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Bill Summary · HF 4951

Summary of HF 4951 (2025-2026) – Tax on Excess Credit Card Interest Income

Jurisdiction: Minnesota

Purpose
- This bill proposes a new tax on the excess credit card interest income earned by financial institutions operating in Minnesota.
- The tax targets high-rate credit card interest revenue, effectively imposing a punitive tax on excess APR income from credit card finance charges.

Key Provisions

  • Definitions (Section 1)

    • Annual Percentage Rate (APR): As defined by the CFPB/Regulatory framework (28 CFR Part 226).
    • Credit Card: A card or device issued by a financial institution that allows the holder to obtain credit under an arrangement, including various methods of initiating transactions.
    • Finance Charge: As defined by CFPB regulation (12 CFR Part 226).
    • Financial Institution: Banks, trust companies, savings institutions, regulated lenders, and certain operating subsidiaries, with detailed inclusions per the bill.

  • Excess Credit Card Interest Income (Subd. 1)

    • “Excess credit card interest income” means the amount of a financial institution’s interest income from credit card finance charges that exceeds a 10% annual percentage rate (APR).
    • For financial institutions subject to apportionment under Minnesota tax law (Minnesota Statutes § 290.17, subd. 3), the excess amount must be multiplied by the institution’s Minnesota apportionment percentage (as determined under §§ 290.191 or 290.20) to determine Minnesota-sourced excess income.

  • Tax Imposed (Subd. 2)

    • In addition to the existing Minnesota income tax (per § 290.06, subd. 1), a new tax is imposed on the excess credit card interest income at a rate of 100 percent.
    • This means every dollar of excess credit card interest income (above 10% APR) would be taxed at 100%.

  • Effective Date

    • The new tax applies to taxable years beginning after December 31, 2026.

Likely Impact and Implications

  • Who is affected

    • Financial institutions with credit card operations in Minnesota that earn interest income from credit card finance charges above a 10% APR threshold.
    • The apportionment adjustment applies to institutions subject to Minnesota’s corporate or multistate apportionment rules.

  • Financial impact

    • The bill creates a separate, additional tax equal to 100% of the excess credit card interest income (above 10% APR), after apportionment for Minnesota-based filers.
    • The effective tax base is the amount by which credit card finance charges exceed a 10% APR, potentially significantly increasing after-tax income taxes for impacted institutions.

  • Compliance and administration

    • Requires calculation of “excess” income (above 10% APR) and application of Minnesota apportionment percentages for multistate institutions.
    • Aligns with existing corporate tax structures by adding a new line item taxed at 100%.

  • Timeline considerations

    • Effective for taxable years beginning after December 31, 2026; filings for 2027 and later fiscal years would be subject to the new tax.

Notes
- The bill was introduced (HF 4951) in the Minnesota House, with authorship by Rep. Falconer and Rep. Engen, and referred to the Committee on Taxes (April 13, 2026).
- The measure is described as an act relating to taxation of corporations, specifically imposing a tax on excess credit card interest income.

Overall, HF 4951 seeks to create a new, substantial tax on the portion of credit card interest income that exceeds a 10% APR, targeting financial institutions’ credit card portfolios and applying a 100% tax rate to that excess starting in 2027 tax years, with apportionment considerations for multistate filers.

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

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