VIA FAX
May 1, 1995
TO: TAX COMMITTEE No. 18-95
MINNESOTA MEMBERS
RE: MINNESOTA HOUSE VOTES TO REVOKE TAX EXEMPTION FOR STATE
BONDS
______________________________________________________________________________
The Minnesota House of Representatives has approved legislation that eliminates the exemption
from state income tax for interest earned on bonds issued after June 30, 1995 by the State of Minnesota.
It would not alter the state tax exemption for bonds issued by Minnesota local governments or agencies
and has no effect on any bond's federal tax exemption. Dividends paid by a mutual fund that are
derived from interest on Minnesota state and local bonds would be treated as exempt from state tax only
if 95 percent of the dividend is derived from interest on Minnesota local bonds and bonds issued by the
state before July 1, 1995.
Attached is the relevant portion of the legislation, which is an amendment to an Omnibus Tax
Bill. The Omnibus Tax Bill will now be considered by a conference committee that will attempt to
reconcile differences between the House passed version and the version approved by the Minnesota
Senate, which does not contain any provisions effecting state or local bonds.
We will keep you informed of developments.
Peter J. Cinquegrani
Assistant Counsel - Tax
Attachment