ST. PAUL – Yesterday, Tax Day, Legislative Republicans joined together to remind Minnesotans about the nearly $10 billion in tax hikes that are just starting to be paid, with more already on the books. They also warned Minnesotans of additional tax hikes being proposed by Democrats to support even more spending.
“The Democrat Majority passed nearly $10 billion in tax increases for 2024 and 2025. So far about $3 billion in new taxes and fees have gone into effect with more than $6 billion being added beginning in 2026,” Senator Mark Johnson (R-East Grand Forks) said. “Not surprisingly, Democrats from proposing even more tax increases this session for consideration. While it may not be a budget year this year, that’s just a technicality, I would expect to many, many more taxes being proposed by Democrats, especially with a looming budget deficit.”
“For too long, Democrats in St. Paul have viewed the paychecks and bank accounts of Minnesotans as their own personal piggy bank to raid whenever they need more money to fund their out-of-control spending,” said House Minority Leader Lisa Demuth (R-Cold Spring). “The Democrat majority has already rammed through over $10 billion in new taxes on Minnesota families and businesses, and they’re proposing even more. Enough is enough.“
Republicans went on the highlight tax increases already passed that hurt working Minnesotans. First, a $2 billion payroll tax hike will begin in 2026 to pay for the bloated bureaucracy of the Democrat’s Paid Leave plan.
“Paid leave is a laudable goal, and we all know how important it is. The challenge is the way it was implemented, it is already causing problems,” Sen. Carla Nelson (R-Rochester said). “The program requires a tax increase on both employers and employees – and even though the program hasn’t started yet, there is a tax increase needed. The payroll tax will impact taxpayers a second time as schools, cities, and counties comply with the mandate, inevitably leading to higher costs for local governments paid for by local taxpayers,” Sen. Nelson concluded.
The net operating loss is a tax increase for businesses and entrepreneurs who businesses experienced a financial loss for the year. “Democrats are raising taxes on small businesses and entrepreneurs who, sometimes by no fault of their own, had a bad businesses year,” Senator Bill Weber (R-Luverne) said Reducing the amount a business can claim puts more money in the pocket of government, and less money available for these job creators to hire, expand, and recoup their losses.”
One of the most controversial tax increases passed by Democrats was tying Minnesota’s gas tax to the rate of inflation. This essentially puts the gas tax on autopilot for increases, without requiring the changes to be voted on by legislators. “Putting the gas tax on an automatic inflator means that the gas tax is increasing on autopilot permanently,” said House Republican Tax Committee Lead Greg Davids (R-Preston). “Democrats are driving Minnesotans and businesses out of the state because of this reckless taxing and spending spree. The decision to raise taxes automatically every year, even after they spent the entire $17.5 billion surplus and raised taxes another $10 billion, is completely irresponsible.”
Democrats are also proposing a new statewide sales tax increase for housing through a constitutional amendment. The bill would ask Minnesotans to approve a sales tax increase of three-eighths of 1% to create three dedicated funds for homebuyers, renters, and homelessness. If approved, the legislature would appoint a 24-member council to manage the funds.
“The Housing tax is not only a tax increase, but a huge growth in bureaucracy,” House Republican Housing Committee Lead Jim Nash (R-Waconia) said. “Taxing Minnesotans to create housing will hurt the very people it’s supposed to help. It will make homes more expensive and will not lower the cost of rent. In fact, this regressive tax increase takes money out of the hands of every Minnesotan, making it harder to afford rent and mortgage payments, or save for a down payment on a home.” The bill would authorize the tax for 25 years, beginning July 1, 2025.