Bill > HF2973

This bill increases the state sales tax rate from 6.5% to 7% effective October 1, 2025, and creates a new mechanism for distributing sales tax revenue to local governments. Specifically, the bill dedicates 0.5 percentage points of the sales tax increase to a new local government aid sales tax revenue account, which will be distributed annually to qualifying cities that do not currently impose a local sales tax. The bill also sets an expiration date of January 1, 2026, for certain local sales tax provisions, meaning that local sales taxes authorized before this date will be phased out by the end of 2025. The distribution of funds will be based on each qualifying city's "aid share," which is calculated by comparing the city's certified aid from the previous year to the total certified aid for all qualifying cities. The commissioner of revenue will compute and certify these distributions annually, with the first distributions occurring in calendar year 2026. This approach aims to provide additional financial support to cities that do not currently have their own local sales taxes, potentially helping to reduce disparities in local government funding.

Budget and Finance

https://www.revisor.mn.gov/bills/bill.php?b=House&f=HF2973&ssn=0&y=2025