Legislative update: Proposed tax on professional services sparks debate
March 3, 2025 | Corey Butler
At Friday’s Legislative Digest Live, Geno Fragnito, MNCPA director of government relations, provided members with updates on several important discussions happening at the Minnesota Capitol.
Watch the entire Legislative Digest Live (requires member login).
Proposed tax on professional services
A major focus of the conversation was Gov. Tim Walz’s proposal to expand the sales tax to include certain professional services, including accounting. Fragnito noted that reactions from legislators have been mixed, with some supporting the idea of broadening the tax base and lowering the overall rate, while others are opposed to raising taxes at all.
The proposed tax on services like audit, bookkeeping, tax preparation and payroll would represent a significant change, though the details remain unclear. Fragnito emphasized that the language includes a disclaimer that the tax could apply to additional services beyond those specifically listed, leaving room for interpretation.
This additional tax would come as proponents say Minnesota has shifted from a goods-based economy to primarily services. As part of this discussion, Walz has proposed decreasing the state sales tax by 0.0075%.
MNCPA legislative priorities
Beyond the tax proposal, the MNCPA has been advocating
other priorities, such as creating
additional pathways to CPA licensure and expanding the state's private letter ruling program to provide businesses with clearer tax guidance. Legislators have expressed support for these initiatives, including at last week’s MNCPA CPA Day at the Capitol.
Other legislative topics
Other topics discussed at Legislative Digest Live were federal conformity, data center tax exemptions and a potential constitutional amendment to automatically return budget surpluses to taxpayers. With the next budget forecast looming, it’s anticipated the legislative landscape will continue to evolve in the coming weeks.
The MNCPA remains engaged at the Capitol, ensuring the accounting profession's voice is heard as lawmakers navigate a busy legislative session. The MNCPA will continue to provide updates to members as these important issues progress.
This recap was produced using artificial intelligence.
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Learn more about this CPA pathways initiative
Do you want to learn more about this effort? You can keep up with the evolving conversation by visiting the MNCPA’s webpage about the broadening pathways to CPA licensure initiative.
VISIT CPA PATHWAYS PAGE
Topics: Legislative & Government Affairs, MNCPA Programs & Activities
Corey Butler
Corey Butler is the MNCPA communications manager, working to enhance the professional reputations of members through content, media relations and public affairs. He's been with the MNCPA since 2013. Corey keeps busy outside of the MNCPA spending time with his wife and children, serving on his local school board, volunteering in his community and catching up on long-lost hobbies. Corey enjoys the works of John Steinbeck and Rankin/Bass Productions, and Paul Bunyan, Robin Hood and Santa Claus lore. You may reach him at 952-885-5530 or cbutler@mncpa.org.
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