Bill > SF1636

This bill introduces a reduced corporate franchise tax rate for "eligible corporations" that maintain a low pay ratio between their top executives and lowest-paid workers. Specifically, an eligible corporation is defined as one with a pay ratio not greater than 15 to 1, calculated by comparing the average hourly compensation of the five highest-paid executives to the average hourly compensation of the lowest-paid five percent of employees (either salaried, hourly, or contractor workers). For such corporations, the franchise tax rate would be reduced from the standard rate to 5 percent. The bill defines various types of compensation, including executive, salaried, hourly, and contractor compensation, and provides detailed methods for calculating these amounts based on federal adjusted gross income. The provisions would apply to taxable years beginning after December 31, 2025, and are designed to incentivize corporations to reduce income inequality by offering a tax benefit to companies with more compressed wage structures. The bill also makes corresponding technical amendments to related tax statutes to integrate this new tax rate provision into existing tax law.

Budget and Finance

https://www.revisor.mn.gov/bills/bill.php?b=Senate&f=SF1636&ssn=0&y=2025