HF 177 Minnesota House · 2025-2026 Regular Session

Refundable construction tax exemption provided for construction of new single-family residential housing for first-time homebuyers.

HF 177 creates a refundable tax exemption for construction materials used in new single-family homes purchased by first-time homebuyers. It exempts taxes on the first $460,000 of construction costs, provided the buyer owns and occupies the home. Buyers pay the tax upfront but receive a refund through the state's tax process. The exemption expires on July 1, 2033, and applies to construction costs incurred after June 30, 2025. This directly benefits first-time homebuyers seeking new single-family housing in Minnesota.

Bill status in committee 1 of 4 stages cleared

Introduction

Feb 2025

Committee Review

Floor Vote

Governor

Introduced Feb 10, 2025 Last action Mar 12, 2025

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What changed between versions

Introduction → 1st Engrossment · 5 edits · Feb 27, 2025

MODERATE

The bill was updated from its introduction to its first engrossment, reflecting amendments that significantly alter the sales tax exemption for new single-family homes. The primary change involves lowering the construction cost threshold for the tax exemption from $460,000 to $165,000 and changing the eligible property type from 'housing' to 'homes'. Additionally, new requirements were added to ensure the homebuyer is both the owner and occupant at completion and that the tax savings directly reduced the purchase price.

Scope change

The scope of the exemption was narrowed by reducing the maximum construction cost eligible for the tax break and specifying that the exemption applies to 'homes' rather than the broader term 'housing'.

FISCAL

The maximum construction cost eligible for the sales tax exemption was reduced from $460,000 to $165,000.

ELIGIBILITY

The term 'housing' was changed to 'homes' to specify the type of property eligible for the exemption.

REQUIREMENT

New criteria require the owner and occupant to be a first-time homebuyer after construction is complete and mandate that the purchase agreement reflect that tax savings reduced the home's price.

ENFORCEMENT

A new requirement was added for the recipient to provide proof to the commissioner that all eligibility criteria were met before receiving a tax refund.

TIMELINE

The expiration date for the exemption remains July 1, 2033, but the commissioner is now explicitly prohibited from issuing refunds after June 30, 2033.

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Full legislative history

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Key actions

Committee

Feb 27, 2025

Lower · Passed

Committee report, to adopt as amended and re-refer to Taxes

lower

Feb 10, 2025

Introduced

Introduction and first reading, referred to Taxes

lower

1 primary · 2 co-sponsors