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HF 1357

Income tax; addition required for deemed capital gains on certain assets of a decedent.

2025-2026 Regular Session Introduced by Kaohly Her and 3 co-sponsors

HF 1357 would add deemed capital gains from a decedent's assets to Minnesota income, taxing estates, executors, or heirs and updating reporting for estate filings.

Author added Huot
#death #taxation-income
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WeVote Research Nonpartisan
Bill Summary · HF 1357

HF 1357 — Income tax; addition required for deemed capital gains on certain assets of a decedent

Overview

HF 1357 is a Minnesota bill introduced on February 24, 2025, and currently at the introduction/first reading stage, referred to the Taxes Committee. The bill’s title indicates that it would require an addition to Minnesota individual income tax for deemed capital gains on certain assets owned by a decedent (a person who has died). No text beyond the title and status was provided in the available information.

Purpose and intent (as indicated by the title)

  • The bill seeks to modify how income is calculated for decedent-related assets by requiring an inclusion (an “addition”) for deemed capital gains. In practical terms, this suggests that certain assets held by a decedent would trigger a capital gains event for Minnesota income tax purposes, and the associated gain would be treated as taxable income to the decedent’s estate or heirs, rather than (or in addition to) any existing treatment.

Key provisions (inferred from the bill title; text not provided)

Because the full bill text is not available, specific provisions are not disclosed. Based on the title, likely areas of design (to be confirmed upon release of the bill text) include:
- Scope of assets: The specific assets deemed to generate capital gains (e.g., real estate, securities, business interests) and any exclusions.
- Definition of “deemed capital gains”: How gains would be calculated for assets of a decedent, including steps, bases, and timing.
- Taxable recipient(s): Whether the deemed gain is added to the decedent’s final return, the estate’s return, or the heir’s/beneficiary’s income for tax purposes.
- Modifications to calculations: How this addition interacts with existing Minnesota and federal tax rules (e.g., basis steps at death, deductions, exemptions).
- Effective date and transition: When the rule would apply (retroactive, prospective, or with a phase-in) and any sunset or sunset-like provisions.
- Administrative specifics: Reporting requirements, forms, withholding, enforcement, and penalties for noncompliance.

Who would be affected

  • Decedents’ estates and executors/administrators handling the estate tax filings.
  • Heirs and beneficiaries receiving assets from a decedent, depending on how gains are allocated for tax purposes.
  • Tax preparers and financial institutions involved in estate administration.

Procedural and timeline notes

  • Introduction and first reading: February 24, 2025.
  • Status: Referred to Taxes for committee consideration.
  • Next steps: Action on the bill will depend on committee deliberations, potential amendments, and floor votes. Full text is needed to assess exact timelines, effective dates, and any transitional rules.

Potential fiscal and policy implications

  • Revenue impact: Depending on the scope and calculation method, the bill could increase Minnesota taxable income for estates or beneficiaries, affecting state revenue.
  • Administrative burden: Requires new definitional clarity and reporting for estates and the Department of Revenue.
  • Policy considerations: Interaction with federal basis rules (step-up in basis at death) and potential concerns about double taxation or alignment with federal estate or gift tax treatment.

Next steps for readers

  • Obtain the full bill text (HF 1357) to review precise definitions, effective dates, and any amendments.
  • Monitor committee actions in the Taxes Committee for hearings, fiscal notes, and amendments.
  • Consider how the proposed deemed gains would affect estate planning, including potential changes to asset structuring or beneficiary planning.

If you’d like, I can update this summary as soon as the bill text becomes available or after committee amendments are posted.

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

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