Purpose

• Establish a property tax task force to investigate ways to reduce property taxes on homestead properties and present options for legislation, including at least one option with minimal general fund impact.

Key Definitions

• Homestead property: a residential homestead classified as 1a, plus the portion of class 2 property consisting of the house, garage, and the immediately surrounding one acre of land.

Main Provisions and Goals

• Create a property tax task force to study and propose options for reducing property taxes on homestead properties.
• Ensure at least one recommended option would have minimal impact on the general fund.
• The task force must consider how the homestead market value exclusion influences property taxes for homestead vs. nonhomestead properties, and how its effectiveness has changed from 2011/201? (through 2025).

Tasks the Task Force Will Examine

• How effective the homestead market value exclusion is at lowering homestead property taxes relative to nonhomestead residential property.
• How the effectiveness of the homestead market value exclusion in 2025 compares to 2011.
• Whether changing property tax classification rates would be a preferred tool compared to the homestead market value exclusion.
• How property tax classification rates compare across all property types, and whether consolidating classifications could reduce homestead taxes.
• Changes and trends in the share of property taxes paid by homestead properties from 2015 through 2025.
• Changes and trends in the relative share of state vs. local property taxes paid by specific property types (commercial, industrial, public utility) from 2015 through 2025.
• How burdens for noncommercial seasonal residential, recreational, nonhomestead residential, and homestead properties compare in different regions and how those burdens changed from 2015 to 2025.

Task Force Membership

• Two state representatives (one appointed by each house’s Tax Committee cochairs).
• Two state senators (one appointed by the chair of the Senate Taxes Committee and one by the ranking minority member).
• The commissioner of revenue or a designee.
• Two people appointed by the Association of Minnesota Counties.
• Two people appointed by the League of Minnesota Cities.
• One person appointed by the Minnesota Association of Townships.
• One person appointed by the Minnesota Association of Assessing Officers.

Duties and Authority

• The task force must provide advisory recommendations to the legislature based on its work.
• The commissioner of revenue or a designee chairs the initial meeting; the task force elects a chair at that meeting.
• Meetings are to be held as needed, called by the chair, and members serve without compensation.
• The commissioner of revenue provides administrative support.
• Meetings must be open to the public with at least seven days’ notice; a meeting occurs when a quorum is present.

Reporting and Timeline

• The task force must submit a report to the chairs and ranking minority members of the legislative committees with jurisdiction over property taxes no later than February 1, 2027.
• The report must include the task force’s advisory recommendations and any other relevant information.

Expiration

• The task force expires after the report is submitted.

Overall Impact (What changes if enacted)

• This bill would not immediately change tax rates or classifications but would create a formal process to study and propose options for reducing property taxes on homestead properties, potentially influencing future legislation. It emphasizes exploring both homestead-specific tools (like the market value exclusion) and alternative classification approaches, with a focus on minimizing general fund impact for at least one option.

Relevant Terms - property tax - homestead - homestead market value exclusion - classification rates - residential homestead (class 1a) - class 2 property (house, garage, surrounding land) - advisory recommendations - burden - nonhomestead - commercial - industrial - public utility property - noncommercial - seasonal residential - recreational property - expiring task force - Minnesota Counties - League of Minnesota Cities - Minnesota Association of Townships - Minnesota Association of Assessing Officers