Bill > HF1357

This bill introduces a new tax provision for Minnesota residents that requires an addition to state income tax for certain capital gains upon a taxpayer's death. Specifically, the bill mandates that if a taxpayer owns capital assets at the time of death, the unrealized capital gains exceeding $1,000,000 will be considered taxable income for their estate. The bill defines "nontaxed capital assets" as assets that would be subject to this tax, excluding agricultural homestead land. When calculating the taxable amount, the gains will be determined as if the assets were sold on the date of death at their gross estate valuation. To provide taxpayers with additional time to manage this complex tax situation, the bill allows for an automatic 275-day extension to file the income tax return, with the possibility of an additional 180-day extension for good cause. These new tax provisions will become effective for taxable years beginning after December 31, 2025, giving taxpayers and tax professionals time to prepare for the changes. The bill aims to capture potential untaxed capital gains that would otherwise escape taxation due to the step-up in basis that typically occurs at death.

Budget and Finance

https://www.revisor.mn.gov/bills/bill.php?b=House&f=HF1357&ssn=0&y=2025