Legislature ends 2026 session with deals on taxes, fraud, infrastructure

Audio By Carbonatix

(The Center Square) – Minnesota lawmakers wrapped up the 2026 legislative session on time Sunday night, advancing bipartisan measures on tax relief, anti-fraud reforms and infrastructure spending.

The session marked the first time this decade lawmakers completed their work by the constitutional deadline. Leaders from both caucuses pointed to bipartisan cooperation in the tied House as key to the negotiations.

“This biennium is an absolute win for Minnesotans,” House Speaker Lisa Demuth, R-Cold Spring, said in a statement after adjournment. “With the House Republican wins this year, Minnesotans will see real relief in their property taxes and car tab fees, they’ll see spending on state government go down, and they’ll see real action against fraudsters stealing from the people who need our help the most.”

Republican Floor Leader Harry Niska, R-Ramsey, seconded that sentiment.

“Despite holding just one-half of one-third of state government, Republicans stopped billions in proposed tax increases, delivered property tax and car tab relief, advanced anti-fraud measures, and invested in school safety and public infrastructure,” he said.

Democrats also highlighted the bipartisan nature of the session.

House DFL Leader Zack Stephenson, DFL-Coon Rapids, said the session was emotionally difficult following last year’s assassination of former House Speaker Melissa Hortman, the shooting at Annunciation Church and School and Operation Metro Surge.

“The best tribute to Melissa Hortman is getting our work done and getting it done on time,” Stephenson said.

In the final hours of the legislative session, a number of key pieces of legislation were passed, including a roughly $705 million package to stabilize Hennepin Healthcare and Hennepin County Medical Center, Minnesota’s primary trauma center and hospital.

The bill includes $205 million in direct stabilization funding and establishes a reserve account of up to $500 million that hospitals dealing with uncompensated care costs could access through 2031.

In the wake of ongoing controversy over “widespread” fraud throughout the state, lawmakers also approved the creation of an independent Office of Inspector General and expanded anti-fraud enforcement powers for state agencies.

Another fraud bill that was passed would permanently allow state agencies to withhold payments to individuals or organizations suspected of fraud based on a “credible allegation” verified by the agency.

“This is a commonsense, good government bill to improve process and protections while adding critical tools in the toolbox to prevent the misuse of state funds and prevent fraud,” said Rep. Kristin Bahner, DFL-Maple Grove.

A major tax package was also approved in the final hours of session, which included a one-time increase in homestead property tax refunds to 14.88%. That will lower the state's potential tax revenue by approximately $125 million.

Other tax provisions that were past included:

• Temporary reductions in the vehicle registration tax

• Expanded dependent care credits

• A free direct tax filing system

The legislature also passed a $1.24 billion bonding bill funding infrastructure projects statewide. Major investments include $420 million for water infrastructure, $177 million for transportation projects and $75 million for the University of Minnesota.

Rep. Mary Franson, R-Alexandria, called the bonding package an important compromise.

“It’s not a Republican bill; it’s not a Democrat bill. It’s a bill that benefits the entire state,” Franson said. "Let us rejoice and be glad that we have a bonding bill in front of us."

Additional legislation passed addressed education, housing, public safety, cannabis regulation and commerce.

Here are some of the notable highlights:

• $165 million for housing programs, including $100 million in housing infrastructure bonds and $40 million for homelessness prevention assistance

• New age-verification requirements for social media users under 16

• Bans on virtual currency kiosks and predictive event wagering platforms such as Kalshi and Polymarket

Despite some bipartisan agreements, other priorities for both parties failed to advance.

Democrats sought additional new gun restrictions, while Republicans were hopeful that additional anti-fraud legislation would be passed.