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Senate committee hears bill to exclude Roth distributions from homeowner property tax refund calculation
Summary
Senate File 105 would align homeowner property tax refund (PTR) income calculations with a prior renter-side change by excluding Roth IRA distributions; sponsor says the change would raise refunds about $180 for roughly 11,000 homeowners. The bill was laid over for possible inclusion.
Senate File 105, presented Jan. 21 to the Minnesota Senate Taxes Committee by Senator Drazkowski, would change how household income is calculated for the state property tax refund (PTR) for homeowners by excluding distributions from Roth-style retirement accounts.
The change would make the homeowner calculation parallel to a 2023 adjustment that removed Roth IRA distributions from income for the renter-side PTR. Sponsor Senator Drazkowski told the committee the measure would increase refunds by about $180 for roughly 11,000 homeowners affected by the change.
Supporters said the bill clarifies inconsistent statutory language. Drazkowski said the current PTR statute contains contradictory language: one section directs that certain retirement distributions “should be considered” in household income while another section says they “shall not” be considered. The bill adjusts both provisions and adds a definition of “Roth-style retirement account or plan” to remove ambiguity.
Joanna Barris, legislative director at the Minnesota Department of Revenue, told the committee the department’s ability to implement the change in the same calendar year would depend on when the bill passes because the PTR currently relies on taxpayers— prior-year information and some filers claim it at different points in the year. Barris said past changes have been implemented in the same year but could require taxpayers to amend returns depending on timing.
Committee members asked about fiscal and revenue estimates and whether the 2023 conversion of the renter refund to the income tax side could be parsed to isolate the effect of excluding Roth distributions. Barris said that parsing would require additional analysis.
Senator Drazkowski said his constituent Fred Majeris had raised the issue after concluding Roth distributions reduced his expected refund; Drazkowski said Majeris previously testified on a related bill and the proposal had bipartisan traction this session. With no objections, the committee laid Senate File 105 over for possible inclusion.
The committee did not take a formal vote on the bill’s merits during the hearing; members requested further information on administration and revenue impacts before proceeding.
