On February 10, 2025, Representative Gregory Davids introduced House File 170 (HF 170) to the Minnesota House of Representatives, proposing a gradual elimination of the state’s estate tax over a ten-year period. Read on for more information about the proposed phaseout of Minnesota’s estate tax.
Current Estate Tax Structure in Minnesota
As of 2025, Minnesota imposes a graduated estate tax on estates over $3,000,000. Estates are taxed at 13% with estates exceeding $7,100,000 subject to marginal increases up to 16%.
Proposed Changes Under HF 170
HF 170 aims to reduce the existing estate tax rates by 1.6 percentage points annually, starting on July 1, 2025, and continuing each July 1 thereafter until June 30, 2034. This systematic reduction would effectively phase out the estate tax entirely by 2034.
Legislative Progress
Following its introduction, HF 170 was referred to the House Taxes Committee. The bill had its first committee hearing on February 13, 2025. Subsequently, Representatives John Burkel, Isaac Schultz, and Bobbie Harder joined as co-authors on February 13, February 17, and March 3, 2025, respectively.
Implications of the Proposed Phaseout
Proponents of HF 170 argue that phasing out the estate tax could encourage wealth retention within Minnesota, potentially stimulating economic growth and investment. They believe that eliminating the tax might make the state more attractive to high-net-worth individuals who might otherwise relocate to states without such a tax.
Opponents, however, express concerns about the potential loss of state revenue generated by the estate tax. They caution that this could impact funding for essential public services and programs. Additionally, critics argue that the tax primarily affects the wealthiest estates and serves as a tool to reduce wealth inequality.
Next Steps
As HF 170 progresses through the legislative process, it will undergo further scrutiny and debate in committee hearings before potentially advancing to the House floor for a vote. If approved by the House, it would then move to the Minnesota Senate for consideration. Stakeholders and citizens interested in the bill’s progress can track updates and access related documents through the Minnesota House of Representatives’ official website.
The proposed phaseout of the estate tax represents a significant policy shift with far-reaching implications for Minnesota’s fiscal landscape and wealth distribution. As such, it warrants careful consideration and informed discussion among legislators, stakeholders, and the public. You can read more about the specifics of the bill here. It is too early to tell how this will play out, but if you want to keep track of the status of the proposed legislation, you may do so here.
