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Tax Law Changes

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When state tax laws change, we share updates and guidance as soon as they are available. For the latest information:

Subscribe to our Tax Law Changes email updates.
Check this web page after new tax laws are enacted.
Email your questions about specific law changes to TaxLawChanges@state.mn.us.

Federal Tax Changes Update
We're updating Minnesota tax forms and instructions to reflect federal tax changes made by the 2025 Tax Budget and Reconciliation Bill (H.R. 1). For details, go to 2025 Federal Nonconformity for Income Tax.

2025 Legislative Session

This year's legislative session resulted in a number of changes to Minnesota's tax code, signed into law on June 14, 2025. Major changes are summarized below. For a complete list, go to Legislative Bulletins.

We'll provide details and guidance for taxpayers through our website, email updates, and other communications. We're also updating our tax forms, instructions, and systems to reflect the law changes.

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Individuals

Individual Income Tax [+]

Coerced Debt Subtraction

Taxpayers with federally taxable debt forgiveness income can subtract taxable coerced debt from their Minnesota tax return. Coerced debt is debt incurred in the victim’s name, and discharged by a court, because of:

The use of their personal information without their knowledge or consent
The use or threat of force, coercion, or similar means
Economic abuse

Those eligible for the Coerced Debt Subtraction may also subtract taxable coerced debt from the income used to calculate their Homestead Credit Refund.

Consumer Enforcement Public Compensation Subtraction

Taxpayers who received federally taxable compensation from the consumer protection restitution account established during the 2025 legislative session can subtract the amount of that compensation from their Minnesota tax return. The amount that an eligible consumer receives as a distribution from this account is a subtraction.

Those eligible for the Consumer Enforcement Public Compensation Subtraction may also subtract this amount from the income used to calculate their Homestead Credit Refund.

Foreign Service Retirement Subtraction

Taxpayers who receive certain foreign service pension or retirement income may be eligible to reduce their income by their federally taxable distributions when completing their Minnesota tax return.

To qualify, the taxpayer must receive retirement income from either the Foreign Service Retirement and Disability System or the Foreign Service Pension System. A taxpayer contributes to these retirement programs while employed in the United States Foreign Service.

Service Employees International Union (SEIU) Stipend Payment Subtraction

Individual providers, also known as “Direct Support Workers,” represented by a collective bargaining agreement between the Service Employees International Union (SEIU) Healthcare Minnesota & Iowa and the State of Minnesota can reduce their income on their Minnesota tax return by any federally taxable stipend payment they received on or after June 15, 2025, from the Minnesota Department of Human Services, per the terms of their union contract.

Those eligible for the SEIU Stipend Payment Subtraction may also subtract this amount from the income used to calculate their Renter’s Credit and Homestead Credit Refund. 

Limited Land Access Farmer

The Minnesota Beginning Farmer Tax Credit program was amended to repeal and replace the definition of “emerging farmer” with “limited land access farmer.” A limited land access farmer rents farmland for a term of three years or less from someone they are not related to, or rents from an incubator farm. Limited land access farmers will be eligible for a tax credit of 12%, as opposed to the 8% available to all other farmers.

Tax Rebates and Refunds [+]

e-Bike Rebate

For 2025, the eligibility requirements and maximum rebate are changing and a lottery system will be used to award rebates if the number of applications exceeds the available funding.

For details, go to e-Bike Rebate (updated July 7, 2025).

Homestead Credit Refund

Taxpayers who are eligible for certain new income tax subtractions may also subtract these amounts from the income used to calculate the Homestead Credit Refund:

Coerced Debt Forgiveness Income
Consumer Enforcement Public Compensation
Service Employees International Union (SEIU) Stipend Payments

For details about these subtractions, see the Individual Income Tax section, above.

Businesses

Business Income Taxes [+]

Credit for Increasing Research Activities (R&D Credit)

A portion of the current year R&D credit is now refundable. You must make an election on a timely filed return (including extensions) to claim the refundable portion. This change is effective for taxable years beginning after December 31, 2024.

Short Line Railroad Infrastructure Modernization Tax Credit

Eligible taxpayers must now apply with the Department of Transportation for a credit certificate. This change is effective for taxable years beginning after December 31, 2024. The Department of Revenue will continue to manage credit transfer agreements.

Informational Estate Returns

The requirement for the first informational return has been removed. Heirs of estates are now only required to file one informational return between 36 and 39 months after the decedent’s death. This change is effective as of June 15, 2025.

Sales and Excise Taxes [+]

Sales Tax

Retail Delivery Fee Exemption

Starting July 1, 2025, the following items are exempt from the Retail Delivery Fee:

Fuel products, liquefied natural gas, or liquefied petroleum gas
Road construction materials

Qualified Data Centers Electricity Exemption

Starting July 1, 2025, qualified data centers can no longer purchase electricity used or consumed in the operation of a qualified data center or qualified refurbished data center exempt from tax.

Qualified Large-Scale Data Centers

Qualified Large-Scale Data Centers were added to the Qualified Data Center definition. For details, see Qualified Data Centers .

June Accelerated Payment

The June Accelerated payment is reinstated and takes effect June 1, 2027. We'll provide more information closer to the effective date.

Hermantown Local Sales Tax Increase Authorized

The city of Hermantown is authorized to extend its local sales tax and use the revenue for additional sewer and pump station projects.

Cannabis Tax

Starting July 1, 2025, the Cannabis Gross Receipts Tax rate increased to 15% (from 10%). For more information, go to Cannabis Tax.

Lawful Gambling Tax

Starting July 1, 2025, lawful gambling organizations no longer need to provide a "cash count" as part of their annual inventory. For details and updated forms, go to Annual Certified Physical Inventory.

Malt Beverage Excise Tax

Starting in 2026, malt beverage producers who qualify for the Brewer Credit and produce less than 250 barrels a year may elect to file and pay alcohol excise tax annually.

Note: Before making this change, brewers must notify Revenue before January 20, 2026, so we can update their tax account. Contact us at 651-556-3036 or alc.taxes@state.mn.us. For more information, go to Fermented Malt Beverage Excise Tax.

Minnesota Care Taxes

Starting July 1, 2025, wholesale drug distributors must include all rebates when calculating their gross revenues. For more information, go to MinnesotaCare Rebates and Gross Revenues.

More Information

Resources [+]

Law Changes from Previous Years [+]

2024 Tax Law Changes

There were several several updates to Minnesota's tax code in 2024. For a summary of major changes, see 2024 Tax Law Changes.

2023 Tax Law Changes

There were a number of changes to Minnesota's tax code in 2023, including some that affect previous tax years. For a summary of major changes, see 2023 Tax Law Changes.

2022 Tax Law Changes

No major tax bill was enacted during the regular 2022 legislative session, but two law changes during the session addressed:

Bonus pay for eligible COVID-19 frontline workers (go to the Frontline Worker Pay website)
Unemployment taxes for businesses (go to the Unemployment Insurance website)

Other Years

Tax Law Change FAQs for Businesses (tax years 2020 and 2021)

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Last Updated

November 03, 2025