Tax on certain credit card interest income imposed.
Summary
HF4951 would create a new Minnesota corporate tax provision imposing a 100 percent tax on a financial institution’s “excess credit card interest income.” The bill defines that income as interest income from credit card finance charges above a 10 percent annual percentage rate, and it applies only to financial institutions as defined in the bill, including banks, savings institutions, trust companies with banking powers, industrial loan and thrift companies, regulated lenders, and their operating subsidiaries.
For institutions subject to Minnesota apportionment rules, the taxable amount would be reduced by the institution’s Minnesota apportionment percentage. The new tax would be added on top of the existing corporate income tax under Minnesota Statutes, chapter 290, and would take effect for taxable years beginning after December 31, 2026.
Impact
The bill would add a new section to Minnesota Statutes, chapter 290, creating a targeted tax on a specific category of credit card finance charge income earned by financial institutions. It would effectively disallow state tax benefit on interest income above the 10 percent APR threshold by taxing that excess income at a 100 percent rate, while still using Minnesota apportionment rules to determine the portion attributable to the state. The affected parties would primarily be banks and other regulated financial institutions that issue credit cards or earn credit card finance charge income.
Sentiment
Based on the bill text and the absence of recorded committee testimony or votes, the available record does not show formal support or opposition in discussion. The bill’s framing suggests a policy intent to target high-interest credit card lending, which may appeal to consumer-protection or anti-usury viewpoints, but no committee debate is available to confirm broader legislative sentiment. There is also no voting history in the provided materials to indicate whether the proposal was controversial or broadly supported.
Contention
The main point of contention is likely the policy choice to impose a 100 percent tax on interest income above a 10 percent APR, which could be viewed by supporters as discouraging high-cost credit card lending and by opponents as an aggressive tax on financial institutions. Another likely issue is how the bill defines “excess credit card interest income” and applies apportionment, since financial institutions may argue that the tax could affect credit pricing, lending availability, or compliance complexity. No specific objections or supporters are identified in the provided transcripts or votes.