MN SF1636

Corporations with a pay ratio of 15:1 or less between top executives and lowest-paid workers qualify for a reduced corporate franchise tax rate of 5% (compared to the standard rate)

Pay ratio calculated by comparing average hourly compensation of the five highest-paid executives to the average hourly compensation of the lowest-paid 5% of salaried employees, hourly employees, or contractors (whichever is lowest)

Executive compensation includes wages, benefits, and noncash amounts, calculated on an hourly basis assuming 52 weeks and 40 hours per week

Conforming amendments made to research credit calculations and alternative minimum tax provisions to account for the new reduced rate category

Effective for taxable years beginning after December 31, 2025