MN SF2867

Creates a new fifth income tax bracket for taxable income over $1,667,000 (married filing jointly), $1,000,000 (single), or $1,334,000 (head of household), with the rate to be determined by the Commissioner of Revenue

Tax rate for the fifth tier will be calculated to generate revenue equal to the estimated loss of federal Medicaid funding in fiscal years 2026 and 2027 due to federal policy changes implemented on or after January 20, 2025

Commissioner of Management and Budget must certify the estimated federal Medicaid revenue loss by December 31, 2025, comparing actual funding to amounts anticipated in the governor's budget

Updates income tax bracket thresholds for all filing statuses (approximately 22% increases across brackets) and resets the inflation adjustment base year from 2019 to 2025

Fifth tier bracket thresholds are exempt from annual inflation adjustments; the initial rate set for tax years 2025-2026 remains in effect for subsequent years