Purpose of the Bill

The purpose of this bill is to phase out the individual income tax and the corporate franchise tax in Minnesota over a period of four years. This initiative involves gradually decreasing the taxpayer's liability each year, eventually leading to the complete elimination of these taxes.

Main Provisions

• Tax Liability Reduction: The bill sets a schedule to reduce taxpayers' liabilities under Minnesota's income tax system annually:
  • 2026: Taxpayer liability will be 80% of the amount previously due.
  • 2027: Taxpayer liability will be reduced to 60%.
  • 2028: Taxpayer liability will further decrease to 40%.
  • 2029: Finally, taxpayer liability will be only 20% of what it would have been.
• Refundable Credit Adjustment: For taxpayers eligible for refundable credits exceeding their tax liability, the amount they can receive as a refund will similarly decrease according to the reduction schedule.

Significant Changes

• This bill will repeal a significant portion of Minnesota's tax statutes related to income tax and corporate franchise tax if enacted. The statutes being repealed include various sections and subdivisions related to how these taxes are calculated and administered.
• By 2029, the income tax and corporate franchise tax as they currently exist will be nearly eliminated, significantly changing Minnesota’s tax landscape.

Relevant Terms

• Income tax
• Corporate franchise tax
• Taxpayer liability
• Refundable credit
• Tax reduction schedule