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SF4750 (Legislative Session 94 (2025-2026))

Prohibit withholding of federal income tax from state employee pay

AI Generated Summary

Purpose

This bill aims to stop the state from withholding federal income tax from state employee pay. It changes who handles federal tax withholding by altering payroll rules and repealing a related provision.

Main Provisions

  • Adds Subd. 32 to Minnesota Statutes 2024, section 290.92: No federal tax withholding for state employees. When the commissioner of management and budget prepares state employee payroll under section 16A.17, or when the head of an agency pays its employees directly, the commissioner or agency head must not withhold or remit federal income tax.
  • Repeals Minnesota Statutes 2024 section 16A.13.1.5.

Significant Changes to Existing Law

  • Eliminates the requirement or practice of the state withholding federal income tax from state employee wages in the specified payroll contexts.
  • Removes the statutory provision identified as 16A.13.1.5 related to federal tax withholding.

Implications and Considerations

  • Payroll changes: State payroll processes would no longer withhold federal income tax or remit it to the IRS on behalf of employees.
  • Employee responsibility: Employees would need to manage their own federal tax obligations, possibly through annual payments or other self-directed withholding adjustments.
  • Compliance and planning: The change could affect budgeting for both the state and employees and may require guidance for employees on how to handle their federal tax payments.

Relevant Terms - federal income tax withholding - state employee pay - payroll - commissioner of management and budget - section 16A.17 - agency head - withhold - remit - Minnesota Statutes 2024 section 290.92 - Subd. 32 - Minnesota Statutes 2024 section 16A.13.1.5 - repeal - 16A.13.1.5 - IRS

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 23, 2026SenateActionIntroduction and first reading
March 23, 2026SenateActionReferred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Subd.32.No federal tax withholding state employees.When the commissioner of management and budget prepares state employee payroll under section 16A.17 or the head of an agency pays its employees directly the commissioner or agency head must not withhold or remit federal income tax."
      ],
      "removed": [],
      "summary": "This bill adds Subd.32 to Minnesota Statutes 2024 section 290.92 to prohibit withholding of federal income tax from state employee pay.",
      "modified": []
    },
    "citation": "290.92",
    "subdivision": "Subd.32"
  },
  {
    "analysis": {
      "added": [],
      "removed": [
        "Repeals Minnesota Statutes 2024 section 16A.13.1.5."
      ],
      "summary": "This bill repeals Minnesota Statutes 2024 section 16A.13.1.5.",
      "modified": []
    },
    "citation": "16A.13.1.5",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill references Minnesota Statutes 2024 section 16A.17 regarding state employee payroll.",
      "modified": []
    },
    "citation": "16A.17",
    "subdivision": ""
  }
]

Progress through the legislative process

17%
In Committee

Sponsors

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