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HF 5026

Sales and use tax exemption for nonprofit carshare organizations created.

2025-2026 Regular Session Introduced by Katie Jones

Sales and use tax exemption for purchases by eligible nonprofit carshare organizations (501(c)(3)) providing carshare services, effective after June 30, 2026.

Introduction and first reading, referred to Taxes
#motorvehicles #nonprofitandcharitableorganizations #taxation-salesanduse
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WeVote Research Nonpartisan
Bill Summary · HF 5026

Summary of HF 5026 (2025-2026) — Minnesota: Sales and Use Tax Exemption for Nonprofit Carshare Organizations

Purpose and Intent

  • The bill creates a sales and use tax exemption for certain purchases by nonprofit carshare organizations.
  • The intent is to support nonprofit entities that provide carsharing services by reducing their purchasing costs.

Key Provisions

New Exemption

  • Subject of Exemption: Sales to a “nonprofit carshare organization” are exempt from Minnesota sales tax. The exemption applies to items purchased for use in providing carshare services.
  • Definition — Nonprofit Carshare Organization: A nonprofit organization whose primary purpose is to provide carshare services and that is exempt from federal taxation under § 501(c)(3) of the Internal Revenue Code.
  • Scope of Exemption: The exemption applies to most purchases by the nonprofit carshare organization, with one important caveat noted below.

Exclusions

  • The exemption does not apply to:
    • Prepared food
    • Candy
    • Soft drinks
    • Alcoholic beverages (as defined in state law)
    • Taxable cannabis products (as defined by state law)

Effective Date

  • The exemption becomes effective for sales and purchases made after June 30, 2026.

Who/What Would Be Affected

Affected Entity

  • Eligible entities are nonprofit carshare organizations meeting the definition above:
    • Primary purpose: provide carshare services
    • 501(c)(3) federal tax-exemption status

Purchases Covered

  • Purchases of items used in providing carshare services (e.g., equipment, supplies, vehicles, maintenance-related items, technology, office supplies, etc.) that are taxable under current law, would be exempt when bought by the eligible nonprofit carshare organizations.

Procedural and Timeline Aspects

  • Introduced: April 20, 2026
  • Committee: Referred to the Committee on Taxes
  • Effective Date: June 30, 2026, or for purchases after that date
  • This is a tax policy change; if enacted, it would require administrative guidance to implement the exemption (e.g., vendors issuing sales tax-exempt status to eligible organizations).

Additional Observations

  • The bill does not alter other tax provisions or define the exemption for for-profit carshare operators.
  • The text specifies that the exemption is broad but does not specify transitional provisions beyond the stated effective date.
  • The bill uses a standard nonprofit tax status (501(c)(3)) to identify eligible organizations, aligning with common charitable and nonprofit classifications.

If you’d like, I can provide a side-by-side comparison with current law (Minnesota Statutes § 297A.70) to highlight exactly where the exemption fits and any drafting nuances.

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

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