House Tax Committee approves bill to exempt essential infant items from state sales tax and sends it to Ways and Means

The Minnesota House Tax Committee on Jan. 24 voted to pass House File 18 and recommend it to the Ways and Means Committee. The bill would exempt a list of infant and baby-care items from the state sales tax, a proposal supporters said would provide immediate savings to families buying essential items.

Representative Engen, the billsponsor, said the House considered a number of everyday baby items and estimated the change would reduce state revenue by roughly $10 million. "We're looking at $138 of savings for parents based on a set of common purchases," Engen said, summarizing an itemized example drawn from retail prices.

Co-chair Ayesha Gomez urged targeting public dollars to the lowest-income families and explained why she had proposed, then withdrawn, an amendment to make the change broader. Gomez pointed to extreme retail examples to illustrate the unequal benefit from a blanket exemption: "They sell a very modest, white plastic bassinet for —6, which is $17,390 but they also have a gold plated bassinet that they sell for $61,803." Gomez said that a broad exemption would provide much larger dollar savings to wealthier purchasers while offering modest benefits for lower-cost purchases at mass retailers.

Witnesses who supported the bill said immediate, point-of-sale savings help families that rely on purchases for safe, new infant products. Sarah Gangelhoff, director of advocacy and innovation at the Women's Foundation of Minnesota, said the sales tax on baby products has a disproportionate effect on single mothers and women of color and that exempting essential items could ease the upfront costs of new parenting. "Paying a tax on already expensive yet essential items compounds the burden on these families," she said.

Maggie Hange of the Minnesota Catholic Conference also supported the exemption, saying even modest savings of "over $100" on bundled infant purchases can help low-income parents avoid unsafe secondhand items.

The Department of Revenue told the committee it would publish notices, letters and tax-law summaries to inform retailers and taxpayers about any new exemption and that audits could be used to correct miscoding. Department legislative director Joanna Baerz said, "When there's a new tax or if there's a tax change, we will send letters to taxpayers. We will put notices out on our website, we'll do deliveries, we'll do tax law summaries, making sure taxpayers know their obligation."

Co-chairs and members discussed trade-offs with other policy tools, including the advance payment mechanism for the state's child tax credit that began after the 2023 session. Gomez and others said targeted, income-tested credits can reach the lowest-income families more effectively than a universal sales tax exemption.

The committee recorded a voice vote in favor of sending HF18 to Ways and Means. The DE1 amendment offered by Gomez was withdrawn during committee debate. The bill now moves to Ways and Means for further consideration.