2025 will be a year of adjustments to new taxes and policies

Happy new year all! I hope you found the opportunity to recharge over the holidays. And I hope to see you at our first big event of the new year, our annual Breakfast With The Mayors on Jan. 21st. This year, Tom Hauser from 5 Eyewitness News, talks 2025 challenges and priorities with St. Paul Mayor Melvin Carter and Minneapolis Mayor Jacob Frey – reserve your seat now. 
​
Looking at 2025, there are several new policies and tax increases that promise to have significant impact, especially on small businesses. Your chamber is facing these as well and like you, we are feeling the pinch. Higher minimum wages, new health insurance mandates, increased unemployment insurance costs and an inflation-adjusted gas tax all took effect Jan. 1st in Minnesota. Business experts say these laws will hit small businesses the most, especially outstate, and they worry about the collective punch of so many changes at once. Which is why I would like to personally invite you to the Politics at the Pub Fundraiser hosted by St. Paul Area Chamber Political Action Committee – Thursday, Jan. 9th. Your involvement is key in helping us elect candidates and advance policies that empower our region and support the business community we all rely on.

This is a good article from the Minnesota Star Tribune, summarizing: As new laws take effect in Minnesota, small businesses say costs will sting. “After a year of inflation and uncertain economic conditions, new Minnesota laws add another layer of expenses that are making some businesses embrace decisions that favor stability over growth.” A business owner is quoted as saying: “business owners are making decisions based on this. From less hiring, to exploring mergers, to other cost-saving measures. Which, by definition, impedes the ability to say yes to new jobs.”

Summary of some new policies taking effect on Jan. 1 include: 

• A gas tax increase – As part of the 2023 legislation tying gas tax rates to inflation, Minnesota’s gas tax will rise by 3.3 cents per gallon. This automatic increase could affect transportation costs for businesses. 
• Salary transparency requirement – Employers with 30 or more employees in Minnesota are now required to include a salary range and a general description of all benefits and other compensation provided in any job posting. 
• PFAS product ban – PFAS are found in hundreds of household products in varying levels, including along supply chains for manufacturers and other businesses. Minnesota has banned the sale of 11 products by 2025, including cookware, ski wax, cosmetics, menstrual products, dental floss, carpets, rugs or fabrics and juvenile products containing PFAS. The Minnesota Pollution Control Agency (MPCA) now has the authority to ban further products through rulemaking. 
• Unemployment insurance (UI) tax rate increase – Minnesota employers have reported an unexpected rise in UI base tax rates, from 0.10% to 0.40%, along with an additional assessment of 5% for 2025. UI tax rates are determined by the Minnesota Department of Employment and Economic Development each year and additional assessments are added when the UI Trust Fund falls below a certain level the preceding year. 
• Minimum wage increase – Minnesota’s minimum wage will adjust to $11.13 per hour, with the same rates now applying to both small and large employers. This is a huge jump for small businesses, who no longer have a designated small business rate which was revoked due to legislation enacted in the 2024 legislative session. 
• Earned Sick and Safe Time (ESST) mandate –  Employers who offer more generous paid time off (PTO) policies need to be aware that the additional PTO must meet the same requirements as the ESST hours, other than the ESST accrual requirements, when it used for an ESST-qualifying purpose. For example, if an employee receives 50 hours of PTO in addition to the minimum requirement of 48 ESST hours per year, the employer must follow the ESST requirements about notice, documentation, anti-retaliation, replacement workers and more for the additional PTO hours when they are used for an ESST-qualifying purpose. Employers must ensure compliance with the updated regulations to avoid penalties.   
• Health insurance mandates – Eleven new health insurance mandates will take effect. Premiums are increasing by as much as 15% for businesses and their employees in 2025, and several health insurers have pointed to new health insurance mandates as a contributing factor to the increases. 

 
As it relates to Saint Paul specifically: minimum wage rates increase in the City and the wage theft ordinance took effect on Jan 1 as well.

And, finally, interested in who’s working from home in Minnesota? Our remote workforce has unique traits that set it apart from the overall working population, find out more in the Fed’s article.

See you in the trenches.
​
B