Tax conformity decisions could shape Minnesota’s competitiveness

By Doug Loon
President and CEO
Minnesota Chamber of Commerce

Last week, we filed a new web article from the Minnesota Chamber of Commerce focused on taxes, outlining three major federal tax provisions that Minnesota lawmakers are now considering whether to adopt at the state level.

Because Minnesota does not automatically conform to federal tax law, the Legislature must act on provisions from the 2025 federal tax package to deliver real relief for businesses here in Minnesota. Otherwise, we risk becoming less competitive as other states move to conform to these federal changes.

There are several key provisions I want to highlight today. The first is Section 179 expensing, which allows businesses to immediately deduct up to $2.5 million in equipment purchases. This improves cash flow and encourages investment here in Minnesota.

Another important provision is bonus depreciation. This allows businesses to fully deduct 100% of capital investments upfront on their state returns rather than spreading those costs over several years.

The third provision restores immediate expensing for research and development investments made here in Minnesota. This helps drive innovation, job growth and long-term competitiveness, which remains a top priority for the Chamber.

These proposals come at a time when Minnesota ranks among the highest taxed states in the country, with one of the highest corporate tax rates and growing concerns from employers about overall tax burdens and mandates.

The Legislature can help, but they must act before April 15. Without action, many Minnesota businesses could end up paying significantly more in federal taxes instead of reinvesting those dollars here at home.

To access the full article outlining these provisions in more detail, click here.

At the Capitol this week, lawmakers are now on their Easter and Passover break and will return on April 7, marking the halfway point of the legislative session. With committee deadlines largely behind them, the focus now shifts to major issues like taxes and capital investment, including the bonding bill.

The Chamber will be watching closely as both the House and Senate begin assembling their legislative packages ahead of adjournment in mid-May. There are not many weeks left in the session.

While legislators are back in their districts, this is an excellent time for business leaders to reach out, share their experiences and advocate for policies that will help Minnesota grow and remain competitive with other states.

Thank you for your support and for listening to this week’s episode of the Minnesota Business Podcast. I hope you have a great Easter weekend, and we look forward to connecting with you again soon.