Shoppers in the Twin Cities seven-county metro paid $677 million in additional sales taxes in 2024 after Minnesota lawmakers approved a 1% hike to fund housing and transportation projects.
The Legislature and Gov. Tim Walz [enacted the tax increase in 2023](https://www.startribune.com/metro-sales-taxes-jumped-oct-1-heres-where-the-money-will-go-housing-and-transit/600309427), when Democrats had full control of state government, as a dedicated source of funding for some of their key priorities. Transportation needs receive 75% of the revenue and affordable housing 25%.
Communities have not received a full year of revenue yet because the proceeds are only distributed twice a year. But money is coming in, and local leaders say it helps them expedite housing and transportation projects that otherwise would have to wait for funding.
How the housing money is used
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The [housing portion of the tax is divided](https://www.revenue.state.mn.us/local-affordable-housing-aid) between metro counties, cities and the state. It is used for emergency rental assistance, to build and preserve affordable housing and, after a modification to the statute in 2024, to operate homeless shelters.
The amount counties and cities receive is based on need, determined by the number of cost-burdened households, which is defined by their rent being more than 30% of their income.
Minnesota is short roughly 100,000 affordable homes for low-income residents, and about half that deficit is in Hennepin and Ramsey counties. Metro county leaders have focused much of the early revenues on helping housing providers repair existing units and stabilize their finances.
Once the existing affordable housing stock is stable, county leaders will turn their efforts to producing new units.