Commissioner lays out Gov. Walz's supplemental tax package with child-care credits, social-media tax and conformity moves

Commissioner Paul Marquart of the Minnesota Department of Revenue presented the governor's supplemental tax bill (House File 5055) to the House Taxes Committee on April 23, 2026, calling it a responsible package that would leave the state with multi‑billion dollar buffers in the near term while changing the structure of several taxes.

Marquart said the centerpiece is a major expansion of the child and dependent care credit, with a refundable credit up to $3,000 for one child ages 0–4 and $6,000 for two or more, phased out beginning near $120,000 of income and fully phased out by about $170,000. He said roughly 104,000 families would benefit and that the proposal would reduce taxes for many middle‑income households.

The presentation also covered federal conformity: current law is static to federal provisions through May 1, 2023; the governor's plan would conform through March 1, 2026, bringing Minnesota into alignment with many recent federal changes. Marquart outlined major conformity cost items (for example, changes to business interest deduction limits) and revenue offsets tied to enhanced employer‑provided childcare credits created by federal law.

Marquart described two revenue‑raising modernization items that drew sustained attention from members and testifiers: a modest sales‑tax rate cut paired with an expansion of the sales‑tax base to include several consumer professional services (candidates listed included accounting, banking/brokerage and some legal services), and a social‑media/consumer‑data tax designed as a graduated charge tied to the number of consumers served by a platform. The commissioner said the social‑media tax would raise an estimated $100 million a year and would be deposited into a special revenue account for workforce and business AI readiness administered by DEED.

On enforcement and administration, Marquart proposed adding auditors to keep up with increasingly complex partnership and pass‑through structures and described options the legislature could use to protect businesses from awkward payment timing if a bill passed late in the filing year.

Stakeholders offered sharply divided views. The Minnesota Budget Project urged the committee to adopt even stronger revenue‑raising measures to offset federal cuts to safety‑net programs (Nan Madden). The Minnesota State Bar Association warned that a sales tax on consumer legal services could harm low‑income litigants and exacerbate access‑to‑justice problems (Brian Lake). Labor groups and some public‑interest advocates supported expansions to the sales‑tax base and the social‑media concept as ways to modernize revenue, while business groups opposed several provisions and urged more cautious implementation and clearer analyses of competitiveness effects.

Committee members focused questions on three recurring issues: whether the social‑media tax can be implemented without legal or practical problems, how the special revenue fund would be governed and guarded against misuse, and how the pass‑through entity and estimated‑payment timing issues would be handled for businesses if changes took effect in mid filing cycle.

Because House File 5055 was introduced after the committee deadline it was heard informationally and will not be acted on in committee on April 23; Marquart noted the bill had been referred to rules and staff indicated further amendments and technical work will be needed before formal action.

Next steps: committee members signaled they will continue detailed review, request additional fiscal modeling and legal analysis, and expect the bill to generate substantial floor debate and external stakeholder negotiation as it moves through the process.