Purpose of the Bill

The purpose of this bill is to gradually phase out the individual income tax and the corporate franchise tax in Minnesota. This legislative effort aims to significantly reduce these taxes over a series of years.

Main Provisions

• Tax Liability Reduction Schedule:
  • For tax years starting after December 31, 2025, taxpayers will see a reduction in their tax liability by 20%, meaning they will owe only 80% of the tax otherwise calculated.
  • This reduction continues annually in increments: 60% of taxes will be due for tax years post-2026, 40% post-2027, and finally, just 20% for tax years after December 31, 2028.
• Refund Credit Adjustments: If a taxpayer is eligible for a refundable credit that exceeds their calculated tax liability, the refund amount they receive will be decreased in accordance with the phased reduction schedule.

Significant Changes to Existing Law

• The bill calls for the repeal of multiple sections of Minnesota Statutes relating to taxation (listed in detail in the bill text). This indicates the comprehensive elimination of the existing legislative framework governing individual income and corporate taxes in Minnesota.

Relevant Terms

• Tax phase-out
• Tax liability
• Refundable credit
• Income tax reduction
• Corporate franchise tax