The bill amends Minnesota Statutes to introduce a reduced corporate franchise tax rate for certain eligible corporations. Specifically, it establishes a new subdivision under section 290.06 that defines an "eligible corporation" as one with a pay ratio not greater than 15 to 1. The franchise tax for these corporations will be computed at a rate of five percent on their taxable income. Additionally, the bill provides detailed definitions for various compensation types, including contractor hourly compensation, executive hourly compensation, and pay ratio calculations, which are essential for determining eligibility for the reduced tax rate.

Furthermore, the bill makes amendments to sections 290.068 and 290.0921, clarifying the definitions of terms related to qualified research expenses and the tax imposed on corporations. It specifies that the tax liability will now include references to the new subdivision 1b in section 290.06. The effective date for these changes is set for taxable years beginning after December 31, 2025. Overall, the bill aims to incentivize corporations with equitable pay structures by offering a lower tax rate while also refining existing tax definitions and calculations.

Statutes affected:
Introduction: 290.06, 290.068, 290.0921