This bill proposes a significant overhaul of Minnesota's tax structure, primarily focusing on phasing out the individual income tax and corporate franchise tax. It establishes a schedule for reducing taxpayer liability under Minnesota Statutes, chapter 290, starting with an 80% reduction for taxable years beginning after December 31, 2025, and decreasing to 20% for taxable years beginning after December 31, 2028. The bill also mandates the revisor of statutes to identify necessary changes to fully repeal these taxes by January 1, 2026, while repealing numerous related sections of the Minnesota Statutes effective for taxable years beginning after December 31, 2029. This comprehensive approach aims to eliminate the existing tax framework and transition to a new structure that significantly reduces tax burdens on individuals and corporations.

Additionally, the bill introduces a new taxation framework for qualifying entities, such as partnerships and S corporations, allowing them to elect to file a pass-through entity tax return. It outlines specific definitions, filing requirements, and tax obligations for various entities, including provisions for estimated tax payments and waivers for underpayment penalties under certain conditions. The bill also addresses the responsibilities of employers regarding tax withholding, particularly for nonresident employees, and introduces several tax credits aimed at supporting education, film production, and other initiatives. Overall, the legislation seeks to streamline tax processes, enhance compliance, and provide targeted financial relief to individuals and businesses in Minnesota.

Statutes affected:
Introduction: 290.09