[MOCK UP] Tax Law Changes and Updates for Tribes

Tribal allocation of $35 million in FY 24-25 and $70 million in FY 26-27

Establishes a new annual direct aid to Minnesota’s 11 federally recognized Tribal nations. Funding will be used in a manner determined by each individual tribe to best meet their needs, in recognition of Tribal nation self-governance and sovereignty.  

Tribal nations aid of $35 million annually will be distributed to Tribal governments that elect to receive aid payments. 

• 50% will be divided equally among participating Tribal nations 
• 50% will be based on proportion of enrolled members of participating Tribal nations

Tribal nations may elect to receive this annual aid by applying to the Department of Revenue by January 15 of the payable year. The tribe must certify the total number of enrolled members by March 1 and Revenue will certify the amount to the participants by August 1 of the payable year. The aid is paid by December 27 of each year beginning in 2024. 
 

Tribal allocation of $5.4 million in FY 24-25 and $2.4 million in FY 26-27

This new aid program provides funding to cities, counties, and eligible Tribal nations for:

• Emergency rental assistance
• Financial support for nonprofit affordable housing provider
• Costs for the construction, acquisition, rehab of affordable housing, and for those outside the metro the development of market rate rental properties 

Eligible Tribal nations are the following federally recognized Indian tribes located in Minnesota: Bois Forte Band, Fond du Lac Band, Grand Portage Band, Leech Lake Band, Mille Lacs Band, White Earth Band, and Red Lake Nation. 

The allocation is: 

• Paid to city and county governments based on households with rent or homeownership costs equal to or in excess of 30% of household income
• Paid in equal amounts to Tribal governments electing to receive aid
• $1.2 million annually for fiscal years 2024 and 2025, and an extra $1.5 million annually thereafter

Tribal nations may elect to receive this annual aid by applying to the Department of Revenue by January 15 of the payable year. Tribes must certify total number of enrolled members by March 1 and Revenue will certify the amount to the participants by August 1. The aid is paid by December 26 of each year. For aid payable in 2023 and 2024, the application must be submitted no later than July 1, 2023.  

Annual payments begin in calendar year 2023. Amounts will be calculated by Revenue by August 1, 2023, and payments made by December 26, 2023. 

Beginning in 2025, aid recipients must submit an annual report to the Minnesota Housing Finance Agency by December 1 documenting qualifying projects completed or planned with funds. 

Tribal allocation of $2.4 million annually

In 2021, the Legislature allocated $20 million in funding to establish a Local Homeless Prevention Aid to help local governments ensure no child is homeless by keeping families from losing housing and helping those experiencing homelessness find housing. 

The original legislation did not include an allocation to the 11 federally recognized Indian tribes located in Minnesota. The aid is modified to allocate $2.4 million annually of the $20 million in previously appropriated funds to Tribal governments to support families at risk of homelessness. This aid is funded through 2028.

The annual allocation is divided equally among tribes electing to receive the payment. The minimum amount a tribe will receive in aid payable year is $218,182 if all tribes opt in. Funds can be used for new or existing family homeless prevention and assistance projects or programs. For more information on how the funds may be used, see our Local Homeless Prevention Aid page. 

Tribal nations may elect to receive this annual aid by applying to the Department of Revenue by July 1 in the year prior to the year the aid is paid. For aids payable in 2023 only, the application must be submitted by July 15, 2023. 

The Department of Revenue will certify the amount to be paid to each applicant by August 1 of the year prior to the year in which the aid is paid. For aids payable in 2023 only, Revenue will certify the aid by July 15, 2023. 

The aid is paid by December 26 of each year, beginning in 2023.  

We will compile a report including information provided by aid recipients by January 15, 2025. 

This is a one-time $300 million public safety aid payment to units of local government and Tribal governments to provide public safety, including:

• Community violence prevention and intervention programs
• Community engagement
• Mental health crisis responses
• Victim services
• Training programs
• First responder wellness
• Equipment related to fire, rescue, and emergency services
• Other personnel or equipment costs

The payment will be divided between: 

• Counties and Tribal governments ($90 million)
• Local units ($210 million) 

This aid is based on population. Tribal population is based on estimates made or conducted by the U.S. Census Bureau or the federally recognized American Indian reservations and off-reservation trust lands in Minnesota, whichever is the most recent estimate and available as of January 1, 2023.

Tribal governments are defined as the 11 federally recognized Indian tribes located in Minnesota.

Revenue certifies payments by September 1, 2023. Payments are made by December 26, 2023. 

The definition of Indian population for use in the tax agreements was updated to account for an outdated reference in current statute to a report that is no longer being published: US Department of the Interior, Bureau of Indian Affairs, Report on Service Population and Labor Force. The population numbers will be effective for the submission on July 1, 2023, under the tax agreements.

To review the new language, see Minnesota Session Laws, 2023, Chapter 64, Article 15, Section 5. 
 

Minnesota will legalize adult cannabis use beginning on August 1, 2023. 

This legislation: 

• Creates the Office of Cannabis Management and establishes a Cannabis Advisory Council. The office will issue licenses to grow and sell cannabis, anticipated to be up and running by 2025. 
• Imposes 10% Cannabis Tax of gross receipts from retail sales of taxable cannabis products, effective July 1, 2023. This includes hemp-based edibles (low-potency cannabis). Products purchased on an Indian reservation from a seller licensed by the tribe are exempt.
• Provides authority for the governor to enter into compacts with Tribal nations regarding regulation and taxation of medical cannabis and adult-use cannabis. Most of the tax provisions regarding cannabis have been dealt with outside of the compacting process. 
• Allows Tribal tax agreements to include revenue sharing off-reservation. 

For more information, see the Cannabis Tax page. 

Stadium Reserve Funding and Charitable Gaming – The tax changes include reducing the combined net receipts tax rate and repealing the deposit of Minneapolis sales tax to pay back bonds used to finance the US Bank Stadium. 

Sports Betting – The legalization language did not make it out of committee this session. Governor Walz and Speaker Hortman have stated that this issue will be worked on and passed next session. 

For information on updates to credits and payments you may be eligible for, see the Tax Law Changes page. 

We have launched a new indicator in our internal tax software to alert us when a business is within reservation borders. This indicator will help determine refund payments for sales tax using the formulas stipulated in the tax agreements. 

We continue to streamline the process of working with tribes.

While we continue to update the tax agreements, remember to submit population and business lists to Revenue before July 1, as stipulated in the agreements. 

You can submit by….