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HF 2591

Fifth tier of individual income tax at a rate sufficient to offset lost federal Medicaid funds established.

2025-2026 Regular Session Introduced by Esther Agbaje and 34 co-sponsors

HF 2591 would create a new fifth income tax bracket in Minnesota with a rate designed to offset lost federal Medicaid funds.

Introduction and first reading, referred to Taxes
#insurance-health #taxation-income
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Bill Summary · HF 2591

Summary of HF 2591 (Minnesota)

Overview

HF 2591 proposes creating a fifth tier in Minnesota’s individual income tax structure. The bracket would be subject to a tax rate that is sufficient to offset funds Minnesota would lose from the federal Medicaid program. The bill is in its introductory stage, having been introduced on March 20, 2025, and referred to the Taxes committee. A companion measure exists in the Senate as SF 2867.

Purpose and Intent

  • The main aim is to preserve or replace Medicaid funding that Minnesota would lose from changes to federal support.
  • By establishing a fifth income tax tier, the bill seeks to generate state revenue that could compensate for the decrease in federal Medicaid dollars.

Key Provisions (as described by the bill’s title and summary)

  • Establishment of a new fifth tier for Minnesota’s individual income tax.
  • Imposition of a tax rate on that fifth tier that is explicitly designed to offset lost federal Medicaid funds.
  • Specific rate, bracket thresholds, and calculation methodology are not provided in the summary available here; the exact details would be in the bill text.
  • The intended use or allocation of the revenue generated by this new tier would be to address shortfalls in Medicaid funding attributable to federal changes (the summary does not specify earmarking beyond the rate’s purpose).

Who Would Be Affected

  • Individual income taxpayers in Minnesota, particularly those falling into or near the proposed fifth tax bracket.
  • Tax administration and collection processes would require updates to accommodate a new tax bracket, rate calculations, and compliance requirements.
  • Potential indirect impacts on taxpayers’ disposable income and on behavioral responses to higher marginal rates are possible, depending on the final rate and thresholds.

Procedural and Timeline Aspects

  • Introduced: March 20, 2025.
  • Status: Introduction and first reading; referred to the Taxes committee.
  • Related legislation: SF 2867 is the companion bill in the Senate.
  • Next steps would typically include committee hearings, potential amendments, fiscal notes, and eventual floor votes in both chambers.

Context and Notes

  • This is an early-stage proposal. The bill’s specific tax rate, bracket thresholds, effective date, and whether revenues are earmarked for Medicaid or placed into the general fund would be defined in the bill text and any amendments.
  • Interested readers should monitor committee agendas and fiscal analyses for HF 2591 to see how the rate is structured and how it would be implemented.

If you’d like, I can integrate any available bill text or fiscal notes into this summary for more precise detail.

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

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