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.

Gov. Tim Walz on Thursday pitched a tighter two-year budget, complete with spending pullbacks and other measures to keep a potential deficit at bay. He also proposed a lower state sales tax rate but called for extending the tax’s reach to financial services.

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.

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's budget proposal would make changes to sales tax collections and trim state spending in an effort to stave off a steep shortfall in future years.

Minnesota Gov. Tim Walz presented his two-year budget proposal, and in it he proposed a cut to sales tax but also proposed to raise the sales tax on certain services. FOX 9's Corin Hoggard has the latest.

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%.