Minnesota House Bill HF1357

Minnesota 2025-2026 Regular Session

• Introduced: 2/24/25
• Refer: 2/24/25

Caption

Income tax; addition required for deemed capital gains on certain assets of a decedent.

Summary

HF1357 would create a new Minnesota income tax addition for certain unrealized capital gains tied to a decedent’s assets. Under the bill, when a taxpayer dies, the law would treat the gains on specified capital assets as if they were realized at death, based on the asset’s value if it is included in the decedent’s federal gross estate. Those gains would be calculated as “nontaxed capital gains,” and the portion exceeding $1,000,000 would be added back to federal adjusted gross income for Minnesota income tax purposes. The bill also creates a new statutory section defining how these gains are determined and excludes agricultural homestead land classified as class 2a from the definition of “nontaxed capital asset.” In addition, it gives taxpayers filing returns that include this new income addition an automatic 275-day extension to file, with the possibility of a further 180-day extension for good cause. The changes would apply to taxable years beginning after December 31, 2025.

Impact

HF1357 would amend Minnesota’s individual income tax filing and income calculation statutes by adding a new income tax adjustment for deemed capital gains at death. It would also create a new chapter 290 provision establishing the calculation method for these gains and would affect estates and heirs holding appreciated assets that are part of a decedent’s federal gross estate. The bill specifically limits the reach of the new addition by exempting class 2a agricultural homestead land from the definition of covered capital assets.

Sentiment

There is no committee transcript or recorded vote information available for this bill in the provided materials, so the overall sentiment cannot be directly measured from debate or roll-call history. Based on the bill text alone, the proposal appears to reflect a policy choice to tax unrealized gains at death above a high threshold, suggesting a revenue-raising or tax-base-expanding intent. Because no discussion or vote data is included, no clear bipartisan or partisan sentiment can be confirmed from the record provided.

Contention

The main likely point of contention is the bill’s treatment of unrealized capital gains at death, which effectively taxes appreciation that was never realized through a sale. Supporters would likely view this as a way to capture tax on large accumulated gains and limit avoidance, while opponents may argue it creates a new tax burden on estates, family-owned businesses, and inherited assets. Another likely issue is the $1,000,000 threshold and the exclusion for agricultural homestead land, which may be seen as protecting some family farms while still leaving other asset classes subject to the new addition. No specific objections or supporters are identified in the provided transcripts or votes.