Navigating division: The story of the 2026 Minnesota legislative session
Advocacy
Geno Fragnito, MNCPA director of government relations | August/September 2026 Footnote
Editor's note: Updated July 27, 2026
Let me know if you’ve heard this one before: same song, different verse. As was the case in 2025, the 2026 Minnesota legislative session had to navigate divided government to pass any legislation. The Senate held a slim 34-33 split and the House was tied 67-67. With this dynamic, it was challenging for legislators to find much agreement.
Some key issues debated were fraud prevention, healthcare costs and long-term budget stability. Public safety, gun policy and affordability also rose to the top of the monthslong deliberations.
The same divided government that affected whether policy moved forward also affected the MNCPA 2026 legislative agenda, which included:
- PTET election extension
- Federal conformity
- Tax on professional services
- Eliminating double taxation on qualified opportunity zones
- Private letter rulings
- Tax Court decisions binding the Minnesota Department of Revenue
Let’s take a closer look at what did — and didn’t happen — this session.
Pass-Through Entity Tax (PTET) election extension
The PTET election extension was first introduced during the 2025 legislative session, but legislators didn’t act in time, causing the election to expire after tax year 2025. When the 2026 session began, passing an extension was high on the MNCPA legislative agenda and we supported passing the extension before the first quarter estimated taxes were due.
As you likely know, the Senate passed a bill extending PTET and did so before the first estimates were due. The delay was caused by gridlock in the House where the extension was held up and finally passed on the last day of session in May.
Passing the extension for two years is a temporary solution and provides the election through 2027, but we’ll be in the same situation at the end of next year if the Legislature doesn’t make changes during the 2027 session.
The MNCPA will seek to make the PTET election permanent when the session convenes in January 2027.
Federal conformity
Federal conformity is a perennial issue on the MNCPA legislative agenda. As expected, especially after the passing of federal tax reform in 2025, it was topic of conversation during the 2026 session.
This year, legislators moved the date used to determine conformity to May 1, 2026. Because Minnesota doesn’t automatically adopt conformity, this date remains in place until the Legislature changes it again.
A few items included in the tax bill include:
- Immediate expensing of Section 174 for pass-through entities
- Bonus depreciation
- Section 179
The MNCPA supports conformity as one way to reduce compliance and cost burdens for taxpayers to comply.
Tax on professional services
The idea of taxing professional services has been around since at least the early 1990s. Over the years, there have been multiple iterations and attempts with a limited serviced tax passing several years only to be repealed. The 2026 session wasn’t any different. Gov. Tim Walz proposed taxing professional services once again. Fortunately, this legislation did not pass in 2026.
The 2027 Legislature will, at the very least, have more than 40 new members next year. Many of these new members have probably not spent much time thinking about taxing professional services but will learn about it in the first weeks of session.
If you don’t already know your legislator — or who is running — now it the time to familiarize yourself, introduce yourself and help candidates better understand tax policy and the implications that go with changes.
Private letter rulings, Revenue rulings
A clear understanding of how tax law is applied by tax administrators is very important to ensure taxpayers can comply and meet the Minnesota Department of Revenue (DOR) vision of, “Everyone reports, pays, and receives the right amount: no more, no less.”
Clear tax guidance continues to be a concern and will be something for which the MNCPA continues advocating. One administrative option to provide this guidance is a private letter ruling from the DOR. Legislation to create this program in Minnesota was debated in 2026.
Authoritative guidance from tax administrators is an integral part of ensuring taxpayer and tax preparer compliance with tax laws.
This year, the Senate had a version of letter rulings in its omnibus tax bill and was supported by the DOR, but an agreement couldn’t be reached with the House. Nothing was included in the final 2026 tax bill.
Share your thoughts
In the coming months, the MNCPA Legislative Issues Committee will meet to develop an agenda for the 2027 legislative session. MNCPA member input is important to this conversation.
Share your insights and topics on the potential agenda by emailing
govrelations@mncpa.org.
Geno Fragnito is the MNCPA director of government relations. You may reach him at govrelations@mncpa.org
MNCPA ELECTION GUIDE
Learn more about this year’s Minnesota House and Senate candidates in your district by reading the MNCPA Election Guide.
