HF379

Purpose

• Create a temporary, two-year income tax holiday for certain police officers. The bill allows eligible officers to elect an exemption from Minnesota individual income tax for specific tax years.

Main Provisions

• Tax years covered: Taxable years beginning after December 31, 2024 and before January 1, 2027 (effectively the 2025 and 2026 tax years).
• Tax exemption: An eligible police officer may elect to receive an exemption from the individual income tax under Minnesota Statutes chapter 290.
• Refundability: If an eligible officer would otherwise have refundable credits that exceed their tax liability, they may still file and claim a refund for the covered tax year.
• Eligibility criteria:
  • Worked at least 1,000 hours in Minnesota during the taxable year as a peace officer (as defined in Minnesota Statutes section 626.84, subdivision 1, paragraph c).
  • Adjusted gross income (AGI) for the taxable year does not exceed $75,000 for an individual, or $150,000 for a married couple filing a joint return.
• Definitions: For this section, the standard definitions in Minnesota Statutes section 290.01 apply.

What this means (practical impact)

• Eligible officers could see reduced or eliminated state income tax liability for the 2025 and 2026 tax years if they elect the exemption.
• The rule about refundable credits ensures that, even if the exemption would otherwise reduce liability to zero, officers can still receive any eligible refundable amounts for those years.
• Eligibility hinges on meeting the 1,000-hour threshold, the AGI cap, and the officer being classified as a peace officer under existing law.

Significant changes to existing law

• Introduces a temporary exemption from state income tax for a subset of police officers for two specific tax years.
• Creates an elective option in place of the standard tax calculation for those years.
• Maintains compatibility with existing credits by allowing refunds if refundable credits exceed tax liability.

Notes for context

• The exemption applies specifically to Minnesota individual income tax under Chapter 290; other taxes and deductions remain governed by current law.
• This is a targeted benefit intended to affect labor costs for police officers meeting defined criteria, within a limited time window.

Relevant Terms - income tax holiday - eligible police officer - peace officer - Minnesota Statutes section 626.84, subdivision 1, paragraph c - Minnesota Statutes chapter 290 - adjusted gross income (AGI) - $75,000 - $150,000 - married filing jointly - taxable years 2025 and 2026 - refundable credit - exemption from tax - hours worked (1,000)