Highlights of the Minn. Senate Tax Bill
The Minnesota Senate today is debating its tax bill. Highlights of the bill are listed below. More information about the bill is available on the state's Senate website.
Income and Franchise Taxes
- Requires foreign operating corporations to file returns.
- Defines part-year resident and assigns or allocates income.
- Reduces the corporate franchise tax rate and eliminates preferences.
- Establishes a fourth tier income tax.
- Establishes a homestead property tax rebate.
- Specifies treatment of real estate investment trust dividends.
- Repeals foreign operating corporation definition and the foreign operating company corporate alternative minimum tax.
- Indexes the state general levy for commercial-industrial property to inflation.
- Modifies city revenue need, city aid base, city formula aid, and city aid distribution.
- Provides for a public safety and streets need factor.
- Provides for a pre-1970 housing need factor.
- Provides for an exempt parcels need factor.
- Increases aid to counties.
Repeals certain local government aid definitions, county program aid, municipal government distributions, aid reductions, and additional aid and credit
Sales Tax and Use Taxes
- Expands the sales tax base to include certain custom computer software, seat licenses, events, exhibitions, and certain digital and electronic services and products.
- Reduces the state sales tax rate.
- Increases the car rental tax rate.
- Provides for a presumption of a solicitor for retailers with an Internet website link.
- Exempts prescription drugs only from taxation.
- Imposes tax on certain clothing sales.
- Limits the materials consumed in industrial production exemption to tangible personal property and services and specifies exemptions for certain services.
- Repeals capital equipment refund claims, certain business, government and nonprofit group exemptions, and local admissions and amusement tax exemptions for nonprofit organizations.
- Requires the commissioner of revenue to disallow tax effects of transactions without economic substance and requires taxpayer proof of evidence for a challenge.
- Defines economic substance.
- Prescribes a noneconomic substance transaction understatement penalty.
- Increases the cigarette and tobacco products sales taxes and the tobacco products use tax.
- Requires the commissioner of revenue to make certain adjustments.
- Imposes a cigarette floor stocks tax.