Purpose

This bill aims to provide a sales and use tax exemption for grain bins and related construction materials and supplies, as well as tractor tires. It also amends how farm machinery is defined in Minnesota law, specifically clarifying what counts as farm machinery and what does not.

Main Provisions

• Exemption for grain bins, related construction materials and supplies, and tractor tires:
  • Establishes a separate sales and use tax exemption for these items used in agricultural production.
• Definitions of farm machinery:
  • Farm machinery is defined as new or used machinery, equipment, implements, accessories, and contrivances used directly and principally in agricultural production of tangible property intended to be sold at retail. Examples include equipment for soil preparation, seeding, cultivation, barn cleaners, milking systems, grain dryers, feeding systems (including stationary feed bunks), and irrigation equipment sold as part of an irrigation system.
  • Farm machinery does not include: repair or replacement parts, tools, shop equipment, grain bins, fencing material, communication equipment, and other farm supplies.
  • Additional exclusions list items not considered farm machinery, such as motor vehicles (under chapter 297B), snowmobiles or snow blowers, lawn mowers (with specific exceptions for sod production or garden-type tractors), and equipment used directly in the production of certain animals (horses not raised for slaughter, furbearing animals, or research animals).

Significant Changes to Existing Law

• Revisions to the farm machinery definition to explicitly exclude grain bins and related items from being classified as farm machinery.
• Introduction of a separate exemption in the sales and use tax system for grain bins, related construction materials and supplies, and tractor tires.
• Clarification of which items are considered farm machinery versus non-farm machinery, and which items are explicitly excluded from the farm machinery category.

Relevant note: The bill references amendments to Minnesota Statutes 2024 sections 297A.61 subdivision 12 and 297A.69 subdivision 4.1.5 to implement these changes.

Practical Effects (Summary)

• Farmers and agricultural operations would likely see reduced sales tax impact on purchasing grain bins, their accompanying construction materials and supplies, and tractor tires.
• Items like grain bins would no longer be automatically treated as farm machinery for exemption purposes, aligning with the new exemption provision.
• The scope of what is considered farm machinery is narrowed to focus on traditional farm production equipment, while certain non-equipment items remain excluded.

Relevant Terms grain bins farm machinery sales tax exemption tractor tires construction materials supplies Minnesota Statutes 2024 297A.61 subdivision 12 297A.69 subdivision 4.1.5 agricultural production irrigation equipment barn cleaners milking systems grain dryers feeding systems lawn mowers garden-type tractors fencing material tools shop equipment repair or replacement parts motor vehicles snowmobiles snow blowers horses not raised for slaughter furbearing animals research animals