "analysis": {
      "added": [
        "Specific scenarios under which filing requirements are exempted."
      ],
      "removed": [],
      "summary": "The bill involves filing requirements linked with withholding exemptions, referencing section 289A.09.",
      "modified": [
        "Change in the scope of filing obligations contingent on a 30-day threshold."
      ]
    },
    "citation": "289A.09"
  },
  {
    "analysis": {
      "added": [
        "Definition of qualifying nonresident individual and related exemptions."
      ],
      "removed": [],
      "summary": "The exemption of certain nonresident income from gross income referencing existing section 290.081.",
      "modified": [
        "Adjustment in the criteria for what constitutes exempt income."
      ]
    },
    "citation": "290.081"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Defines 'Entertainer' under the existing tax code, as referenced in section 290.9201.",
      "modified": []
    },
    "citation": "290.9201"
  }
]

Sponsors