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Bill would exempt certain community‑bank loan income from state tax to improve competitiveness
Summary
Senate File 3364 would exempt income derived from commercial and agricultural loans of $5 million or less from state income tax for certain institutions, a change advocates say would help community banks compete with tax-exempt lenders. Community bankers testified in support and the committee laid the bill over.
Senate File 3364, presented April 24, 2025 by Senator Putnam, would exempt income from commercial and agricultural loans of $5,000,000 or less from state income tax for qualifying financial institutions. Supporters said the change would help community banks compete with tax‑exempt institutions such as credit unions and certain cooperative lenders.
John Herges, CEO of Falcon National Bank and testifying for Bankers Association of Minnesota, told the committee that Minnesota community banks struggle to match loan pricing offered by tax‑exempt institutions and that a statutory exemption used in Wisconsin has helped community banks there retain small businesses and family farms. “This legislation will allow community banks to turn this tax exemption into more competitive loan terms for their Main Street customers,” Herges said.
Senator Putnam acknowledged the fiscal cost of the proposal but said the committee should consider policy as well as dollars. The committee heard the testimony and laid Senate File 3364 over with no recorded roll‑call vote.
