HF3816 (Legislative Session 94 (2025-2026))
Individual income and corporate franchise taxes; federal changes to expensing research expenditures conformed.
AI Generated Summary
Purpose
- The bill aims to align Minnesota's tax rules with recent federal changes related to expensing research expenditures. It updates how the Internal Revenue Code (IRC) is defined for Minnesota law, to incorporate specific federal provisions that affect how research and development costs can be expensed.
Main provisions
- Amends Minnesota Statutes 2024 section 290.01 subdivision 31 to redefine “Internal Revenue Code” for Minnesota tax purposes.
- The Internal Revenue Code is defined as the IRC of 1986 as amended through May 1, 2023.
- The definition also includes section 70302 of Public Law 119-21, which relates to full expensing (100% expensing) of domestic research and experimental expenditures.
- The definition further includes any uncodified federal provisions that relate to IRC provisions that Minnesota law incorporates.
Effects and implications
- By adopting the federal full expensing approach for domestic research and development (R&D) expenditures, Minnesota would conform its tax treatment of R&D costs to the federal policy change.
- The bill clarifies that Minnesota follows the federal definitions of the IRC up to the specified date and includes certain federal provisions (including uncodified ones) that affect those IRC provisions when applying Minnesota tax law.
Significant changes to existing law
- Expands Minnesota’s definition of the Internal Revenue Code to explicitly include the federal full expensing provisions for R&D expenditures (via Public Law 119-21, section 70302).
- Adds reference to uncodified federal provisions related to the IRC, ensuring these provisions are incorporated into Minnesota tax conformity where applicable.
- Establishes a specific endpoint date (May 1, 2023) for the IRC as it applies to Minnesota, while also including the additional full-expensing provisions.
Relevant Terms - Internal Revenue Code - Minnesota Statutes 2024 section 290.01 subdivision 31 - Subd.31 - full expensing / 100% expensing - domestic research and experimental expenditures - Public Law 119-21 - section 70302 - uncodified provisions - May 1, 2023 - Internal Revenue Code of 1986
Bill text versions
- Introduction PDF PDF file
Past committee meetings
- Taxes on: March 11, 2026 10:15
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| March 02, 2026 | House | Action | Introduction and first reading, referred to | Taxes | |
| March 05, 2026 | House | Action | Author added |
Citations
[
{
"analysis": {
"added": [
"Defines Internal Revenue Code to mean the Internal Revenue Code of 1986 as amended through May 1, 2023",
"Includes section 70302 of Public Law 119-21 relating to full expensing of domestic research and experimental expenditures",
"Includes uncodified provisions of federal law that relate to provisions of the Internal Revenue Code incorporated into Minnesota law"
],
"removed": [],
"summary": "This bill amends Minnesota Statutes 2024 section 290.01, subdivision 31 to define the Internal Revenue Code for purposes of Minnesota tax law. The definition incorporates the Internal Revenue Code as amended through May 1, 2023 and adds reference to section 70302 of Public Law 119-21 related to full expensing of domestic research and experimental expenditures, and includes uncodified federal provisions related to the Internal Revenue Code that are incorporated into Minnesota law.",
"modified": [
"Updates the IRC reference to align Minnesota law with federal expensing changes for research expenditures"
]
},
"citation": "Minnesota Statutes 2024 section 290.01, subdivision 31",
"subdivision": "subd.31"
},
{
"analysis": {
"added": [
"Recognition of full expensing provisions for domestic R&E expenditures from Pub. L. 119-21, §70302"
],
"removed": [],
"summary": "The bill references Public Law 119-21, section 70302, as it relates to full expensing of domestic research and experimental expenditures, incorporating this federal provision into the definition of the Internal Revenue Code for Minnesota tax purposes.",
"modified": []
},
"citation": "Public Law 119-21, §70302",
"subdivision": ""
},
{
"analysis": {
"added": [
"Definition of Internal Revenue Code to include IRC amendments through May 1, 2023",
"Inclusion of Pub. L. 119-21 §70302 related to full expensing of domestic R&E expenditures",
"Inclusion of uncodified federal provisions relating to the IRC incorporated into Minnesota law"
],
"removed": [],
"summary": "The bill treats the Internal Revenue Code as defined, including amendments through May 1, 2023 and the Pub. L. 119-21 §70302 provisions, and includes uncodified federal provisions related to the IRC that are incorporated into Minnesota law.",
"modified": []
},
"citation": "Internal Revenue Code",
"subdivision": ""
}
]Progress through the legislative process
In Committee