Additional changes to tax laws under OB3: Newly acquired business equipment. Internal Revenue Code Section 179 was amended to allow for the immediate expensing and deduction of the cost of new business equipment (rather than the previous requirement of depreciation) for equipment with a cost of $2.5 million. Research and Development Expenses. Internal Revenue Code Section 174A was amended to provide for a deduction for research and development expenses retroactive to 2022 for businesses with incomes of 31 million or less. Bonus Depreciation. Internal Revenue Code Section 168(k) was amended to make permanent the 100 percent bonus depreciation election for qualified property acquired and placed in service after January 19, 2025. In summary, the OB3 generally eases the business interest deduction limitation for most businesses by permanently returning to the more generous EBITDA-based calculation of ATI, but it also closes some previous tax planning strategies (like elective capitalization) and introduces new restrictions
for multinational groups. Refer to IRS information:
- Credits and deductions for businesses - Guide to business expense resources
Minnesota Tax Overview • Sole Proprietors report all profits and losses from their business on their personal Minnesota income tax return. • Partnerships, LLCs, S Corporations generally are pass-through entities and profits pass directly to owners and are taxed at Minnesota individual income tax rates. • Corporations are taxed separately from owners. A Corporation determines taxable income and tax before distributing profits. Profits distributed as dividends are then taxable to shareholders. Minnesota Individual Income Tax Rates. The Minnesota individual income tax rates for 2025 are 5.35 percent, 6.80 percent, 7.85 percent, and 9.85 percent depending on income and filing status. Minnesota Corporate (Franchise) Tax Rates The Regular Corporate Franchise Tax rate is 9.8 percent of Minnesota taxable net income. Corporations are also subject to an Alternative Minimum Tax (AMT) based on Minnesota alternative minimum taxable income at the current rate of 5.8 percent. The amount due is the excess of the alternative minimum tax liability over business’ regular franchise liability. If the AMT exceeds the regular tax, the corporation pays the difference as additional AMT. Minnesota Minimum Fee Rates. A graduated minimum fee is imposed on Minnesota entities filing as corporations, S corporations, and partnerships. The fee is indexed annually for inflation.
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