HF4906

Purpose

This bill creates a one-time special property tax refund for 2026 and provides a large, single appropriation to the state Department of Revenue to issue these refunds to eligible property owners. The aim is to reduce property tax costs for owners who paid property taxes on qualifying properties in 2026.

Definitions (key terms used in the bill)

• Eligible property: Specific classes of property in Minnesota that are subject to 2026 property taxes, including:
  • Residential homestead property (including certain manufactured homes)
  • Residential nonhomestead property
  • Apartment property
  • Agricultural homestead and agricultural nonhomestead property
  • Rural vacant land
  • Managed forest land
• Property taxes payable: The sum of local net property taxes plus any state general tax due on eligible property in 2026.
• Refund share: A property owner’s total taxes payable on all eligible properties divided by the total taxes payable on all eligible properties of owners who apply for the refund.
• Commissioner of Revenue: The state official who administers the refund program and processes applications.

Main Provisions

• Onetime refund program: The bill authorizes a one-time refund of eligible property taxes payable in 2026.
• Eligibility to apply: A property owner who paid more than $0 in property taxes on eligible properties in 2026 may apply for a refund.
• Application window: Applications must be accepted starting by July 15, 2026, with a deadline to apply by September 15, 2026.
• How refunds are calculated: Each eligible applicant’s refund equals the applicant’s refund share multiplied by the total appropriation for the program. In other words, refunds are distributed pro rata based on each owner’s share of the total taxes payable on eligible properties among all applicants.
• Timing of refunds: Approved refunds must be paid by December 31, 2026.
• Appropriation: The program is funded with a one-time appropriation of $4,000,000,000 from the general fund in fiscal year 2027 to the commissioner of revenue for refunds under this section.
• Administration: The Commissioner of Revenue administers the program, reviews applications, and issues refunds.

Significant Changes to Existing Law

• Creates a new, one-time property tax refund program funded by a large general fund appropriation.
• Introduces a specific “refund share” formula to determine each eligible applicant’s payment.
• Establishes new application deadlines, payment timelines, and a distinct administrative path through the Department of Revenue for this onetime refund.
• Does not alter ongoing property tax rates or otherwise modify how property taxes are calculated in future years; it is a separate, temporary relief measure.

Financial and Practical Impact

• A substantial, one-time payout: $4 billion is provided for refunds in the 2027 fiscal year.
• Proportional refunds: The size of each refund depends on how much the owner paid in taxes on eligible properties relative to all eligible properties claimed by all applicants.
• Short-term administration: Requires timely processing of applications and payments within the 2026-2027 time frame, with specific start and end dates for applications and a set payment deadline.

Administration and Compliance Considerations

• The Department of Revenue is responsible for accepting applications, calculating refund shares, distributing refunds, and ensuring refunds are paid by the deadline.
• Property owners should gather tax records for 2026 to determine eligibility and estimate potential refunds, recognizing that refunds are contingent on the number of eligible applicants and the total appropriation.

Relevant Terms - one-time special property tax refund - eligible property - property taxes payable - refund share - commissioner of revenue - general fund - appropriation - fiscal year 2027 - July 15, 2026 - September 15, 2026 - December 31, 2026