Don’t Send Minnesota’s Money to Washington

Minnesota small business tax relief, PTE election expiration 2025, Minnesota tax changes 2026, How PTE tax works Minnesota, House File 3127, Minnesota Legislature, Minnesota House of Representatives, PTE Tax, Small Business Minnesota, Minnesota Tax Policy

MN PTE Small Business Tax Update: Urgent Action Needed Before 2026
Lawmakers Need to PASS HF 3127

Pass-through entity tax Minnesota, Minnesota small business tax relief, PTE election expiration 2025, Minnesota tax changes 2026, How PTE tax works Minnesota, House File 3127, Minnesota Legislature, Minnesota House of Representatives, PTE Tax, Small Business Minnesota, Minnesota Tax Policy

The Pass-Through Entity (PTE) election has been a valuable tax-saving tool for Minnesota small businesses. If no action is taken, it will expire after 2025—making immediate legislative action critical.

What Is the PTE Election?

In 2021, the Internal Revenue Service (IRS) allowed small businesses to pay state taxes at the business level instead of individually. Minnesota adopted this option—known as the PTE election—and more than 66,000 business owners have used it to reduce their federal tax burden.

Today, 38 states—including Illinois and California—have implemented similar policies.

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What’s Changing?

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Losing PTE would hit small businesses already recovering from Operation Metro Surge with higher federal tax bills. Some business owners saw local revenue drop by about 85% during the ICE Operation Metro Surge.

Recent federal tax updates have created a disconnect because Minnesota does not automatically conform to federal tax law changes.

  • Minnesota currently follows a fixed conformity date (May 1, 2023).
  • Because of this, the state has determined the PTE election will expire after December 31, 2025.
  • If lawmakers don’t pass HF 3127 this session, the PTE election will not be available starting in 2026.

What This Means for Minnesota Businesses

If the PTE election expires:

  • Businesses may need to restructure how they pay and plan taxes.
  • Estimated tax payments and cash flow planning could be disrupted.
  • Credits for PTE taxes paid to other states may no longer apply.
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What This Means for Minnesota Businesses

If the PTE election expires:

  • Businesses may need to restructure how they pay and plan taxes.
  • Estimated tax payments and cash flow planning could be disrupted.
  • Credits for PTE taxes paid to other states may no longer apply.

Why This Matters

The expiration of the PTE election would have real consequences:

  • Business owners may have to return to paying taxes individually.
  • This could result in higher federal tax liability.
  • The PTE election does not create a new tax—it simply allows full federal deductibility.
  • Small and mid-sized businesses would be impacted the most.
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Urgent Action Is Required
Lawmakers Need to PASS HF 3127

Pass-through entity tax Minnesota, Minnesota small business tax relief, PTE election expiration 2025, Minnesota tax changes 2026, How PTE tax works Minnesota, House File 3127, Minnesota Legislature, Minnesota House of Representatives, PTE Tax, Small Business Minnesota, Minnesota Tax Policy

Without action, Minnesota small businesses will lose a proven tax-saving tool.

  • Lawmakers must update state law during the 2026 legislative session, pass HF 3127.  
  • The PTE election will not be available for 2026 taxes unless extended.
  • Business owners and voters should contact their legislators and demand action now.

Take Action Now

Minnesota has a choice: keep more money in local businesses—or send it to Washington.

Extending the PTE election will provide immediate relief, improve tax fairness, and help businesses reinvest in their employees and communities.

Email Your Legislator Today!

References

Kristel Porter, “A Simple Step to Support Minnesota’s Small Businesses: Pass-Through Entity Tax Election,” MinnPost, April 9, 2026, https://www.minnpost.com/community-voices/2026/04/simple-step-support-minnesotas-small-businesses-pass-through-entity-tax-election/

Daniel Hernandez, “Pass-Through Entity Tax: Minnesota Small Businesses at Risk,” Minnesota Spokesman-Recorder, April 24, 2026, https://spokesman-recorder.com/2026/04/24/pass-through-entity-tax-minnesota-small-business/

Lonnie McQuirter, David Hernandez, and Matt Perry, “Small Businesses Are Strained — This Tax Change Could Help,” Star Tribune, April 17, 2026, https://www.startribune.com/pass-through-entity-pte-tax-election-state-federal-returns/601751252

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