Senate Taxes Committee recommends passage of bill extending Minnesota PTE tax election through 2029

The Minnesota Senate Taxes Committee voted 9-0 on March 5 to recommend passage of Senate File 3405, which would extend the state's pass-through entity (PTE) tax election through 2029 and let the broader provision expire in 2030.

Senator Rest, chair of the committee, told members the measure (as amended by an adopted A3 amendment) would allow partnerships, S corporations and similar pass-throughs to continue electing to pay tax at the entity level. Rest said the Department of Revenue's updated revenue estimate shows no net state fiscal impact over the next four years and that extending the election would reduce urgent uncertainty for businesses facing upcoming estimated-tax deadlines.

Supporters who testified described the extension as important to small and medium-sized businesses. Brian Cook, director of tax, fiscal policy and elections for the Minnesota Chamber of Commerce, said over 66,000 pass-through entities have used the PTE election and urged swift action so taxpayers can plan for first-quarter estimated payments. "We're urging the legislature to move quickly and reinstate the PTE tax so businesses have certainty before those deadlines," Cook said.

Other witnesses included Joel Carlson of the Minnesota Association for Justice, Chris Martin of Eide Bailey and Connor Stinson of CBIZ, all of whom described the measure as a practical, revenue-neutral fix to the limitation on state and local tax (SALT) deductions created by the federal Tax Cuts and Jobs Act of 2017. Chris Martin noted that many taxpayers are surprised the state election expired in 2025 and that clarity will aid cash flow and compliance.

Brian Rice, an attorney testifying on his own behalf, argued passage was urgent and cited a Clifton Larson Allen estimate he said implies a roughly $400,000,000 federal outflow to Washington if Minnesota did not restore the election. Rice urged committee members to seek fuller fiscal analysis. The committee record does not include a Department of Revenue endorsement of that $400 million figure during testimony.

After brief discussion and a roll call requested by Senator Nelson, the clerk recorded nine affirmative votes and no negatives; the committee recommended that SF 3405, as amended, pass to the full Senate.

The committee adopted the author's A3 amendment before the recorded vote. No amendments that changed the bill's effective dates beyond the amendment discussed in committee were adopted. Senator Rest closed the hearing and adjourned the committee. The bill will proceed to the Senate floor for further action.