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SF 860

Certain discharges of indebtedness subtraction provision and certain discharges of indebtedness from income for purposes of the property tax refund and the renter's income tax credit exclusion provision

2025-2026 Regular Session Introduced by Zach Duckworth and 1 co-sponsor

Excludes forgiven debt from income calculations for Minnesota property tax refunds and renter income tax credits, expanding eligibility for these housing cost assistance programs.

Referred to Taxes
#revenuedepartment #taxation-income
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WeVote Research Nonpartisan
Bill Summary · SF 860

Legislative bill overview

SF 860 modifies Minnesota tax law to exclude certain discharges of indebtedness from taxable income when calculating eligibility for property tax refunds and renter's income tax credits. The bill creates a subtraction provision that allows taxpayers to reduce their reported income by the amount of forgiven debt for these specific tax benefit programs.

Why is this important

This directly affects middle and lower-income Minnesotans who rely on property tax refunds and renter's income tax credits—benefits designed to ease housing cost burdens. By excluding forgiven debt from income calculations, more households may qualify for these credits or receive larger refunds, particularly those who had student loans, medical debt, or other obligations cancelled.

Potential points of contention

  • Fiscal impact uncertainty: The bill's cost to the state depends on how many Minnesotans have forgiven debt and would newly qualify for benefits; this could create unpredictable budget impacts
  • Debt forgiveness eligibility questions: It's unclear whether the provision applies to all debt cancellation (personal loans, medical, credit cards) or only specific types (student loans, bankruptcy discharge), which could create loopholes or unintended consequences
  • Fairness debate: Some may argue the benefit primarily helps those with higher debt loads while others question whether tax credits should account for debt relief that wasn't earned income

Compiled from official sources — confirm details with the bill’s official record.

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