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SF2010 (Legislative Session 94 (2025-2026))

All individual income tax rates reduction by one percentage point provision

Related bill: HF153

AI Generated Summary

This bill, Minnesota Senate File No. 2010, proposes a reduction in all individual income tax rates by one percentage point. It amends Minnesota Statutes 2024, section 290.06, subdivisions 2c and 2d.

Key Provisions:

  1. Tax Rate Reductions:
    • The bill reduces each individual income tax rate immediately by one percentage point, affecting different income brackets for married filing jointly, unmarried individuals, and heads of households.
  • Current vs. Proposed Rates:
    • Lowest bracket: Reduced from 5.35% to 4.35%
    • Second bracket: Reduced from 6.8% to 5.8%
    • Third bracket: Reduced from 7.85% to 6.85%
    • Highest bracket: Reduced from 9.85% to 8.85%

  1. Temporary Adjustments for 2025 & 2026:

    • For tax year 2025, tax rates will be slightly increased:
      • 4.35% → 4.85%
      • 5.8% → 6.3%
      • 6.85% → 7.35%
      • 8.85% → 9.35%
    • For tax year 2026, rates will decrease slightly from 2025 levels but remain above the initial 1% reduction:
      • 4.35% → 4.6%
      • 5.8% → 6.05%
      • 6.85% → 7.1%
      • 8.85% → 9.1%

  2. Tax Computation for Non-Residents:

    • The bill maintains the method for non-resident individuals to compute their Minnesota income tax liability by applying Minnesota-source federal adjusted gross income in a proportional formula.

  3. Impact on Pass-Through Entities:

    • Non-residents with ownership in pass-through entities that elect to pay taxes at the entity level must include additional tax additions and subtractions when computing their Minnesota tax liability.

Overall Impact:

  • The initial tax reduction benefits all taxpayers across income brackets by lowering rates by one percentage point.
  • Temporary rate increases apply for 2025 and 2026, before returning to slightly reduced levels in 2027.
  • This change aims to provide income tax relief while managing state budgetary concerns.

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Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 26, 2025SenateFloorActionIntroduction and first reading
February 26, 2025SenateFloorActionReferred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "New rates applicable for tax years after certain dates."
      ],
      "removed": [],
      "summary": "This bill amends Minnesota Statutes section 290.06, modifying individual income tax rates.",
      "modified": [
        "Reduces all individual income tax rates by one percentage point."
      ]
    },
    "citation": "290.06"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Includes adjustments in the calculation of numerator for income tax computations.",
      "modified": [
        "Adds certain subdivisions for adjustments to Minnesota source income."
      ]
    },
    "citation": "290.0131"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Includes adjustments in the calculation of numerator and denominator for income tax computations.",
      "modified": [
        "Adjusts certain subtractions for computation of Minnesota adjusted income."
      ]
    },
    "citation": "290.0132"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "References allocation and assignability provisions related to income adjustments.",
      "modified": [
        "Influences the calculation of Minnesota adjusted income."
      ]
    },
    "citation": "290.081"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "References allocation and assignability provisions related to income adjustments.",
      "modified": [
        "Further modifies calculation methods for income adjustment."
      ]
    },
    "citation": "290.17"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "References provisions for electing entities paying taxes.",
      "modified": [
        "Impacts tax computations for nonresident individuals."
      ]
    },
    "citation": "289A.08"
  }
]

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