This bill proposes significant changes to Minnesota's income tax structure and local government aid. It introduces a new fifth tier individual income tax rate of 10.85% for individuals with taxable income exceeding $1,000,000, while also adjusting the income brackets for lower tiers. The bill amends the income tax rates for married individuals, unmarried individuals, and heads of households, increasing the thresholds for each bracket. Additionally, it mandates annual inflation adjustments to these brackets, with the first adjustment set for the 2026 tax year.

In terms of local government aid, the bill increases the total aid payable to cities and counties significantly. The total aid for cities is raised to $799,898,012, while the aid for counties is set at $220,009,793 for one subdivision and $277,158,651 for another. The bill also includes a provision for the recertification of aids payable in 2026, ensuring that the amounts are recalculated and certified by July 1, 2026. These changes aim to enhance funding for local governments while adjusting the tax burden on higher-income individuals.

Statutes affected:
Introduction: 290.06, 477A.03