Omnibus tax bill headed to governor's desk after lawmakers strike Sunday night deal

No House tax bill? No problem.

While it’s customary that each chamber of the Legislature fashions its own tax bill, then hammers out compromises between the provisions of each, 2026 was a year in which the Senate produced such a bill, but the House didn’t.

That said, the two tax committees did meet twice as a “discussion group” moderated by Revenue Commissioner Paul Marquart, then headed behind closed doors in recent days, finally emerging with an agreement Sunday evening.

And the result is HF2438, which subbed out a 2025 transportation bill sponsored by Rep. Jon Koznick (R-Lakeville) with a delete-all amendment. It was subsequently passed 126-8 by the House and 52-15 by the Senate, and sent to the governor.

As expected since an agreement between Gov. Tim Walz and legislative leaders was announced Wednesday, the bill includes a onetime increase in homestead credit refunds to 14.88%. That will cost the state’s General Fund $125 million.

And it includes a $75 million transfer in Fiscal Year 2027 from the General Fund to the driver and vehicle services operating account, presumably to deliver the promised reduction in vehicle registration fees.

While House Taxes Committee Co-Chair Rep. Greg Davids (R-Preston) lamented that no approvals of local option sales tax proposals are included in the bill, he nevertheless advocated for passage and continued his annual tradition of naming the tax bill after a song, in this case the 1981 Foreigner hit, “Urgent.”

“Most of the fiscal changes in the bill relate to federal conformity,” said the committee’s other co-chair, Rep. Aisha Gomez (DFL-Mpls). “There were major changes made to the Internal Revenue Code last year at the federal government and we have to align with them.”

[MORE: View the spreadsheet]

The bill includes a plethora of conformity measures that would bring Minnesota’s tax code in line with changes made at the federal level through May 1, 2026. It also would:

• expand the Dependent Care Credit;
• increase credits for sustainable aviation fuel;
• establish a direct free filing system for individual income tax returns;
• modify tax rates on homestead resorts;
• postpone until 2032 the sunset of the local homeless prevention aid program;
• appropriate $38 million for the family homeless prevention and assistance program;
• impose a 100% penalty for money received due to fraud of a public program;
• update tax increment finance provisions in six municipalities;
• appropriate $500,000 in Fiscal Year 2027 for a study regarding nuclear generation; and
• establish an ongoing school district seasonal tax base replacement aid program for districts with a certain amount of seasonal recreational market value.

It all adds up to a bill that offers $40.3 million in tax aids and credits and $16.2 million in increased revenue. That results in a net General Fund reduction of $24.1 million.

While Rep. Bjorn Olson (R-Fairmont) is angry the bill doesn’t include an increased property tax market value exclusion for disabled veterans, Rep. Patty Acomb (DFL-Minnetonka) appreciates its inclusion of a nuclear energy study, since the session produced no energy bill to include such a provision.

What’s in the bill?

Here are some of the House bills that contained provisions found in the 2026 taxes omnibus bill:

• HF30 (Gomez)
• HF1161 (Igo)
• HF1626 (Vang)
• HF1669 (Davids)
• HF1829 (Davids)
• HF2437 (Davids)
• HF2475 (Tabke)
• HF3051 (Davids)
• HF3127 (Davids)
• HF3360 (Acomb)
• HF3420 (Lee, L.)
• HF3697 (Norris)
• HF3755 (Davids)
• HF3994 (Davids)
• HF4161 (Duran)
• HF4319 (Altendorf)
• HF4344 (Agbaje)
• HF4361 (Agbaje)
• HF4490 (Schomaker)
• HF4677 (Davids)
• HF4678 (Davids)
• HF4950 (Anderson, P.E.);
• HF5055 (Gomez)
• HF5063 (Davids)