House committee advances HF5 to Taxes after debate over delivery fee, gas tax indexing and Social Security subtraction

The Minnesota House Transportation Committee voted to send House File 5 to the House Tax Committee after lengthy testimony and several roll-call amendment battles, with the motion to move the bill approved 8-7.

HF5, sponsored by Representative Sarah Joy, would fully subtract Social Security income from state taxable income, repeal the retail delivery fee enacted in 2023, and remove or cap the automatic inflation indexing of the state gas tax — changes the bill’s proponents say will make Minnesota more affordable. Opponents from the Minnesota Department of Transportation, local governments, transit advocates, labor unions and many businesses warned the changes would reduce dedicated transportation revenue and put projects, safety improvements and transit operations at risk.

Why it matters: Committee fiscal staff estimated the delivery-fee repeal and the gas-tax cap would reduce transportation-related revenues by roughly $131 million in the 2026-27 biennium and $112 million in 2028-29. Minnesota Department of Transportation Commissioner Nancy Daubenberger told the committee that even before HF5 the state faces an annual funding gap for roads of almost $2 billion for networks funded through the highway-user distribution fund. "If the legislature enacts reductions in planned transportation investments that would result from House File 5, pavement, bridge and other roadway infrastructure conditions will suffer," Commissioner Daubenberger said.

Author and bill scope:…