SF4690 (Legislative Session 94 (2025-2026))
Various individual income and corporate franchise taxes and property taxes policy and technical changes provisions modifications, obsolete JOBZ provisions removal provision, and other miscellaneous tax provisions modifications
AI Generated Summary
Purpose
- Change Minnesota tax rules to add a composite return option for nonresident partners, nonresident shareholders, and nonresident beneficiaries who have income from Minnesota sources through partnerships, corporations, or estates/trusts. The goal is to simplify how nonresidents pay Minnesota tax on their share of pass-through income and certain other Minnesota-source income.
Main Provisions
- Composite return option for nonresident partners: A partnership may file a single composite return to pay the Minnesota tax on behalf of eligible nonresident partners who have no other Minnesota source income.
- Information included: The composite return must list each nonresident partner’s name, address, Social Security number, income allocated to that partner, and that partner’s tax liability if covered by the composite filing.
- Tax calculation: Each nonresident partner’s tax liability is computed by multiplying the partner’s income allocated from the partnership by the highest individual tax rate (as used under the individual tax rules). Nonbusiness deductions, standard deductions, and personal exemptions are not allowed. The net investment income tax is calculated under the applicable statute.
- Filing mechanics: The partnership must request to use the composite method; filing the composite return is treated as that request.
- Eligibility of partners: An electing partner must have no Minnesota source income other than income from the partnership (and other electing partnerships or qualifying entities that elect to file and pay the passthrough entity tax under a separate subdivision). If the partner has any other Minnesota income, the composite return does not count as a return to satisfy the regular filing requirements.
- Estimated tax: Even with a composite return, individual estimated tax obligations still apply if required. The partnership’s payment of composite estimated tax satisfies the partner’s estimated tax obligation.
- No other Minnesota income with zero liability: If a partner’s Minnesota income is below filing thresholds, the tax liability is zero, but a statement of the partner’s share of gross income must be included in the composite return.
- Eligibility restrictions: The election is available only to a partner with no other Minnesota source income who is either a full-year nonresident individual or a trust or estate that does not claim certain federal deductions.
- Special rules for installment gain: The composite election can apply to a nonresident partner who has accelerated gain on installment sales under the specified section. If a nonresident defers gain under the installment-sale rules, the composite election cannot be used until the deferred gain is recognized; the deferred gain must then be reported on the nonresident’s individual return.
- Corporate and estate/trust eligibility: A corporation defined for tax purposes and its nonresident shareholders may also elect to use the composite method; estates and trusts distributing current income and their nonresident beneficiaries may also elect. The same principles that apply to partnerships apply to corporations and to estates/trusts and beneficiaries.
- Definition of income: For purposes of these rules, “income” is the meaning given in the statute defining Minnesota income (as referenced in the bill text).
Significant Changes to Existing Law
- Introduces a formal composite return mechanism for nonresident partners, shareholders, and beneficiaries, allowing pass-through income to be taxed via a single partnership- or entity-level filing on behalf of nonresidents.
- Removes or limits certain deductions (e.g., standard deductions and personal exemptions) for computing tax liability within the composite framework.
- Ties the composite tax calculation to the highest individual tax rate and to the net investment income tax, changing how nonresidents’ shares of Minnesota income are taxed.
- Establishes eligibility criteria that require nonresident partners to have no other Minnesota source income to qualify for the composite filing.
- Creates special rules regarding accelerated and deferred gains on installment sales and how they interact with the composite filing.
- Extends the composite filing concept to corporations and estates/trusts, not just partnerships, broadening the use of composite payments to more taxpayer types.
- Connects composite payments to existing obligations for estimated taxes and to the separate passthrough entity tax structure (subdivision 7a).
Practical Implications
- Potentially simplifies filing and payment for many nonresident partners by allowing one composite payment from the partnership or entity.
- Increases information sharing requirements (names, addresses, SSNs, and income allocations) between partnerships/entities and the department of revenue.
- May reduce individual filing burdens for qualifying nonresidents but could also complicate compliance for partnerships that must determine eligibility and track partner-specific details.
- Creates potential privacy and administrative considerations because partnerships must report sensitive information about partners.
Relevant Terms
- composite return
- nonresident partner
- partnership
- Minnesota source income
- highest rate (section 290.06 subdivision 2c)
- standard deductions
- personal exemptions
- net investment income tax (section 290.033)
- passthrough entity tax (subdivision 7a)
- estimated tax (section 289A.25)
- accelerated gain
- installment sales (section 290.0137)
- deferred gain (section 290.0137)
- corporation (section 290.9725)
- nonresident shareholders
- estates
- trusts
- beneficiaries
- income (as defined by section 290.01 subdivision 19 paragraph h)
Bill text versions
- Introduction PDF PDF file
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| March 23, 2026 | Senate | Action | Introduction and first reading | ||
| March 23, 2026 | Senate | Action | Referred to | Taxes |
Citations
[
{
"analysis": {
"added": [],
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"summary": "Amends Minnesota Statutes 2024 section 123B.53, subdivision 1 as part of the tax package.",
"modified": []
},
"citation": "123B.53",
"subdivision": "1"
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{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 123B.535, subdivision 1 as part of the tax package.",
"modified": []
},
"citation": "123B.535",
"subdivision": "1"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 270B.14, subdivision 3 as part of the tax package.",
"modified": []
},
"citation": "270B.14",
"subdivision": "3"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 270B.15 as part of the tax package.",
"modified": []
},
"citation": "270B.15",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 270C.055 by adding a subdivision as part of the tax package.",
"modified": []
},
"citation": "270C.055",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 273.032 as part of the tax package.",
"modified": []
},
"citation": "273.032",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 273.111, subdivision 9 as part of the tax package.",
"modified": []
},
"citation": "273.111",
"subdivision": "9"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 289A.08, subdivision 7 regarding composite income tax returns for nonresident partners, shareholders, and beneficiaries as part of the tax package.",
"modified": []
},
"citation": "289A.08",
"subdivision": "7"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 290.01, subdivision 19 as part of the tax package.",
"modified": []
},
"citation": "290.01",
"subdivision": "19"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 290.01, subdivision 29 as part of the tax package.",
"modified": []
},
"citation": "290.01",
"subdivision": "29"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 290.0137 as part of the tax package.",
"modified": []
},
"citation": "290.0137",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 290.0921, subdivision 3 as part of the tax package.",
"modified": []
},
"citation": "290.0921",
"subdivision": "3"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 290.0922, subdivision 2 as part of the tax package.",
"modified": []
},
"citation": "290.0922",
"subdivision": "2"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 290.0922, subdivision 3 as part of the tax package.",
"modified": []
},
"citation": "290.0922",
"subdivision": "3"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 295.52, subdivision 5 as part of the tax package.",
"modified": []
},
"citation": "295.52",
"subdivision": "5"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 297B.03 as part of the tax package.",
"modified": []
},
"citation": "297B.03",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 428A.02, subdivision 1 as part of the tax package.",
"modified": []
},
"citation": "428A.02",
"subdivision": "1"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 428A.13, subdivision 1 as part of the tax package.",
"modified": []
},
"citation": "428A.13",
"subdivision": "1"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 469.175, subdivision 4a as part of the tax package.",
"modified": []
},
"citation": "469.175",
"subdivision": "4a"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 268.19, subdivision 1 as part of the tax package.",
"modified": []
},
"citation": "268.19",
"subdivision": "1"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 297A.75, subdivision 1 as part of the tax package.",
"modified": []
},
"citation": "297A.75",
"subdivision": "1"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 297A.75, subdivision 2 as part of the tax package.",
"modified": []
},
"citation": "297A.75",
"subdivision": "2"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 297A.75, subdivision 3 as part of the tax package.",
"modified": []
},
"citation": "297A.75",
"subdivision": "3"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 297A.94 as part of the tax package.",
"modified": []
},
"citation": "297A.94",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 272.02, subdivision 31 as part of the tax package.",
"modified": []
},
"citation": "272.02",
"subdivision": "31"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 272.02, subdivision 64 as part of the tax package.",
"modified": []
},
"citation": "272.02",
"subdivision": "64"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 272.029, subdivision 7 as part of the tax package.",
"modified": []
},
"citation": "272.029",
"subdivision": "7"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 273.11, subdivision 19 as part of the tax package.",
"modified": []
},
"citation": "273.11",
"subdivision": "19"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 273.11, subdivision 20 as part of the tax package.",
"modified": []
},
"citation": "273.11",
"subdivision": "20"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 273.1315, subdivision 1 as part of the tax package.",
"modified": []
},
"citation": "273.1315",
"subdivision": "1"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 273.1385 as part of the tax package.",
"modified": []
},
"citation": "273.1385",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 273.25 as part of the tax package.",
"modified": []
},
"citation": "273.25",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 273.65 as part of the tax package.",
"modified": []
},
"citation": "273.65",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 273.66 as part of the tax package.",
"modified": []
},
"citation": "273.66",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 273.67 as part of the tax package.",
"modified": []
},
"citation": "273.67",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 274.07 as part of the tax package.",
"modified": []
},
"citation": "274.07",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 289A.12, subdivision 15 as part of the tax package.",
"modified": []
},
"citation": "289A.12",
"subdivision": "15"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 290.06, subdivision 29 as part of the tax package.",
"modified": []
},
"citation": "290.06",
"subdivision": "29"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 297A.68, subdivision 37 as part of the tax package.",
"modified": []
},
"citation": "297A.68",
"subdivision": "37"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 428B.02, subdivision 7 as part of the tax package.",
"modified": []
},
"citation": "428B.02",
"subdivision": "7"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.310 as part of the tax package.",
"modified": []
},
"citation": "469.310",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.311 as part of the tax package.",
"modified": []
},
"citation": "469.311",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.312 as part of the tax package.",
"modified": []
},
"citation": "469.312",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.313 as part of the tax package.",
"modified": []
},
"citation": "469.313",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.314 as part of the tax package.",
"modified": []
},
"citation": "469.314",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.315 as part of the tax package.",
"modified": []
},
"citation": "469.315",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.316 as part of the tax package.",
"modified": []
},
"citation": "469.316",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.317 as part of the tax package.",
"modified": []
},
"citation": "469.317",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.318 as part of the tax package.",
"modified": []
},
"citation": "469.318",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.3181 as part of the tax package.",
"modified": []
},
"citation": "469.3181",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.319 as part of the tax package.",
"modified": []
},
"citation": "469.319",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.3191 as part of the tax package.",
"modified": []
},
"citation": "469.3191",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.3192 as part of the tax package.",
"modified": []
},
"citation": "469.3192",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.3193 as part of the tax package.",
"modified": []
},
"citation": "469.3193",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.320 as part of the tax package.",
"modified": []
},
"citation": "469.320",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 469.3201 as part of the tax package.",
"modified": []
},
"citation": "469.3201",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 477A.085 as part of the tax package.",
"modified": []
},
"citation": "477A.085",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 477A.18, subdivision 1 as part of the tax package.",
"modified": []
},
"citation": "477A.18",
"subdivision": "1"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 477A.18, subdivision 18 as part of the tax package.",
"modified": []
},
"citation": "477A.18",
"subdivision": "18"
}
]Progress through the legislative process
In Committee