Purpose of the Bill

The purpose of this bill is to phase out the individual income tax and corporate franchise tax in the state of Minnesota. By gradually reducing tax liabilities over a set period, the legislation aims to eventually eliminate these taxes entirely.

Main Provisions

• Tax Liability Reduction Schedule: For taxable years starting after December 31, 2025, individual and corporate tax liabilities will gradually decrease:

  1. 2026: Taxpayers will pay 80% of their current tax liability.
  2. 2027: Taxpayers will pay 60%.
  3. 2028: Taxpayers will pay 40%.
  4. 2029: Taxpayers will pay 20%.
  5. This planned reduction continues until these taxes are phased out entirely beyond the years listed.

• Refundable Credits Adjustment: If a taxpayer eligible for a refundable credit finds the credit amount exceeds their tax liability after reductions, the refund will also be scaled down according to the same schedule.

Significant Changes

• The bill proposes significant amendments to Minnesota Statutes by repealing numerous sections related to the computation and administration of the individual income tax and corporate franchise tax. This would remove the legal structure currently supporting these tax types as they are phased out.

Relevant Terms

income tax, corporate franchise tax, tax liability, refundable credit, tax phaseout, individual tax, corporate tax, Minnesota Statutes.