Which Minnesota industries will benefit from the federal budget act

WASHINGTON, D.C. – In Warroad, executives at Marvin are still studying the provisions of the federal budget bill passed by Congress last week.

The window and door manufacturer last month expanded with a new 400,000-square-foot plant in Kansas City and hope to hire 600 workers there by 2028. That adds to its strong base in northern Minnesota.

“While the ultimate impact this highly complex legislation might have on our business is still unknown,” Marvin President Darrin Peterson said in an email, ”we’re optimistic about changes in tax policies that could allow for increased investments in manufacturing and innovation at Marvin."

Republican messaging around the budget provisions President Donald Trump signed into law on July 4 was laser focused on the removal of tax burdens for major and minor economic players.

Like Marvin, many in Minnesota’s business community have been closely watching the various provisions. Other manufacturers like 3M also pointed to the tax provisions.

The benefits for some industries, though, will not be as friendly. Health care providers are worried about cuts to Medicaid and especially how they would affect rural hospitals.

Here’s a breakdown.

As home to Minneapolis-based Target and Richfield-based Best Buy, Minnesota’s retail sector accounts for roughly a quarter of jobs and the state’s GDP, and retailers see a mixed bag with the new tax law.

Neither Target nor Best Buy has publicly commented on the legislation, but extension of the 2017 tax cuts and deductions for tips, overtime, and auto-loan interest — provisions the National Retail Federation, of which both companies are members, described as “pro-growth” and likely to stimulate consumer spending — are seen as beneficial to the retail sector.

Still, cuts to Medicaid and federal nutrition programs could further weigh on cost-conscious shoppers.

— Carson Hartzog

Minnesota’s electric utilities are still evaluating the Republican law, but the legislation’s quick phase-out of tax credits for wind and solar power will challenge the power sector.

Despite GOP pressure for utilities to rely less on renewable energy, Minnesota electricity providers have to meet the state’s carbon-free standard by 2040 while supplying power to a new crop of energy-hungry data centers. To do that, utilities were banking on billions in tax credits and other benefits from the 2022 Inflation Reduction Act to reduce the cost of building wind and solar on an eye-popping scale.

A potential tax on new wind and solar was removed from the bill before it passed, and existing tax credits for nuclear, geothermal and battery power will remain intact for longer. The nuclear tax credits are critical for Xcel Energy. The company generates roughly a fourth of its electricity in the Upper Midwest at its Monticello and Prairie Island plants.

“Meeting the unprecedented demand for energy in the U.S. to support our growing economy will require a wide range of energy sources and strengthened infrastructure,” said Xcel spokesman Theo Keith. “While we supported a longer-term phase-down of the wind and solar tax credits, we recognize that budgets require compromise, and the provisions of the new law provide a sufficient path for us to continue delivering new, affordable, clean energy to our customers through the end of the decade.”

Others had a less-generous read of the legislation. The changes in the bill will “drive up electricity costs for Minnesotans, inject significant uncertainty into business planning, and not only halt job growth but imperil thousands of existing clean energy jobs statewide,” said Gregg Mast, executive director of Clean Energy Economy Minnesota, an industry trade group.

— Walker Orenstein

As the largest private-employer sector of Minnesota’s economy, and a target for many of Trump’s campaign promises, manufacturing should see a boost from the new law.

Major tax breaks are intended to boost domestic manufacturing. Moreover, companies can fully expense the cost of building a factory between Jan. 19, 2025, and Jan. 1, 2029, and the facility is in service by 2031.

The law also increases the tax credit for U.S. semiconductor manufacturing — the backbone of AI development — from 25% to 35%, for projects in the U.S.

And businesses can now fully write off the cost of equipment and research and development in the first year those expenses occur, reviving and making permanent key provisions from the 2017 Tax Cuts and Jobs Act.

Maplewood-based 3M, manufacturer of everything from Post-It notes to surgical masks, endorsed Trump’s tax law for extending current rates of the foreign-derived intangible income, seen as a boost for driving more U.S. exports.

Over in Medical Alley, the state’s numerous medical device players — from Medtronic and Boston Scientific to Abbott Laboratories — will likely benefit from the continuation of the 2017 tax rate.

The “pro-growth environment that allows America’s medtech industry to maintain its global leadership position going forward,” said Scott Whitaker, president and CEO of AdvaMed, a trade group for the industry.

— Emmy Martin, Brooks Johnson, Victor Stefanescu

Some of the most ballyhooed winners of the 2025 tax law changes are small-business owners, who often file taxes as individuals. Their taxes will now be lower, with the 2017 temporary lower rates made permanent.

The law also increases the expensing cap to $2.5 million, allowing businesses to write off equipment purchases from tractors to software.

— Dee DePass

Several provisions of the bill aim to boost residential and commercial development, which have been hampered by higher interest rates.

The bill extends and expands tax breaks for real estate developers and investors, including “bonus depreciation,” an incentive that allows firms to deduct the cost of some property improvements. It also makes “opportunity zones,” an economic development tool focused on low-income communities, a permanent part of the tax code and expands the low-income housing tax credit, which is used by many developers to build income-restricted housing.

Nick Erickson, senior director of housing policy for Housing First Minnesota and executive director of Housing Affordability Institute, said that despite those provisions, which could stimulate additional home building, he considers the bill a “mixed bag” for builders and developers in the state.

That’s because the new law will scale back or terminate tax deductions and other incentives that now encourage construction of more energy-efficient buildings. He said one of those changes will be especially noticed in Minnesota, which recently adopted legislation that will make the state’s energy code the most aggressive and costly in the nation.

“It will be a step back for people who want to do energy efficiency,” he said, noting that without those incentives, building houses to code, or going beyond, will add to the already high cost of homebuilding. “It’s not going to help builders build more efficiently.”

— Jim Buchta and Katie Galioto

The federal budget reduces funding for the Consumer Financial Protection Bureau, the federal agency born from the 2010 Dodd-Frank Act. The agency’s mission and scope has already seen dramatic transformation under the Trump administration, dismissing lawsuits, easing fines and rolling back dozens of regulatory rules.

— Bill Lukitsch

Medicaid reimburses Minnesota’s health care providers around 70 cents for every dollar of care they provide. But health care providers are expected to lose even more if new restrictions such as work requirements kick more people off Medicaid, a taxpayer-funded health program for disabled and low-income individuals.

Hospitals are obliged to treat patients, whether they have insurance or not, when they show up at emergency rooms, so hospitals absorb the cost of uninsured patients.

Providers will “provide uncompensated care at a time when rural hospitals and physician practices are struggling to keep their doors open,” said Dr. Bobby Mukkamala, president of the American Medical Association, in a statement shortly before the Medicaid cuts were signed into law.

The law tried to soften the financial blows. Physicians will get a 2.5% bump in payments from the federal Medicare program for seniors, but only next year. Rural hospitals can tap into a $50 billion annual rescue fund to maintain operations.

— Jeremy Olson

The new law included some special carve-outs for the agricultural industry.

Most controversially, the bill contained $66 billion in farm programs that are typically funded through the farm bill, which has been stuck in Congress for two years. These include updated crop protections in the farm safety net.

The law also extended a tax credit that’ll boost the nation’s biofuels industry, centered in the corn belt.

Poet, the Sioux Falls, S.D.-based ethanol maker with plants across Minnesota, said continuation of the carve-out will open new foreign markets and boost farm-side income.

“President Trump continues to reassert his support for American farmers and energy independence,” said Joshua Shields, Poet’s senior vice president of corporate affairs.

— Christopher Vondracek