HF4974

Purpose

• The bill changes how the homestead (property tax) refund works for homeowners. It adds income-based requirements that require claimants to pay a share of their property taxes, reduces certain refund copays, and creates a tax compliance program. It also appropriates money to implement these changes and amends Minnesota statutes related to the homestead credit refund.

Main Provisions

• Change to the homestead credit refund calculation:
  • A claimant must pay a portion of their property taxes based on a percentage of household income. The state refund then covers the remaining amount up to a specified maximum.
  • The bill defines “Homeowners homestead credit refund” as the state refund equal to the portion of property taxes payable that remains after the claimant pays their income-based share.
  • The amount the claimant must pay is determined by a table that links household income to a specific percent of income and a corresponding percent the claimant must pay toward the remaining property taxes.
  • The state refund is limited by a maximum amount shown in the same table.
• Detailed income table:
  • The bill provides a long table outlining various household income ranges, the percent of income the claimant must pay, and the maximum state refund for each range. (The table includes multiple brackets with different percentages and refund caps.)
• Income-based payment threshold:
  • There is a specified income threshold above which no payment is allowed, meaning households with income at or above that threshold would not receive a homestead refund under the new rules.
• Additional provisions:
  • The commissioner of revenue is authorized to implement a tax compliance program.
  • The changes involve amending Minnesota Statutes 2024 section 290A.04 subdivisions 2 through 4.

Significant Changes to Existing Law

• Replaces the previous formula for the homestead credit refund with an income-based copay system, shifting more of the property tax burden onto some claimants depending on household income.
• Introduces explicit percentages of income that claimants must contribute, along with corresponding maximum state refunds.
• Adds an authorization for a tax compliance program and related funding.
• Updates the statutory language for the homestead credit refund under Minnesota Statutes 2024 section 290A.04 in subdivisions 2–4.

Implications for Stakeholders

• Homeowners with lower or middle incomes may see a portion of their property taxes required as a payment, reducing the refund they receive.
• Higher-income households may be more likely to receive little or no homestead refund if they exceed the income threshold.
• Local taxpayers and homeowners may experience changes in the timing or amount of refunds due to the new calculation method.
• The state would have enhanced ability to enforce tax compliance related to this refund program through the new program.

Terminology and Concepts (Key Terms from the Bill)

• homestead credit refund
• state refund
• property taxes payable
• household income
• claimant
• percent of income
• percent paid by claimant
• maximum state refund
• tax compliance program
• commissioner of revenue
• Minnesota Statutes 2024 section 290A.04
• copays

Relevant Terms - homestead credit refund - state refund - property taxes payable - household income - claimant - percent of income - percent paid by claimant - maximum state refund - tax compliance program - commissioner of revenue - Minnesota Statutes 2024 section 290A.04 - copays - income threshold