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SF2867 (Legislative Session 94 (2025-2026))

Fifth tier of the individual income tax establishment at a rate sufficient to offset lost federal Medicaid funds

Related bill: HF2591

AI Generated Summary

Purpose of the Bill

This bill aims to modify the individual income tax system in Minnesota by establishing a new, fifth tier of income taxation. The primary goal is to generate sufficient state revenue to counterbalance any potential loss of federal Medicaid funding.

Main Provisions

  • Fifth Tax Tier: Introduces a fifth tax tier for higher-income individuals.
  • Tax Rate Determination: The rate for this new tax tier will be calculated based on the estimated revenue needed to replace any losses from changes in federal Medicaid policies.
  • Applicability: The new tax provisions are set to apply to tax years starting after December 31, 2024, and before January 1, 2027.

Significant Changes

  • Income Brackets: The bill amends current tax brackets, adding a new top rate applied to income exceeding certain thresholds, depending on filing status.
  • Adjustment for Federal Policy Changes: The tax rate established will specifically address revenue shortfalls resulting from federal policy changes affecting Medicaid.

Relevant Terms

individual income tax, fifth tax tier, Medicaid funding, revenue replacement, tax brackets, nonresident income tax, commissioner of revenue.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 19, 2025SenateFloorActionIntroduction and first reading
March 19, 2025SenateFloorActionReferred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "A new fifth tier tax rate sufficient to offset lost federal Medicaid funds is introduced."
      ],
      "removed": [],
      "summary": "This bill modifies the individual income tax rates and brackets in section 290.06 to establish a fifth tier for income taxation.",
      "modified": [
        "Adjusts tax rate schedules for married individuals, unmarried individuals, and heads of households."
      ]
    },
    "citation": "290.06"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Amendments to adjustments for calculating tax for non-residents under section 290.0131.",
      "modified": [
        "Clarifies the additions necessary in the calculation of Minnesota income tax for non-residents."
      ]
    },
    "citation": "290.0131"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Amendments to subtractions for calculating tax for non-residents under section 290.0132.",
      "modified": [
        "Clarifies the subtractions applicable in the calculation of Minnesota income tax for non-residents."
      ]
    },
    "citation": "290.0132"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill references section 289A.08 regarding the election to pay tax by qualifying entities.",
      "modified": [
        "Clarifies the requirements for including income from qualifying entities in non-resident tax calculations."
      ]
    },
    "citation": "289A.08"
  }
]

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