Tax insight

Minnesota enacts income, sales, and MinnesotaCare tax changes

Insight
5 minute read
June 23, 2025

What happened?

Tax changes passed in the Minnesota legislature during a special session held on June 9 and 10, 2025, and signed by the Governor on June 14 include:

H.F. 9, the omnibus tax finance and policy bill, which makes the research and development tax credit partially refundable, eliminates a tax exemption for electricity use by data centers, and requires businesses with an annual sales and use tax liability of $250,000 or more during the previous state fiscal year to make an accelerated payment of a portion of their estimated June sales tax liability.
H.F. 2, the health and human services omnibus bill, which expands the definition of “gross revenues” as it applies to a tax on wholesale drug distributors.
H.F. 16, which extends the remaining data center tax exemption, applicable to hardware and software purchases, and makes other changes to the program. Under the legislation, the exemption is available for 35 years after a facility is first certified for the exemption or until July 2042, whichever is later. Previously, it was available for 20 years from certification or until July 2042, whichever came first.

Why is it relevant?

These tax changes may have a significant impact on certain taxpayers and industries, including those with data center exemptions and excess research and development credits. In addition, healthcare entities and those involved in the sale or distribution of certain health-related goods and services in Minnesota should review the implications of the expanded definition of gross revenues for purposes of MinnesotaCare tax liability.

Actions to consider

Taxpayers should review the impact of the refundability of the research and development credit, as well as processes associated with MinnesotaCare tax for wholesale drugs distributors to ensure that appropriate revenue is captured for tax purposes.