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SF 3931

Withholding of federal income tax from state employee pay prohibition

2025-2026 Regular Session Introduced by Doron Clark and 4 co-sponsors

Minnesota bill would end state withholding of federal income taxes from employee paychecks, shifting tax payment responsibility directly to individual workers.

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Bill Summary · SF 3931

Legislative bill overview

SF 3931 would prohibit the state of Minnesota from withholding federal income tax from state employee paychecks. Instead of the state deducting federal taxes and remitting them to the IRS, employees would be responsible for managing their own federal tax withholding or payments directly to federal authorities.

Why is this important

This bill would fundamentally alter the payroll administration system for Minnesota's state workforce and shift tax compliance responsibility from the employer to individual employees. The change could affect thousands of state workers' take-home pay, tax filing complexity, and the state's administrative burden, while also creating potential complications for federal tax collection.

Potential points of contention

  • Federal compliance risk: The IRS requires employers to withhold federal income taxes; this bill may conflict with federal law and expose the state to penalties or legal challenges
  • Employee financial impact: Workers accustomed to automatic withholding might face unexpected tax bills, penalties for underwithholding, or increased filing complexity
  • Administrative burden: Shifting responsibility to individual employees could increase tax non-compliance, errors, and create equity issues for workers unfamiliar with tax obligations
  • State liability: The state could face legal exposure if employees fail to pay federal taxes or claim the state failed to properly inform them of their obligations

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

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