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SF 3405

Pass-through entity tax expiration modification

2025-2026 Regular Session Introduced by Julia Coleman and 3 co-sponsors

SF 3405 modifies when Minnesota's pass-through entity tax expires, affecting how business income is taxed for partnerships, S-corps, and LLCs.

Author added Coleman
#taxation
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WeVote Research Nonpartisan
Bill Summary · SF 3405

Legislative bill overview

SF 3405 modifies the expiration date of Minnesota's pass-through entity tax, which allows certain business structures (S-corporations, partnerships, LLCs) to pay tax at the entity level rather than only at the individual owner level. The bill extends or alters when this tax provision sunsets, affecting how business income is taxed in the state.

Why is this important

Pass-through entity taxes represent a significant revenue source for states and directly impact business taxation strategy. For affected business owners, changes to this tax can alter their overall tax burden and financial planning. The expiration modification determines whether businesses continue operating under current tax rules or face different treatment.

Potential points of contention

  • Revenue impact: Extending the tax maintains state revenue but may increase costs for business owners; allowing expiration reduces revenue but benefits pass-through entities
  • Competitive positioning: Neighboring states' pass-through entity tax policies could make Minnesota less or more attractive for business formation and relocation
  • Fairness concerns: Businesses taxed as pass-through entities versus C-corporations may face different effective tax rates, raising equity questions about which business structures receive preferential treatment

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

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