Bill
HF 3501
HF3501 creates a refundable sales tax exemption and refund path for purchases and services used to repair natural disaster damage, retroactive to May 31, 2025.
HF3501 Summary (Minnesota) – 2025-2026 Session
Overview
- Bill type: Tax bill establishing a refundable sales and use tax exemption for purchases used to repair property damage caused by natural disasters.
- Jurisdiction: Minnesota
- Sponsor: Primary sponsor (unnamed in excerpt); Co-sponsor: Bidal Duran
- Introduced: February 19, 2026
- Effective date: Retroactive to after May 31, 2025; some provisions set to take effect or refunds issued on later dates (see sections below)
Purpose and intent
- To provide targeted tax relief for individuals, businesses, and public entities repairing property damaged by natural disasters.
- Creates a refundable sales tax exemption for specified repair materials and services, enabling tax refunds of the tax paid on eligible purchases.
Key provisions and changes
1) New exempt items and services (Repair following a natural disaster)
- Section 297A.67, Subd. 41: Adds a list of eligible items and services when purchased to repair or remediate disaster-caused damage:
- Windows
- Doors
- Siding materials
- Insulation
- Trusses, shingles, and other roofing materials
- Power generators
- Equipment used for sandbagging
- Replacement parts for pumps, valves, and other small equipment
- Plywood
- Tree removal and other debris-hauling services
- Eligibility conditions:
- A qualifying natural disaster must be declared by either the federal government or a local official (under applicable Minnesota law, section 12.29)
- The purchase must be made within two years of the disaster declaration
- Tax handling: The exempt items are taxed as if the standard rate under 297A.62 applied and then refunded under 297A.75
- Effective date: Retroactive for sales/purchases after May 31, 2025
2) Refund mechanics and eligible items (Section 297A.75)
- Subdivision 1 (Tax collected on exempt items): The tax on gross receipts for the exempt items is collected as if taxable, then refunded per existing refund procedures. The listed exempt items appear to be consolidated with other exemptions, with a new item added:
- New eligible category (19): Materials and services for repairs/remediation of natural disaster damage (the same concept as Subd. 41)
- Subdivision 2 (Refund eligibility): Specified recipients may apply for refunds, mirroring other exemptions’ eligibility rules (purchaser, governmental entity, owner of property, municipal utilities, etc.). The new addition clarifies that the applicant for the disaster repair exemption must be the owner of the damaged property if Subd. 1, clause (19) applies.
- Subdivision 3 (Application): Sets forth application requirements, verification needs, and contractor reporting responsibilities. Limits on applying for refunds for capital equipment (two applications per calendar year) are retained and mirrored for the new disaster repair exemption.
- Effective date for this section: Retroactive to May 31, 2025
3) Administration and timing adjustments (Section 5)
- A new section (Section 5) explicitly addresses sales tax refunds for eligible purchases to repair disaster damage.
- Key timing change: Refunds for eligible purchases under 297A.67, Subd. 41, will not be issued until after June 30, 2026.
- Temporary hardship provision: For disasters declared between June 1, 2025, and January 31, 2026, refunds may be issued for purchases made through December 31, 2027 or two years after the disaster, whichever is later. This expands the window for eligible purchases beyond the standard two-year requirement.
Effective dates
- Retroactive effective dates: May 31, 2025 (for the recovery tax exemption and refunds)
- Section 5 timing: Applies starting the day after final enactment
Potential impact
- For home and business owners, contractors, and local governments repairing disaster-damaged property, HF3501 provides a streamlined path to recover sales tax paid on essential repair materials and services.
- The extended refund window for certain disasters helps accommodate lengthy recovery periods and large repair projects.
- Administrative requirements will place reporting responsibilities on contractors and applicants, with verification requirements aligned to existing refund processes.
Note: This summary reflects the text provided and emphasizes substantive provisions, eligibility criteria, refund mechanics, and timelines without editorial interpretation.
Compiled from official sources — confirm details with the bill’s official record.
Sign in to ask a question.
