Minnesota tax return changes for 2026

Before the 2026 session, Minnesota used the Code as amended through May 1, 2023, and the Department warned that 2025 returns might need non-conformity adjustments. Minn. Laws 2026, chapter 128 moved the date to May 1, 2026, conforming to H.R. 1 with some decoupling. Conformity generally takes effect when the federal provision did, and the Department will not adjust filed returns itself.

Tips and overtime are subtracted below the line on Form 1040, so the Department said no Minnesota non-conformity entries were needed for them.

• Bonus depreciation: an 80% addition with one-fifth subtracted in each later year. No addition for qualified production property.
• Section 174A: conformed except for C corporations, which add back 80% and subtract one-quarter over the next four years.
• Net CFC tested income: a 10% QBAI subtraction for tax years beginning after December 31, 2025.

• The PTE tax is extended through tax year 2027 and expires for years beginning after December 31, 2027.
• For 2026, a first-quarter PTE estimate is timely if paid by the second-quarter due date.
• From 2026: charitable deductions only above 1% of the contribution base, employer educational assistance over $5,250 added back, and a dependent care credit separate from the federal credit.

Flag every Minnesota business client with 2025 asset additions or research costs. Minnesota penalties are at /us/penalties/minnesota.