Minnesota Weighs First-in-Nation Tax on Wealth Above $10 Million

Minnesota lawmakers are weighing legislation imposing what backers say would be the nation’s first true state-level wealth tax—a 1% annual levy on all “taxable wealth” above $10 million.

While several states have pursued special levies on income above certain thresholds, Minnesota’s proposal (HF 4616) would require taxpayers to annually evaluate their taxable assets in a manner similar to calculations for the federal estate tax, and then remit 1% of that total to the state. The legislation defines taxable wealth as all real or personal tangible and intangible property in Minnesota, minus all debts and financial obligations owed by the taxpayer.

The bill was added last week to a list of revenue proposals for consideration in the House Tax Committee’s end-of-session omnibus tax bill. The measure is an effort to modernize the state tax code and respond to emerging methods for wealth creation and retention, sponsor Rep. Aisha Gomez (D) said.

“The government taxes the unrealized gains that happen with people’s real property each year,” Gomez, co-chair of the committee, said in an interview. “But we don’t have similar revenue tools to match the way wealth has accrued over the last three decades, especially when you think about the increased financialization of our economy. So we need to modernize our tools for raising revenue.”

An analysis by the state’s Department of Revenue estimated the program would generate $288 million in fiscal 2027. The department estimated 5,600 Minnesotans would be subject to the tax.

Minnesota has a $3.7 billion surplus for the current two-year budget cycle, but the state’s office of management and budget recently warned of a long-term structural imbalance.

Taxes targeting the uberwealthy have gained traction primarily in Democratic-controlled states in recent years, but the proposals typically tax annual income.

Four years ago, Massachusetts enacted a 4% surtax on annual incomes over $1 million. Last month, Washington enacted a 9.9% levy on incomes over $1 million. Washington’s tax is being challenged in court.

Meanwhile, Maine Gov. Janet Mills (D) is expected to sign a budget bill, LD 2212, that imposes a 2% surtax on income over $1 million.

California voters will be asked to approve a plan during the Nov. 3 elections that comes closest to the wealth tax proposed in Minnesota. The ballot initiative would levy a one-time 5% tax on billioinaires’ accumulated wealth, including businesses, securities, art, collectibles, and intellectual property. Real property and certain retirement accounts would be excluded.

Minnesota House Speaker Lisa Demuth (R) lambasted the wealth proposal in a social media post. Republicans and Democrats share control of the Minnesota House, with each party holding 67 seats.

“House Republicans have said no, we are not raising taxes on Minnesotans anymore,” she said. “We are overtaxed. We need to cut government spending.”

Minnesota’s constitution requires lawmakers to finish their session by the first Monday following the third Saturday in May—May 18 this year. The primary tax code changes are generally pulled into a single omnibus tax measure that the legislature can either approve or reject.