This bill proposes an increase in the state sales tax rate from 6.5% to 7%, effective for sales and purchases made after September 30, 2025. It also introduces a new provision that dedicates 0.5 percentage points of the sales tax revenue to a local government aid sales tax revenue account, which will be distributed to qualifying cities starting in calendar year 2026. The bill amends several sections of the Minnesota Statutes, including provisions related to the deposit of sales tax revenues and the distribution of local government aid.

Additionally, the bill establishes an expiration date for certain laws applicable to local sales taxes, specifically stating that these laws will remain in effect until January 1, 2026, or until the last existing local sales tax authorized by special law prior to December 31, 2025, is terminated. The new section on sales tax distribution outlines definitions, eligibility criteria for cities, and the process for calculating and certifying annual distributions to qualifying cities. The local government aid sales tax revenue account will be funded by the dedicated sales tax revenue, ensuring that local governments receive financial support from the increased sales tax.

Statutes affected:
Introduction: 297A.62, 297A.94, 297A.99