The Minnesota State Legislature introduced Senate Bill 2585 on March 17, 2025, aimed at reforming the corporate franchise tax structure. The bill proposes a contingent reduction in the tax rate, currently set at 9.8 percent, based on specific fiscal conditions.

Key provisions of the bill include a mechanism for reducing the corporate tax rate by 0.312 percent whenever the state experiences a budget surplus or when over 70 percent of the corporate franchise tax burden is allocated to consumers, as indicated in the tax incidence report. However, the bill stipulates that the tax rate cannot fall below 8.24 percent. The Minnesota Department of Revenue would be responsible for publishing any rate reductions by December 31, with the new rates taking effect for taxable years beginning after that date.

The introduction of Senate Bill 2585 has sparked discussions among lawmakers and stakeholders regarding its potential economic implications. Proponents argue that the bill could stimulate business investment and economic growth by lowering the tax burden on corporations, which may ultimately benefit consumers. Critics, however, express concerns that such tax reductions could lead to decreased state revenue, impacting funding for essential public services.

As the bill moves through the legislative process, it is expected to face scrutiny and debate, particularly regarding its long-term fiscal impact and the balance between corporate tax relief and public funding needs. The outcome of this bill could significantly influence Minnesota's economic landscape and tax policy in the coming years.