Purpose

Provide a temporary, refundable sales tax exemption for building materials used in certain housing development projects in St. Louis County. The goal is to reduce costs for constructing specified housing types and encourage new development during a defined time period.

What the bill would do

• Create a refundable exemption for sales and use tax on materials, supplies, and equipment used in constructing, rebuilding, upgrading, expanding, renovating, or remodeling certain housing developments in St. Louis County.
• The exemption applies only to purchases made after June 30, 2025 and before July 1, 2027.
• Qualified projects must be one of the following in St. Louis County:
  • An apartment development with at least 20 units.
  • A condominium development with at least 40 units.
  • A townhouse development with at least 40 units.

How the exemption works

• The exemption is treated as if the normal sales tax rate (the rate specified in 297A.62(1) and 297A.62(1a)) were applied and then refunded, using the same refund process used for other eligible projects under 297A.75, subdivision 1, clause 17.
• In effect, buyers pay the tax up front and later receive a refund, making the tax outlay effectively zero for eligible purchases.

Eligible materials and activities

• Covers materials and supplies used or consumed, and equipment incorporated into the construction, reconstruction, upgrade, expansion, renovation, or remodeling of the eligible housing projects.

Timing and location

• The exemption only applies to projects in St. Louis County and only for materials bought within the stated window (after 6/30/2025 and before 7/1/2027).

Funding and administration

• The refunds for these exemptions are paid from a general fund appropriation to the Minnesota commissioner of revenue.
• The commissioner administers the refunds under the existing framework used for similar projects.

Significance and potential impact

• Represents a temporary government incentive to stimulate housing development in St. Louis County by reducing the tax burden on construction materials.
• Units thresholds ensure the exemption targets larger multi-unit projects rather than small-scale construction.

What changes this bill would make to existing law

• Establishes a new, time-limited refundable sales tax exemption for construction materials on specified housing projects in St. Louis County.
• Creates a funding mechanism (general fund appropriation) to cover the expected refunds.
• Integrates with existing refund processes under Minnesota Statutes for eligible projects.

Relevant Terms - sales tax exemption - refundable exemption - construction materials - materials and supplies - equipment - construction - reconstruction - upgrade - expansion - renovation - remodeling - apartment development (≥ 20 units) - condominium development (≥ 40 units) - townhouse development (≥ 40 units) - St. Louis County - Minnesota Statutes chapter 297A - 297A.62 (tax rate application) - 297A.75 (refund mechanisms) - general fund appropriation - commissioner of revenue - refunds - unit thresholds - effective window: after 6/30/2025 and before 7/1/2027