With summer in full swing, most Minnesota contractors are feeling the heat in more ways than one. There are job schedules to meet, crews to manage, and clients to please. And now, following the 2019 Minnesota legislative session, there are new laws to follow—many of which will impact the way contractors do business this season.
To help you stay in compliance, here’s a brief summary of the new laws and legislative changes that will affect contractors the most.
1. Tax relief for businesses
The approved tax bill passed by the legislature included a reduction in the commercial/industrial property tax levy by $77.5 million in fiscal year 2020-21 and $100 million in fiscal year 2022-23, which is expected to reduce the business property tax by 6%. The bill also cut the second-tier rate for personal income taxes from 7.05% to 6.8%. This affects married couples with taxable income between $37,850 and $150,380 as well as single filers with tax income between $25,890 and $85,060.
2. Federal tax conformity
For the most part, Minnesota’s tax code now conforms to the federal Tax Cuts and Jobs Act (TCJA). A few exceptions to this include the 80% add-back on Section 179 expenses; the Minnesota timeframe for the deduction is not as quick as what’s allowed by the federal government. The most significant change tax payers will notice is that the Federal Adjusted Gross Income (FAGI) is now the starting point for Minnesota taxes.
3. Changes to retainage laws
Public and private construction contracts entered into on or after August 1, 2019, must comply with changes to retainage, including an expedited deadline for when it must be released. Public contracting agencies or private owners must release all retainage no later than 60 days after substantial completion. Contractors on public or private construction projects must pay all remaining retainage to subcontractors within 10 days of receiving retainage from the public contracting agency or owner.
4. No changes to statewide workplace mandates
The legislature did not pass any new statewide workplace mandates. Although you may have heard about proposals for a new 0.6% payroll tax to fund a paid leave program and an earned sick and safe time mandate, these were not included in the final bill.
5. New vehicle signage requirements for plumbing contractors
As of August 1, 2019, Minnesota plumbing contractors must follow new rules for vehicle signage. Any vehicle used by a plumbing contractor while performing plumbing work must prominently display the contractor’s name and license number—exactly as it appears on the contractor’s license—on each side of the vehicle.
6. New continuing education requirement for residential contractors
Residential contractors must now devote one of their 14 hours of continuing education to business management strategies applicable to the residential construction business. The total number of required continuing education hours has not changed.
If you have questions about how these new laws and legislative updates could impact your business this summer and throughout the year, please contact us as soon as possible. Many of these new laws go into effect as early as August, so don’t wait to take action.
Contact your PWB advisor today.