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Minnesota Governor Tim Walz has proposed a 0.075% reduction in the state’s general sales tax rate as part of his tax bill, HF2437. However, this cut would be offset by new sales taxes on accounting, banking, brokerage, and legal services, a move that has sparked backlash from industry leaders.
The bill, presented by Rep. Greg Davids (R-Preston) to the House Taxes Committee, aims to create a more balanced and stable tax system, according to Revenue Commissioner Paul Marquart. The proposal is estimated to generate an additional $60.7 million in fiscal year 2026, increasing to $136.8 million in 2027.
Key provisions include expanding the sustainable aviation fuel tax credit, modifying the research credit, repealing the political contribution refund, and reducing payments for aquatic invasive species prevention. Critics, especially from the financial and legal sectors, argue that the new service taxes could disproportionately impact businesses and consumers.
Additionally, county officials warn that reductions in state payments in lieu of taxes (PILT) will shift a heavier tax burden onto local governments and property taxpayers. With opposition mounting, lawmakers must weigh the economic impact before deciding on its inclusion in the final omnibus tax bill.
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