MAS Weekly Legislative Recap Newsletter

February 21, 2025

Regular Legislative Session

The Seventh week of the 2025 Regular Legislative Session has passed. The deadline for making requests for appropriations and revenue bills to be drafted is Monday, February 24, 2025.

** TIP: Text in blue, bold and underlined is hyperlinked.

Senate Finance Committee Passes Senate

Tax Reform Measure

Senate Bill 3095

On Thursday, February 20^th, the Senate Finance Committee passed out Senate Bill 3095. This is the first measure introduced and passed out of a Senate committee that addresses comprehensive tax reform.

The following are the highlights of the bill:

• Section 1: Phasing the income tax to 2.99% by 2030

• Section 2: Phasing the grocery tax down to 5% July 1^st 2025

• Section 3: Removal of grocery tax from Municipal Special Sales Tax

• Section 4: Sales & Use Tax Diversion code sections brought forth

• Sections 5, 6, & 7: Amends the 18 cents excise tax per gallon for fuel from 18 cents to 27 cents by year 2028 for gasoline and special fuels

• Section 8: Conforms the new proposed amendments to reflect the new rate increases for gasoline, diesel fuel, and compressed gas.

• Section 9: Conforms the new proposed amendments to reflect the new rate increases for special fuels and it addresses monthly reporting and remittance.

• Section 10: Identifies the percentage split of the excise tax above 18 cents as the following: 23.25% to Office of State Aid Road Construction; 2.75% to the Strategic Multi Modal Investment Fund; 74% to MDOT.

• Section 11: In this section of the proposed measure, State Aid Road Construction statutory minimum increases from $4 million a month to $8 million a month by 2028.

• Section 12: Addresses the Use Tax Diversion by increasing the diversion from 15% to 21%.
• IMPORTANT NOTE: MAS is still seeking clarity to see if this increase will benefit county government. MAS was informed that this increase was provided to help offset the loss in grocery taxes to municipalities that are purchased online.

• Section 13: Effectiveness: This measure is set to take effect July 1, 2025.

NOTE: Senate Bill 3095 will now head to the Senate Floor Calendar for debate.

Homestead Exemption Reimbursement Measure

Passes Senate Chamber

Senate Bill 3041

On Wednesday, February 19^th the Senate Chamber passed Senate Bill 3041 by a vote of 50 to 0. This measure provides reimbursements to counties, county districts, and municipal separate school districts for tax losses incurred by reason of the exemption of homes from certain ad valorem taxes.

NOTE: Section 7 of this measure provides the homestead reimbursement at $94,000,000.00.

Additional Note: This is a $2 million increase from last year’s appropriation. This measure will now transfer to the House Chamber for consideration. 

*House and Senate will reconvene Monday.

*Copyrights. All rights reserved.

Authors: Steve Gray and Derrick Surrette