Provider Tax Set to Increase in New Year

December 21, 2023

Beginning January 1, Minnesota physicians will see an increase in their taxes as the MinnesotaCare provider tax increases from 1.6% to 1.8%.  

During the 2019 legislative session, lawmakers voted to reduce the provider tax from 2% to 1.8%. A section of the law allowed the provider tax to drop below 1.8% if the Health Care Access Fund (HCAF) exceeded anticipated expenditures for the previous year. In 2023, the provider tax dropped down from 1.8% in the previous year to 1.6%. However, following a smaller-than-expected surplus in the HCAF going into 2024, more resources are expected to be needed and the tax will increase back to 1.8%. 

The provider tax applies to gross receipts that healthcare providers receive for providing patient services in Minnesota. Taxable entities include physicians, hospitals, surgical centers, other healthcare providers, and wholesale drug distributors.  

The tax is used to fund several programs to address healthcare access, including the MinnesotaCare program, the state healthcare program for Minnesotans with low incomes. The provider tax is the largest single source of funding for the state’s HCAF. 

 

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