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SF536 (Legislative Session 94 (2025-2026))

Residential housing construction materials sales and use tax exemption authorization

AI Generated Summary

Purpose

This bill creates a refundable exemption in Minnesota sales and use tax for materials used to build new residential housing. It adds a new subdivision (Subdivision 55) to Minnesota Statutes 297A.71 to specify what counts as construction materials for residential housing and how the exemption works with the tax system.

Main Provisions

  • Adds Subd. 55, “Construction materials for residential housing,” to Minnesota Statutes 2024 section 297A.71.
  • a) Defines the exemption: Materials and supplies used or consumed in, and equipment incorporated into, the construction of new residential housing are exempt from sales tax.
  • b) How the exemption is handled: The tax on purchases that are exempt under paragraph (a) must be imposed and collected as if the standard tax rate under section 297A.62, subdivision 1 applied, and then refunded under section 297A.75. In other words, the tax is charged at the point of sale and then refunded to reflect the exemption.

Significant Changes to Existing Law

  • Expands the set of items exempt from sales tax to include construction materials and equipment used in the construction of new residential housing.
  • Establishes a refundable mechanism for these purchases by using the existing refund process (refunding the tax through 297A.75).

Who Is Affected

  • Builders, developers, suppliers, and purchasers of materials used in constructing new residential housing, as the exemption applies to materials, supplies, and equipment used in construction.

Practical Implications

  • Lower effective cost for building new homes due to the refundable sales tax on construction materials.
  • Administrative process will require claims for refunds under the existing 297A.75 framework.

Relevant Terms construction materials, residential housing, materials and supplies, equipment incorporated, exempt, sales tax, refundable exemption, Minnesota Statutes 2024, 297A.71, subdivision 55, 297A.75, rate under section 297A.62, refund.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
January 23, 2025SenateActionIntroduction and first reading
January 23, 2025SenateActionReferred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "New Subd.55: Construction materials for residential housing—materials and supplies used or consumed in and equipment incorporated into the construction of new residential housing are exempt.",
        "Tax collection mechanics: the exemption applies as if the rate under section 297A.62, Subd.1 applied and then refunded via section 297A.75."
      ],
      "removed": [],
      "summary": "This bill adds Minnesota Statutes 2024 section 297A.71 Subd.55 to provide a refundable sales tax exemption for construction materials used in residential housing; materials and supplies used or consumed in the construction of new residential housing are exempt. The exemption's tax collection mirrors the rate under section 297A.62, Subd.1 and refunds under section 297A.75.",
      "modified": [
        "Amends Minnesota Statutes 2024 section 297A.71 by adding Subd.55."
      ]
    },
    "citation": "297A.71",
    "subdivision": "Subd.55"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references Minnesota Statutes 2024 section 297A.62, Subd.1, as the basis for applying the tax rate and refund mechanism relevant to the new exemption; the text does not modify 297A.62.",
      "modified": []
    },
    "citation": "297A.62",
    "subdivision": "Subd.1"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references Minnesota Statutes 2024 section 297A.75 as the refund mechanism for the exemption; the text does not modify 297A.75.",
      "modified": []
    },
    "citation": "297A.75",
    "subdivision": ""
  }
]

Progress through the legislative process

17%
In Committee

Sponsors

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