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HF 3115

Individual income tax and corporate franchise tax phased out.

2025-2026 Regular Session Introduced by Drew Roach

Minnesota bill HF 3115 would phase out individual income and corporate franchise taxes, eliminating major state revenue sources and requiring alternative funding mechanisms.

Introduction and first reading, referred to Taxes
#corporationsandpartnerships #taxation #taxation-income
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Bill Summary · HF 3115

Legislative bill overview

HF 3115 proposes a phased elimination of Minnesota's individual income tax and corporate franchise tax. The bill would gradually reduce these taxes over a period of years, ultimately moving the state toward a tax system that relies less heavily on income-based taxation.

Why is this important

Income and corporate franchise taxes are major revenue sources for Minnesota state government, funding education, healthcare, infrastructure, and social services. Eliminating them would fundamentally reshape state finances, requiring either significant new revenue sources (such as sales or property taxes), major spending reductions, or both—each with substantial consequences for residents and businesses.

Potential points of contention

  • Revenue replacement: The bill does not specify how the state would replace hundreds of millions in annual tax revenue, raising questions about fiscal sustainability and whether spending cuts would be deep enough to offset lost income
  • Distributional fairness: Income taxes are progressive (higher earners pay more); replacing them with alternatives like sales taxes tends to be regressive (lower earners pay a higher percentage of income)
  • Economic effects: Proponents argue lower income taxes attract business and workers; critics contend the loss of public investment in education and infrastructure could have offsetting negative economic impacts
  • Implementation timeline: A phased approach creates multi-year budget uncertainty and could incentivize high-income residents to relocate before full implementation

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

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