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HF 370

Two-year income tax holiday established for direct support professionals.

2025-2026 Regular Session Introduced by Natalie Zeleznikar

HF 370 would provide a two-year state income tax holiday for direct support professionals, reducing or eliminating their state income tax during that period.

Introduction and first reading, referred to Human Services Finance and Policy
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Bill Summary · HF 370

Bill Summary: HF 370 (Minnesota, 2025-2026)

Title

Two-year income tax holiday established for direct support professionals.

Primary purpose

HF 370 seeks to provide a temporary income tax relief measure for direct support professionals (DSPs) by establishing a two-year income tax holiday. The bill appears to be designed to increase take-home pay for DSPs, potentially aiming to improve recruitment, retention, and compensation for workers who provide direct support services.

Key provisions and changes

  • Tax relief duration: Establishes a two-year window during which DSPs would receive an income tax holiday. The measure effectively reduces or eliminates state income tax for eligible DSPs for that period.
  • Eligible workers: Direct support professionals who work in roles providing direct services to individuals with disabilities, seniors, or other populations served by Minnesota’s direct care sector. (Note: The bill text would specify who qualifies; the summary references DSPs generally.)
  • Mechanism of relief: The two-year exemption or holiday would reduce the amount of state income tax owed by eligible DSPs during the specified period. Details such as the eligibility criteria (e.g., wage thresholds, employer verification, or employment type) and whether the exemption applies to wages, self-employment income, or both, would be defined in the bill.
  • Sunset or expiration: The relief is explicitly limited to two years, after which normal income tax obligations would resume unless further legislative action is taken.
  • Co-sponsor: Natalie Zeleznikar is listed as a co-sponsor.

Who would be affected

  • Direct support professionals providing direct care services in Minnesota.
  • Employers and payroll processors who would implement and verify eligibility for the tax holiday and ensure accurate withholding adjustments during the two-year period.
  • State revenue and fiscal planning as the tax holiday affects state tax collections and budget forecasting.

Procedural and timeline aspects

  • Introduction and referral: HF 370 was introduced on February 13, 2025, and referred to the House committee on Human Services Finance and Policy for consideration.
  • Next steps: The bill would proceed through committee hearings, potential amendments, and floor votes in the Minnesota House of Representatives. If passed, it would need to clear the Senate (and be signed by the governor) to become law. Specific implementation timelines (e.g., start date of the tax holiday) would be defined in the bill’s text and any future legislative action.

Potential impacts and considerations

  • Workforce effects: Could improve recruitment and retention of DSPs by increasing after-tax income, though the magnitude depends on the final tax rates and eligibility rules.
  • Fiscal impact: Represents a reduction in state revenue for the two-year period; the bill would need to align with the state’s budget and revenue projections.
  • Administrative considerations: Requires clear eligibility verification and consistent application by employers and state agencies to avoid confusion or misapplication.
  • Policy alignment: Fits within broader legislative efforts to support the direct care workforce, often facing balancing acts between wage support, program funding, and overall fiscal sustainability.

This summary reflects the information available from the bill’s introduction and sponsor details. For a complete understanding, the full bill text (including definitions, eligibility criteria, implementation dates, and fiscal notes) should be reviewed.

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

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