Minnesota OBBBA Conformity: 2025 Amended Return Requirements

Minnesota recently enacted legislation (HF 2438) updating its Internal Revenue Code conformity date to May 1, 2026. As a result, Minnesota now conforms to most provisions of the One Big Beautiful Bill Act (OBBBA). Conformity applies retroactively, and the Minnesota Department of Revenue will not automatically adjust previously filed returns. Therefore, Minnesota returns filed with 2025 nonconformity adjustments should be evaluated for amendment.

Key Considerations

1. Amended returns are required. Minnesota does not allow a catch-up adjustment on a future return. Any conformity-related changes must be reported on an amended 2025 return.
2. Common amendment triggers include:

·         Bonus depreciation

·         IRC §174 research expenditures

·         IRC §179 deductions exceeding prior Minnesota limits

·         IRC §163(j) interest limitation adjustments

3. Pass-through entities. Conformity adjustments flow through to owners on amended Schedules KPI, KPC, or KS.
4. Pass-Through Entity Tax (PTET). Unless PTET is marked as satisfying the owner's Minnesota filing requirement, PTET credit will not change for the entity. Owners claim their refunds on amended individual returns.
5. Composite tax. Composite tax must be recalculated at the entity level. Any resulting refund is issued to the entity.
6. Nonresident withholding tax. Nonresident withholding is not adjusted at the entity level. Owners must amend their Minnesota individual returns to claim any related refund.
7. Corporate and partnership partners. Minnesota did not adopt IRC §174A for corporations. As a result, affected corporate and partnership owners may continue to receive Minnesota Schedule KPCNC addbacks.
8. Filing requirement. Minnesota 2025 amended business returns must currently be paper-filed, while Minnesota 2025 amended individual returns may be e-filed.

Contact our State and Local Tax Team with questions or to learn more.