HF3501

Purpose

• Create a refundable sales tax exemption for certain items and services purchased to repair or remediate damage to property caused by a natural disaster.

What the bill does

• Adds a new provision (Subdivision 41) to Minnesota Statutes to define and implement the disaster-related exemption.
• Establishes that the exemption applies to specific repair materials and services after a natural disaster.

Eligible items and services

The exemption covers purchases used to repair or remediate disaster-damaged property for the following categories: - Windows - Doors - Siding materials - Insulation - Trusses, shingles, and other roofing materials - Power generators - Equipment used for sandbagging - Replacement parts for pumps, valves, and other small equipment - Plywood - Tree removal and other services related to hauling debris

Eligibility conditions and timing

• The disaster must be officially declared by either the federal government or a local official under section 12.29.
• The purchase must occur within two years of the disaster declaration.

Tax treatment and refund mechanism

• The exemption is applied by treating the purchase as if the standard sales tax rates in Minnesota apply (as per section 297A.62) and then refund the tax under section 297A.75.
• In other words, the tax is collected at the time of purchase and subsequently refunded through the state’s refund process.

Changes to existing law

• Creates a new subdivision (Subd. 41) within Minn. Stat. 2024 section 297A.67 to establish the exemption.
• Ties eligibility to disaster declarations and a two-year window.
• Uses the existing tax collection-and-refund framework (section 297A.75) for the exemption.

Practical impact and limitations

• Provides financial relief for individuals and businesses repairing property after a natural disaster by reducing tax costs on specified repair materials and services.
• Limitations include: only applies to the listed items and services, only after a disaster is declared, and only within two years of that declaration.

Related references (context)

• Disaster declarations: federal government or local official under section 12.29
• Tax rate application and refunds: sections 297A.62 and 297A.75

Relevant Terms - refundable exemption - sales tax exemption - natural disaster - disaster declaration - section 12.29 - Minnesota Statutes 2024 section 297A.67 - Minnesota Statutes 2025 Supplement section 297A.75 - 297A.62 - 297A.75 - repairs - remediation - windows - doors - siding materials - insulation - trusses - roofing materials - power generators - sandbagging equipment - pumps - valves - plywood - debris hauling - local official - federal government - two years