Tax Law Changes

Federal Conformity

Minnesota updated its conformity date to May 1, 2026. This incorporates and conforms with the provisions of the 2025 Federal Tax Budget and Reconciliation Bill (H.R. 1) signed into law on July 4, 2025. Minnesota decoupled from some of the provisions of H.R. 1. 

Generally, conformity is retroactive and effective at the same time as the federal provisions. We are updating our forms to reflect this change. 

Note: Minnesota Revenue will not be adjusting returns impacted by retroactive conformity items. Impacted taxpayers should plan to amend their 2025 returns when updated forms are available, if needed.

(Updated June 24, 2026)

The 2026 Tax Bill changes the statute of limitations for filing a claim for a refund under Minnesota Statute, section 289A.40, subdivision 1.

Taxpayers can claim a refund within either:

• 3 ½ years of the return’s due date or extended due date
• 2 years of paying tax, penalties, or interest

The bill removes other limitations, including the previous one-year limitation from an audit assessment, appeal determination, or commissioner filed return.

These changes apply to any claim for refund filed on or after May 28, 2026.

Homestead Credit Refund Increase for 2025

The tax bill increased the 2025 Minnesota property tax refund for homeowners by nearly 15%. We are updating our systems to reflect this change. Meanwhile:

• Homeowners who already filed for a 2025 Homestead Credit Refund do not need to do anything else. We will adjust your return to include the increase.
• Other homeowners can still file their 2025 returns during this time. We will adjust your return if needed.

For more information about this change, read our June 5 announcement.

Learn more about the refund and who qualifies at Homeowner’s Homestead Credit Refund.

Dependent Care Credit

The Child and Dependent Care Credit has historically been tied with the federal dependent care credit (see federal Form 2441). The tax bill decouples the Minnesota credit from the federal credit while making additional changes, starting with the 2026 tax year.

529 Plan Addition

Taxpayers were previously required to add back to Minnesota income the lesser of 529 plan distributions used for K-12 expenses or total earnings reported on federal Form 1099-Q from a 529 plan. 

The tax bill updated this addition to add qualified postsecondary credentialing expenses to K-12 expenses when determining the lesser of the two above to be added to Minnesota income. 

This change applies to payments received starting July 5, 2025. 

Charitable Contributions Deduction

The Charitable Contributions itemized deduction now limits the deduction to contributions exceeding one percent of the taxpayer’s contribution base, starting with tax year 2026.

This limitation also applies to the subtraction for charitable contributions for those who do not itemize their deductions. 

Disallowed Educational Assistance Addition

Those who receive federally nontaxable student loan assistance from their employer and those who receive certain federally nontaxable tuition and other educational benefits from their employer in excess of $5,250 are required to add these amounts to Minnesota income starting with tax year 2026. 

Nursing Facility Workforce Wage Supplement Subtraction

Nursing home workers who receive supplemental wage payments under the temporary Nursing Facility Workforce Wage Supplement Program may subtract this income when calculating their Minnesota Taxable Income. 

This subtraction only applies to supplemental wage payments received in 2026 and expires at the end of the 2026 tax year. 

Those claiming the 2026 Homestead Credit may also claim this subtraction when filing their 2026 Form M1PR, Homestead Credit Refund.

Qualified Transportation Fringe Benefit Addition

If you receive qualified transportation fringe benefits more than a certain amount, you must add the amount you received to your Minnesota income, starting with tax year 2026. 

Sinai Peninsula and Other Service Addition

If you receive federally nontaxable income for performing certain services as a member of the United States Armed Forces in the Sinai Peninsula of Egypt, Kenya, Mali, Burkina Faso, and Chad, you must add this amount to your Minnesota income, starting with tax year 2026.

Sustainable Aviation Fuel Tax Credit

The tax credit for creating sustainable aviation fuel (SAF) received several definitional updates, credit calculation updates, and allocation limit changes. 

For SAF sold after June 30, 2025, the definitional updates and credit calculation updates are effective for taxable years beginning after December 31, 2024.

The credit certificates may be issued by the Minnesota Department of Agriculture (MDA) until June 30, 2035. 

For more details, contact the MDA or visit their Sustainable Aviation Fuel Tax Credit webpage.

Tax Credit for Owners of Agricultural Assets

The tax bill temporarily removed the allocation limitation for tax year 2026.

For more details, contact the Minnesota Department of Agriculture or visit their Beginning Farmer Tax Credit webpage. 

Domestic Research and Expenditure Expensing

The 2026 Tax Bill conforms to domestic research and expenditure (R&E) expensing for most income taxpayers but decoupled for C corporations. 

C corporations must make an addition for 80% of the deduction claimed. These C corporations are allowed a subtraction for 1/4 of the addition amount over the subsequent four taxable years. 

C corporations must also add back the amount of any deduction claimed for unamortized amounts. These C corporations are allowed a subtraction for the amortized amount in subsequent years. 

All changes are effective at the same time as the federal change. We are updating our forms and instructions to reflect these changes. 

Interest Received on Loans Secured by Rural and Agricultural Real Property

The amount of the federal exclusion for interest income received on loans secured by rural or agricultural real property is an addition.

This is effective for taxable years ending after July 4, 2025.

Look-Thru Rule for Related Controlled Foreign Corporations

For the purposes of calculating Minnesota net CFC tested income (NCTI) and Subpart F income, you must disregard the federal look-thru rule for related controlled foreign corporations. 

Opportunity Zone Capital Gain Income

Capital gain income that is deferred by investing in a qualified opportunity zone is an addition. 

In a tax year where a deferred gain is recognized federally, a subtraction is allowed for amounts previously added back.

Any amount of capital gain income excluded as a result of a federal step-up in basis for investments in a qualified opportunity zone is an addition. 

These changes are effective for taxable years beginning after December 31. 2026.

Qualified Business Asset Investment (QBAI) Deduction Against Net CFC Tested Income

The 2025 Federal Tax Budget and Reconciliation Bill (H.R. 1) changed global intangible low-taxed income (GILTI) to net CFC tested income (NCTI).  This change removed the net deemed tangible income return (DTIR) deduction. 

To calculate Minnesota NCTI, you are allowed a subtraction for 10% of QBAI. 

This is effective for tax years starting after December 31, 2025.

Accelerated Gains for Composite Tax

Nonresident shareholders, partners, and beneficiaries, can now elect Composite Income Tax in a year where there is an installment sale subject to acceleration. The full amount of the gain will be accelerated and included in their Composite Tax calculation. 

This is effective for taxable years beginning after December 31, 2025.

Composite Tax cannot be elected when the gain is elected to be deferred. 

Pass-Through Entity Tax

The bill extends the Minnesota Pass-Through Entity (PTE) Tax through the 2027 tax year. Minnesota PTE Tax will expire for taxable years beginning after December 31, 2027. 

The bill extends the Credit for PTE Taxes Paid to Another State by allowing the credit to be claimed for taxable years beginning before January 1, 2028. 

The bill also clarifies that Revenue can deny PTE tax credits if the entity has not paid the tax.

For tax year 2026, first-quarter estimated PTE tax payments are considered timely if they are paid by the second quarter estimated payment due date. 

Legislative Bulletins (2017-25) — updated Aug. 19, 2025

2025 Summary of Annual Forms Changes — updated Oct. 17, 2025

Find a Form (current and previous years)

Draft Forms and Instructions (upcoming year)

Minnesota Legislature (bills, statutes, laws, and rules)

2025 Tax Law Changes

There were a number of updates to Minnesota's tax code in 2025. For a summary of major changes, see 2025 Tax Law Changes.

Federal Tax Changes

We've updated 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.

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.