A bill authored by Senator Carla Nelson (Rochester) to strengthen the State Housing Tax Credit passed the Minnesota Senate Thursday as part of the Senate's broader housing package. The State Housing Tax Credit allows people and businesses in Minnesota to contribute to a fund that helps build or fix up affordable housing. In return, the contributors receive a tax credit. It's administered by the Minnesota Housing Finance Agency. Sen. Nelson was the driving force behind the program when it was created in 2021.

Sen. Nelson’s bill allows the tax credit to be paired with the Workforce Housing Development program, extending financing ability to workforce housing projects in rural Minnesota where shortages are more acute. It also directs Minnesota Housing to make a good-faith effort to distribute assistance proportionally between the metro and the rest of the state.

"What makes the program so great is that it gets private money into housing and lets contributors decide where it goes, whether that's a project in their own backyard or the statewide pool," Sen. Nelson said. "That kind of flexibility is rare, and it's why we've seen the demand for this program take off the way it has. These changes will make a good program better."

"What's been really gratifying is seeing housing advocates from across the aisle come together around this," Sen. Nelson said. "At the end of the day, everybody wants to see their community and our state thrive." 

On the Senate floor, Sen. Nelson offered an amendment to reserve 50% of the program's annual tax credits for housing projects in Greater Minnesota. The amendment ensures that communities across the entire state benefit from the program, not just the Twin Cities metro. The amendment was adopted on a bipartisan voice vote.

In October 2025, the National Council of State Housing Agencies gave Minnesota Housing a Special Achievement Award recognizing the State Housing Tax Credit Program as a successful tool for addressing affordable housing issues.

The Minnesota Housing Partnership, Habitat for Humanity Minnesota, Southwest Minnesota Housing Partnership, CommonBond Communities, and Otter Tail County testified in support of the bill during the committee process.