The 2026 Tax Bill, signed into law May 27, made a number of changes to the state tax code (Minnesota Laws 2026, Chapter 128) bringing potential tax opportunities to many businesses and new planning decisions for others.. Major changes include:

• Minnesota extends pass-through entity tax (PTET) through 2027, retroactive to January 1, 2026, and waives penalties for late Q1 2026 estimated payments.
• Minnesota conforms to federal bonus depreciation, allowing for a 100% bonus deduction for qualifying assets for the year placed in service, subject to Minnesota’s 80% addback.
• For pass-through entities only, Minnesota conforms to the full expensing of Section 174 R&E costs.

Minnesota does not automatically conform to federal tax laws, so the state must intentionally decide whether to adopt those provisions, reject them entirely, or conform only in part. This legislation extends the state’s pass-through entity tax (PTET) election and updates Minnesota’s tax code to match most of the recent federal changes from the One Big Beautiful Bill Act (OBBBA).

These changes may simplify some areas of tax compliance and offer new tax savings opportunities — but selective conformity means careful planning is still needed.  Give one of our tax experts a call at (888) 388-1040 to see how these changes impact your unique situation.