MN Legislative Session: Major Laws, Bonding, and Failed Bills

The Minnesota 2026 legislative session ran from February 17 to May 18 and ended on time with a bipartisan package of bills covering bonding, taxes, housing, a rescue of Hennepin County Medical Center, a new Office of Inspector General, cannabis market changes, social media restrictions for children, and a wide-ranging public safety law. Omnibus bills for environment and energy, children and families, and transportation did not pass.

Governor Tim Walz and legislative leaders announced the end-of-session framework on May 13, with Walz describing it as a plan built around “fiscal sustainability, critical infrastructure, and the health and wellbeing of our communities.”¹ The final deals cleared an evenly split House and a Senate with a one-seat DFL majority.

Why Everything Had to Be Bipartisan

The House sat at 67–67, and the Senate at 34–33. Under a February 2025 power-sharing agreement, no bill could reach the House floor without cooperation from both caucuses, and most committees operated with bipartisan co-chairs and equal partisan representation.² Republican Lisa Demuth served as Speaker for the full session.

The session also followed the June 2025 killings of former House Speaker Melissa Hortman and her husband Mark Hortman, and the shootings of Senator John Hoffman and his wife Yvette Hoffman, by Vance Boelter.³ Boelter pleaded guilty in federal court on June 11, 2026, after prosecutors agreed not to seek the death penalty.⁴ Walz ordered weapons screening at the Capitol, and leaders from both parties publicly pledged to improve the tone of political debate.

Tax Refunds, Vehicle Fees, and Free Filing

The omnibus tax bill (HF2438, Chapter 128) passed the House 126–8 and the Senate 52–15, and Walz signed it on May 27.⁵ Its centerpiece is a one-time increase to the homestead credit refund rate to 14.88 percent, funded by $125 million from the General Fund.⁶

The bill also puts $75 million behind a one-year cut in vehicle registration fees, expands the Dependent Care Tax Credit, increases credits for sustainable aviation fuel, extends the Pass-Through Entity Tax through tax year 2027, and directs the Department of Revenue to build a free electronic filing system for individual income tax returns. It conforms Minnesota’s tax code to Internal Revenue Code changes through May 1, 2026. The net General Fund impact is a reduction of $24.1 million.⁶ A separate $254 million General Fund appropriation backs the registration tax reduction.⁷

A $165 Million Housing Package

The bipartisan housing bill (HF1141, Chapter 100) committed $165 million without drawing on the General Fund. The money came from repurposing unused settlement funds tied to unconstitutional property seizures, reclaiming interest earned on taxpayer dollars held by the Minnesota Housing Finance Agency, and leveraging those sources to secure $100 million in Housing Infrastructure Bonds for affordable construction.⁸ The package directs $40 million in unclaimed Tyler Settlement funds to rental assistance, $4 million to frontline homelessness relief, and $4 million to manufactured home park infrastructure. Sponsors expect up to 2,000 new affordable units.

To win Republican support, the bill added legislative oversight of the Minnesota Housing Finance Agency and a dedicated funding carve-out for Greater Minnesota. A separate Homeowners Association Bill of Rights reformed HOA fines, governance, and enforcement, and limited local government authority to require or regulate HOAs during development approval.⁷ No residential zoning preemption bills passed.

Rescuing HCMC and Codifying Medicaid Changes

The health and human services omnibus (HF4466/SF4612) delivered $205 million in direct stabilization funding for Hennepin County Medical Center and established a reserve account of up to $500 million, available through 2031, for HCMC and other hospitals under similar pressure. HCMC’s financial crisis stemmed from federal Medicaid cuts under the 2025 “One Big Beautiful Bill Act,” the expiration of Affordable Care Act subsidies, and the burden of uncompensated care.⁹ The bill also restructured HCMC governance, creating a new board of 11 to 15 directors, with 70 percent required to have professional expertise in health systems and safety-net hospital governance.¹⁰ It passed the House 108–26 and the Senate 35–32.

The same bill wrote new federal Medicaid rules into state law, including work requirements for adults without children, six-month renewal cycles, new cost-sharing, and a reduction of retroactive coverage from three months to one month. Representative Jeff Backer said noncompliance would put $3.5 billion to $4 billion in annual state funding at risk.¹⁰

A separate human services budget bill (SSHF2), roughly $7 billion for health, human services, children, and family programs, passed the House 73–58 and the Senate 34–33. It included $35 million to upgrade the child welfare information system and $12 million for food insecurity.¹¹

A New Office of Inspector General

SF 856 created a statewide Office of Inspector General, an independent executive branch entity responding to years of fraud scandals in state safety-net programs.¹² The governor appoints the inspector general from candidates vetted by a bipartisan legislative advisory commission, the Senate must confirm by a three-fifths supermajority, and the term is five years. Removal requires cause, a public hearing, and three-fifths approval from both chambers.¹³

The office can investigate fraud and misuse of public funds across executive branch agencies and private entities receiving state money. It has subpoena power and can seek court orders to freeze payments when fraud is suspected. Beginning January 1, 2028, it may appoint peace officers and run an anti-fraud bureau with investigation and arrest authority.¹⁴ The OIG must be fully operational by September 1, 2027.

Cannabis: One Supply Chain, New “Macrobusiness” Licenses

The omnibus cannabis bill (SF4401, Chapter 123) merged Minnesota’s separate medical and adult-use cannabis supply chains. The existing medical combination business license was replaced with a new macrobusiness license, capped at eight statewide. A macrobusiness may cultivate up to 38,000 square feet of indoor canopy (growing to 45,000 over three renewals), operate up to eight retail locations (three in designated high-medical-need areas), and use up to 90,000 pounds of dry-weight equivalent for manufacturing.¹⁵

Most provisions take effect August 1, 2026, with the macrobusiness license structure launching January 1, 2027. The bill lets hemp business license holders obtain cannabis licenses in anticipation of possible federal changes to hemp THC limits, and it expands the Office of Cannabis Management’s enforcement authority, including inspections of unlicensed hemp edible facilities and civil penalties.¹⁶ Walz signed it on May 26.¹⁷ The bill passed the House 92–42 and the Senate 34–33.

Social Media Restrictions for Children Under 16

HF4138 requires parental consent for social media accounts held by children under 16 and imposes new design rules on how platforms treat those accounts. Privacy settings must default to the most restrictive level. Platforms cannot present addictive features such as infinite scrolling, autoplay video, or push notifications to minors, and they cannot target advertising to children.¹⁸ Platforms must estimate user age, and if they cannot reach 90 percent confidence that an account holder is 16 or older, they must treat the user as a child.¹⁹

The bill passed 132–2 in the House and 66–0 in the Senate, and Walz signed it on May 26, 2026.²⁰ It takes effect in July 2027. NetChoice, a trade group representing TikTok, Meta, and others, has signaled a First Amendment challenge.

Public Safety: Firearms, Prediction Markets, and New Felonies

The public safety omnibus (Chapter 97, SF4760) made several criminal justice changes. Courts must prohibit firearm possession for parties under protection orders, and law enforcement must take surrender of firearms upon a finding of imminent risk. Citations in lieu of arrest are now barred for domestic abuse, stalking, and harassment, and a task force will develop a statewide public safety radio system.²¹

The bill also banned prediction markets such as Kalshi and Polymarket, making operation or facilitation of such a market in Minnesota a felony effective August 1, 2026.²² On May 19, the Commodity Futures Trading Commission sued to block the law before its effective date, arguing Congress has given the CFTC exclusive jurisdiction over derivative markets and that the state ban is preempted.²³ CFTC Chairman Michael Selig said the law turned “lawful operators and participants” into felons overnight, and Kalshi likened a single state banning access to a federally regulated exchange to banning the New York Stock Exchange.²⁴

Separate bills increased the penalty for impersonating a peace officer from a misdemeanor to a felony (Chapter 98), criminalized the creation of nonconsensual AI-generated intimate imagery (Chapter 72), added gift card fraud to organized retail theft statutes (Chapter 74), and made it a felony to use threats of sharing intimate images as coercion (Chapter 76).²² Amendments to delay implementation of age-of-delinquency changes and carve out 10-to-12-year-olds who commit violent crimes both failed on 67–67 tie votes.²¹

A $1.2 Billion Bonding Bill

Lawmakers passed a $1.2 billion capital investment bonding bill alongside a $28 million cash capital investment measure. Over $400 million was directed to water and sewer projects, including $345 million for specified city water and sewer work, $137 million for Public Facilities Authority programs, and $15 million for lead line replacement. Transportation received $54 million for city projects, $47 million for local roads, and $25 million for local bridge replacement. Higher education received roughly $150 million, economic development $100 million, dam and river crossing projects $15 million, and flood hazard mitigation grants $9 million.⁷

K-12 Education: One-Time Investments, Future Cuts

The K-12 omnibus (SSHF5) appropriated $25.73 billion for the 2026–27 biennium, passing the House 97–36 and the Senate 35–32.²⁵ One-time investments included $55.6 million in compensatory revenue, $4 million for a special education apprenticeship program, and $1 million for cardiac emergency response plans. The short-call emergency substitute teacher pilot became permanent, allowable epinephrine delivery systems expanded, and high school students may now possess and administer opiate antagonists.

The bill also mandated $420 million in general education cuts for the 2028–29 biennium to address projected shortfalls, cut charter school aid by nearly $20 million and school library aid by $19.62 million, and reduced special education transportation reimbursement from 95 to 90 percent for fiscal year 2027.

Other Notable Laws

The commerce omnibus (Chapter 124) prohibits utilization review organizations from using artificial intelligence as the sole basis for health coverage denials, requiring clinician review. It passed the House 121–13 and the Senate 49–15.²⁶
Minor-league baseball players were exempted from minimum wage requirements, and unemployment insurance for iron miners was extended by 26 weeks.
Line-of-duty death benefits were expanded retroactively to February 2020 to cover certain cancers and communicable illnesses linked to job exposure.
Candidates and elected officials are now prohibited from wagering on their own elections, and candidate street addresses on campaign filings were reclassified as private data.⁷

What Did Not Pass

Omnibus bills for environment and energy and for children and families failed to clear conference committee. No omnibus transportation policy or finance bill was enacted, and proposals for a regulatory framework for autonomous vehicles, regulation of electric-assisted bicycles, and changes to the local cost-share formula for utility relocation during highway construction all stalled.⁷ A bill to give the attorney general enforcement authority over the 340B drug pricing program failed, as did the Office of Cannabis Management’s push to ban disposable vapes. Over 40 bills on artificial intelligence in the workplace were introduced; none passed, and leaders said a dedicated AI subcommittee would take up the issue in 2027.²⁶ No new or modified local sales tax authorizations were enacted, and no residential zoning preemption measures advanced.

Twenty-six House members announced their retirement after the session, setting up substantial turnover in the 2026 elections.²⁷

1
KTTC. Governor Walz, MN Legislative Leaders Reach Agreement Allowing High-Priority Bills to Pass
2
State Legislative Leaders Foundation. Compromise as It Should Be: Minnesota House Power-Sharing Agreement
3
U.S. Department of Justice. Vance Boelter Indicted for Murders of Melissa and Mark Hortman, Shootings of John and Yvette Hoffman
4
The Guardian. Minnesota Man Pleads Guilty to Murder of Melissa Hortman
5
Minnesota Department of Revenue. Tax Law Changes
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Minnesota House of Representatives. Omnibus Tax Bill Headed to Governors Desk
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League of Minnesota Cities. 2026 Legislative Session Overview
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MinnPost. How Minnesota Lawmakers Defied Expectations to Pass Bipartisan Affordable Housing Law
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Star Tribune. Hennepin County Medical Center Financial Crisis
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Minnesota House of Representatives. Health and Human Services Omnibus Passes
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Minnesota House of Representatives. Health, Human Services, Children, and Family Budget Bill
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Minnesota Reformer. Minnesota Legislature Passes Office of Inspector General Bill
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Minnesota House of Representatives. SF 856 Summary
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Minnesota Office of the Revisor of Statutes. SF 856, 11th Engrossment
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Minnesota Office of Cannabis Management. Cannabis Policy Changes 2026
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Minnesota House of Representatives. Omnibus Cannabis Bill
17
MJBizDaily. Minnesota Merges Medical and Adult-Use Cannabis Supply Chains
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Minnesota House of Representatives. Social Media Protections for Children Pass House
19
Minnesota Office of the Revisor of Statutes. HF 4138, 5th Engrossment
20
Minnesota Reformer. Walz Signs Bill Enacting Social Media Guardrails for Minnesota Children
21
Minnesota Intergovernmental Collaborative for Advocacy. 2026 Public Safety Legislation
22
League of Minnesota Cities. Bipartisan Public Safety Package
23
NPR. Minnesota Ban on Prediction Markets
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Governing. Minnesota Becomes First State to Ban Prediction Markets, Triggering Federal Lawsuit
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Minnesota House of Representatives. K-12 Education Budget Bill
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Stinson. 2026 Minnesota Legislature Recap: On Time and On Budget
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Minnesota House of Representatives. 2026 Session Wraps On Time