Gov. Tim Walz is pitching his first budget under the new Trump era as a counterweight to the incoming president’s threats to impose tariffs, which he says will raise costs on everyday Minnesotans. His plan would lower Minnesota’s sales tax rate for the first time in state history by 0.

Minnesota Gov. Tim Walz called for spending cuts Thursday in a $65.9 billion two-year budget proposal that includes a modest reduction in the overall state sales tax but new taxes on services like legal and financial advice.

Walz wants to shift the tax burden to wealthier Minnesotans, but Republican House leaders say any increases are off the table.

Minnesota Gov. Tim Walz presented his two-year budget proposal on Thursday amid an ongoing power struggle at the Capitol.

He wants to cut the statewide sales tax by 0.075% — which is $0.075 on a $100 purchase — moving it to 8.6% from 8.675%.

In regards to the statewide sales tax, Walz is proposing a .75% reduction to the tax rate alongside provisions to expand the sales tax base to close so-called "loopholes" for service providers, such as bankers and attorneys.

Walz focused on tackling fraud, cutting state spending and long-term fiscal stability in Minnesota’s 2026-27 budget.

Gov. Tim Walz pitched the first sales tax cut in Minnesota history and curbs to state spending on Thursday as he rolled out his latest budget proposal. Why it matters: It's the DFL governor's opening salvo to a deeply divided Legislature,

The state of Minnesota is spending more money than it’s bringing in, and if current trends continue, the state will spend down the current balance as soon as 2027. DFL Gov. Tim Walz wants to address the issue mostly by slowing state spending on disability services,