Governor’s omnibus tax bill: HF 2437 / SF 2374
Why it Matters: As a part of the MN Governors budget proposal for Fiscal Years 2026-27, there was included expansion of state sales tax to more services. The proposal would make the following services taxable when purchased by a person other than a trade or business: Accounting services, banking and brokerage services, and legal services.
MNR’s Advocacy: As soon as the Governor’s proposal was released in January, MNR’s advocacy team began working to determine if, and to what extent, it would impact real estate commissions or fees. When the details of the proposal became available with the introduction of the Governor’s omnibus tax bill on March 10, it appeared that real estate commissions and fees were not included in the proposal. However, MNR’s advocacy team contacted staff at the Minnesota Department of Revenue to confirm our interpretation of the bill language and received that confirmation in mid-March.
While it was good news that real estate commissions and fees were not included in the Governor’s proposal, some services from impacted industries would still increase housing Costs. Therefore, MNR joined a coalition that included the Minnesota Chamber of Commerce, the Minnesota State Bar Association, the Minnesota Business Partnership, the National Federation of Independent Businesses, the Minnesota Bankers Association, the Minnesota CPAs, and others, to submit written testimony sharing serious concerns regarding the sales tax proposal.
Specifically related to home purchase services, MNR contributed the following to the coalition letter, “Minnesota should be focused on reducing the cost of homeownership. However, applying the sales tax to more services will do the opposite. The list of services in the Governor’s proposal that would be newly subject to the sales tax includes “loan servicing” and “title search.” Taxing those services will increase the cost of purchasing a home, adding to the affordability challenges Minnesotans, particularly first-time homebuyers and low- and moderate-income households, are already facing in the current market.”
In addition to the coalition testimony, MNR’s advocacy team shared our concerns with key legislators and committee staff.
Result: The Governor’s expansion of the sales tax to more services did NOT pass.
Modifying the community-based first-generation homebuyers down payment assistance program
HF 999-Rep. Esther Agbaje-DFL
SF 1610-Sen. Clare Oumou Verbeten-DFL
Session Law Chapter 32 (Article 1, Section 2, Subdivision 19; Article 3, Sections 9 and 11)
Why it Matters: This bill allotted $2 million for the community-based first-generation homebuyers downpayment assistance program in the Fiscal Year 2026. In addition to the appropriation, the omnibus housing budget bill also:
MNR’s Advocacy: Securing funding for this program was on MNR’s2025 Legislative Session Agenda. MNR’s work on this issue dates to 2020, when MNR and the Minnesota Homeownership Center partnered to launch the Minnesota Down Payment Assistance Research Project.
During the 2025 Session, MNR testified several times in support of community-based first-generation homebuyers down payment assistance. In our testimony, MNR emphasized how this program helps individuals from low- and moderate-income households and communities of color become homeowners by providing the necessary capital for a down payment.
MNR testimony emphasized, among other key features, how MNR’s housing market data demonstrates the need for this program, highlighting that MNR’s Housing Affordability Index was 93 at the end of 2024,which means that “a median income household is only making 93% of what it takes to qualify for a mortgage on a median priced home.”
The funding for this program opens the door to homeownership opportunities for more Minnesotans. For more information, go to www.firstgendpa.org.
Result: This bill was included in SF 2298, passed, and is effective July 1, 2025.
Establishing a task force on homeowners and commercial property insurance
HF 2228-Rep. Elkins-DFL
SF 2205-Sen. Port-DFL
Special Session Law Chapter 4 (Article 3, Section 20)
Why it Matters: This bill creates a task force that must identify recommendations to strengthen and stabilize the homeowners and commercial property insurance industry.
MNR’s Advocacy: MNR testified in support of the bill in committee stating, “Over the past couple of years, we have been hearing from more of our members about the challenge that rising insurance costs, and in the case of HOAs, availability of insurance, is having on the housing market and those trying to get into Homeownership.”
MNR’s testimony went on to say, “While the overall cost of housing due to limited supply and higher mortgage rates are often cited first when discussing housing market challenges, the rising cost of insurance and increases in property taxes are also contributing to the growing financial pressure on homeownership.”
Result: This bill was included in the special session commerce budget bill, passed, and was signed into law with an effective date of June 15, 2025.