Bill Text: MN SF1545 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Income tax rate schedules for individuals, estates, and trusts provisions modifications
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Introduced - Dead) 2012-01-26 - Referred to Taxes [SF1545 Detail]
Download: Minnesota-2011-SF1545-Introduced.html
1.2relating to taxation; income; modifying rates for individuals, estates, and trusts;
1.3amending Minnesota Statutes 2010, section 290.06, subdivision 2d; Minnesota
1.4Statutes 2011 Supplement, sections 289A.08, subdivision 7; 290.01, subdivisions
1.519, 19a, 19b; 290.06, subdivision 2c.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2011 Supplement, section 289A.08, subdivision 7,
1.8is amended to read:
1.9 Subd. 7. Composite income tax returns for nonresident partners, shareholders,
1.10and beneficiaries. (a) The commissioner may allow a partnership with nonresident
1.11partners to file a composite return and to pay the tax on behalf of nonresident partners who
1.12have no other Minnesota source income. This composite return must include the names,
1.13addresses, Social Security numbers, income allocation, and tax liability for the nonresident
1.14partners electing to be covered by the composite return.
1.15(b) The computation of a partner's tax liability must be determined by multiplying
1.16the income allocated to that partner by thehighest rate used to determine the tax liability
1.17for individuals under section290.06, subdivision 2c . Nonbusiness deductions, standard
1.18deductions, or personal exemptions are not allowed.
1.19(c) The partnership must submit a request to use this composite return filing method
1.20for nonresident partners. The requesting partnership must file a composite return in the
1.21form prescribed by the commissioner of revenue. The filing of a composite return is
1.22considered a request to use the composite return filing method.
1.23(d) The electing partner must not have any Minnesota source income other than
1.24the income from the partnership and other electing partnerships. If it is determined that
1.25the electing partner has other Minnesota source income, the inclusion of the income
2.1and tax liability for that partner under this provision will not constitute a return to
2.2satisfy the requirements of subdivision 1. The tax paid for the individual as part of the
2.3composite return is allowed as a payment of the tax by the individual on the date on
2.4which the composite return payment was made. If the electing nonresident partner has no
2.5other Minnesota source income, filing of the composite return is a return for purposes of
2.6subdivision 1.
2.7(e) This subdivision does not negate the requirement that an individual pay estimated
2.8tax if the individual's liability would exceed the requirements set forth in section289A.25 .
2.9The individual's liability to pay estimated tax is, however, satisfied when the partnership
2.10pays composite estimated tax in the manner prescribed in section289A.25 .
2.11(f) If an electing partner's share of the partnership's gross income from Minnesota
2.12sources is less than the filing requirements for a nonresident under this subdivision, the tax
2.13liability is zero. However, a statement showing the partner's share of gross income must
2.14be included as part of the composite return.
2.15(g) The election provided in this subdivision is only available to a partner who has
2.16no other Minnesota source income and who is either (1) a full-year nonresident individual
2.17or (2) a trust or estate that does not claim a deduction under either section 651 or 661 of
2.18the Internal Revenue Code.
2.19(h) A corporation defined in section290.9725 and its nonresident shareholders may
2.20make an election under this paragraph. The provisions covering the partnership apply to
2.21the corporation and the provisions applying to the partner apply to the shareholder.
2.22(i) Estates and trusts distributing current income only and the nonresident individual
2.23beneficiaries of the estates or trusts may make an election under this paragraph. The
2.24provisions covering the partnership apply to the estate or trust. The provisions applying to
2.25the partner apply to the beneficiary.
2.26(j) For the purposes of this subdivision, "income" means the partner's share of
2.27federal adjusted gross income from the partnership modified by the additions provided
2.28in section290.01, subdivision 19a , clauses (6) to (10), and the subtractions provided in:
2.29(i) section290.01, subdivision 19b , clause (8), to the extent the amount is assignable or
2.30allocable to Minnesota under section290.17 ; and (ii) section
290.01, subdivision 19b ,
2.31clause (13). The subtraction allowed under section290.01, subdivision 19b , clause (8), is
2.32only allowed on the composite tax computation to the extent the electing partner would
2.33have been allowed the subtraction.
2.34EFFECTIVE DATE.This section is effective for taxable years beginning after
2.35December 31, 2011.
3.1 Sec. 2. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19, is
3.2amended to read:
3.3 Subd. 19. Net income. For purposes of this subdivision, "Internal Revenue Code"
3.4means the Internal Revenue Code of 1986, as amended through the date named in this
3.5subdivision.
3.6 For all but individuals, the term "net income" means the federal taxable income,
3.7as defined in section 63 of the Internal Revenue Codeof 1986, as amended through the
3.8date named in this subdivision, incorporating the federal effective dates of changes to the
3.9Internal Revenue Code and any elections made by the taxpayer in accordance with the
3.10Internal Revenue Code in determining federal taxable income for federal income tax
3.11purposes, and with the modifications provided in subdivisions 19a to 19f.
3.12For individuals, the term "net income" means the federal taxable income, as defined
3.13in section 63 of the Internal Revenue Code, incorporating the federal effective dates
3.14of changes to the Internal Revenue Code and any elections made by the taxpayer in
3.15accordance with the Internal Revenue Code in determining federal taxable income for
3.16federal income tax purposes, plus the amount of the standard deduction or itemized
3.17deduction used in determining federal taxable income for federal income tax purposes,
3.18and with the modifications provided in subdivisions 19a to 19f.
3.19 In the case of a regulated investment company or a fund thereof, as defined in section
3.20851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
3.21company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
3.22except that:
3.23 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
3.24Revenue Code does not apply;
3.25 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
3.26Revenue Code must be applied by allowing a deduction for capital gain dividends and
3.27exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
3.28Revenue Code; and
3.29 (3) the deduction for dividends paid must also be applied in the amount of any
3.30undistributed capital gains which the regulated investment company elects to have treated
3.31as provided in section 852(b)(3)(D) of the Internal Revenue Code.
3.32 The net income of a real estate investment trust as defined and limited by section
3.33856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
3.34taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
4.1 The net income of a designated settlement fund as defined in section 468B(d) of
4.2the Internal Revenue Code means the gross income as defined in section 468B(b) of the
4.3Internal Revenue Code.
4.4 The Internal Revenue Code of 1986, as amended through April 14, 2011, shall be
4.5in effect for taxable years beginning after December 31, 1996. The provisions of the
4.6act of January 22, 2010, Public Law 111-126, to accelerate the benefits for charitable
4.7cash contributions for the relief of victims of the Haitian earthquake, are effective at the
4.8same time they became effective for federal purposes and apply to the subtraction under
4.9subdivision 19b, clause (6). The provisions of title II, section 2112, of the act of September
4.1027, 2010, Public Law 111-240, rollovers from elective deferral plans to designated Roth
4.11accounts, are effective at the same time they became effective for federal purposes and
4.12taxable rollovers are included in net income at the same time they are included in gross
4.13income for federal purposes.
4.14 Except as otherwise provided, references to the Internal Revenue Code in
4.15subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
4.16the applicable year.
4.17EFFECTIVE DATE.This section is effective for taxable years beginning after
4.18December 31, 2011.
4.19 Sec. 3. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19a, is
4.20amended to read:
4.21 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
4.22trusts, there shall be added to federal taxable income:
4.23 (1)(i) interest income on obligations of any state other than Minnesota or a political
4.24or governmental subdivision, municipality, or governmental agency or instrumentality
4.25of any state other than Minnesota exempt from federal income taxes under the Internal
4.26Revenue Code or any other federal statute; and
4.27 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
4.28Code, except:
4.29(A) the portion of the exempt-interest dividends exempt from state taxation under
4.30the laws of the United States; and
4.31(B) the portion of the exempt-interest dividends derived from interest income
4.32on obligations of the state of Minnesota or its political or governmental subdivisions,
4.33municipalities, governmental agencies or instrumentalities, but only if the portion of the
4.34exempt-interest dividends from such Minnesota sources paid to all shareholders represents
4.3595 percent or more of the exempt-interest dividends, including any dividends exempt
5.1under subitem (A), that are paid by the regulated investment company as defined in section
5.2851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
5.3defined in section 851(g) of the Internal Revenue Code, making the payment; and
5.4 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
5.5government described in section 7871(c) of the Internal Revenue Code shall be treated as
5.6interest income on obligations of the state in which the tribe is located;
5.7 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
5.8accrued within the taxable year under this chapter and the amount of taxes based on net
5.9income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
5.10or to any province or territory of Canada, to the extent allowed as a deduction under
5.11section 63(d) of the Internal Revenue Code, but the addition may not be more than the
5.12amount by which the itemized deductions as allowed under section 63(d) of the Internal
5.13Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
5.14the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
5.15and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
5.16required under clause (21) if the taxpayer had claimed the standard deduction. For the
5.17purpose of this paragraph, the disallowance of itemized deductions under section 68 of
5.18the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
5.19taxes are the last itemized deductions disallowed;
5.20 (3) the capital gain amount of a lump-sum distribution to which the special tax under
5.21section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
5.22 (4) the amount of income taxes paid or accrued within the taxable year under this
5.23chapter and taxes based on net income paid to any other state or any province or territory
5.24of Canada, to the extent allowed as a deduction in determining federal adjusted gross
5.25income. For the purpose of this paragraph, income taxes do not include the taxes imposed
5.26by sections290.0922, subdivision 1 , paragraph (b),
290.9727 ,
290.9728 , and
290.9729 ;
5.27 (5) the amount of expense, interest, or taxes disallowed pursuant to section290.10
5.28other than expenses or interest used in computing net interest income for the subtraction
5.29allowed under subdivision 19b, clause (1);
5.30 (6) the amount of a partner's pro rata share of net income which does not flow
5.31through to the partner because the partnership elected to pay the tax on the income under
5.32section 6242(a)(2) of the Internal Revenue Code;
5.33 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
5.34Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
5.35in the taxable year generates a deduction for depreciation under section 168(k) and the
5.36activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
6.1the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
6.2limited to excess of the depreciation claimed by the activity under section 168(k) over the
6.3amount of the loss from the activity that is not allowed in the taxable year. In succeeding
6.4taxable years when the losses not allowed in the taxable year are allowed, the depreciation
6.5under section 168(k) is allowed;
6.6 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
6.7Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
6.8Revenue Code of 1986, as amended through December 31, 2003;
6.9 (9) to the extent deducted in computing federal taxable income, the amount of the
6.10deduction allowable under section 199 of the Internal Revenue Code;
6.11 (10) for taxable years beginning before January 1, 2013, the exclusion allowed
6.12under section 139A of the Internal Revenue Code for federal subsidies for prescription
6.13drug plans;
6.14(11) the amount of expenses disallowed under section 290.10, subdivision 2;
6.15 (12) for taxable years beginning before January 1, 2010, the amount deducted for
6.16qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
6.17the extent deducted from gross income;
6.18 (13) for taxable years beginning before January 1, 2010, the amount deducted for
6.19certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
6.20of the Internal Revenue Code, to the extent deducted from gross income;
6.21(14) the additional standard deduction for property taxes payable that is allowable
6.22under section 63(c)(1)(C) of the Internal Revenue Code;
6.23(15) the additional standard deduction for qualified motor vehicle sales taxes
6.24allowable under section 63(c)(1)(E) of the Internal Revenue Code;
6.25(16) discharge of indebtedness income resulting from reacquisition of business
6.26indebtedness and deferred under section 108(i) of the Internal Revenue Code;
6.27(17) the amount of unemployment compensation exempt from tax under section
6.2885(c) of the Internal Revenue Code;
6.29(18) changes to federal taxable income attributable to a net operating loss that the
6.30taxpayer elected to carry back for more than two years for federal purposes but for which
6.31the losses can be carried back for only two years under section290.095, subdivision
6.3211, paragraph (c);
6.33(19) to the extent included in the computation of federal taxable income in taxable
6.34years beginning after December 31, 2010, and before January 1, 2012, the amount of
6.35disallowed itemized deductions, but the amount of disallowed itemized deductions plus
6.36the addition required under clause (2) may not be more than the amount by which the
7.1itemized deductions as allowed under section 63(d) of the Internal Revenue Code exceeds
7.2the amount of the standard deduction as defined in section 63(c) of the Internal Revenue
7.3Code, disregarding the amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the
7.4Internal Revenue Code, and reduced by any addition that would have been required under
7.5clause (21) if the taxpayer had claimed the standard deduction:
7.6(i) the amount of disallowed itemized deductions is equal to the lesser of:
7.7(A) three percent of the excess of the taxpayer's federal adjusted gross income
7.8over the applicable amount; or
7.9(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
7.10taxpayer under the Internal Revenue Code for the taxable year;
7.11(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
7.12married individual filing a separate return. Each dollar amount shall be increased by
7.13an amount equal to:
7.14(A) such dollar amount, multiplied by
7.15(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
7.16Revenue Code for the calendar year in which the taxable year begins, by substituting
7.17"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
7.18(iii) the term "itemized deductions" does not include:
7.19(A) the deduction for medical expenses under section 213 of the Internal Revenue
7.20Code;
7.21(B) any deduction for investment interest as defined in section 163(d) of the Internal
7.22Revenue Code; and
7.23(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
7.24theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
7.25Code or for losses described in section 165(d) of the Internal Revenue Code;
7.26(20) to the extent included in federal taxable income in taxable years beginning after
7.27December 31, 2010, the amount of disallowed personal exemptions for taxpayers with
7.28federal adjusted gross income over the threshold amount:
7.29(i) the disallowed personal exemption amount is equal to the dollar amount of the
7.30personal exemptions claimed by the taxpayer in the computation of federal taxable income
7.31multiplied by the applicable percentage;
7.32(ii) "applicable percentage" means two percentage points for each $2,500 (or
7.33fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
7.34year exceeds the threshold amount. In the case of a married individual filing a separate
7.35return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
7.36no event shall the applicable percentage exceed 100 percent;
8.1(iii) the term "threshold amount" means:
8.2(A) $150,000 in the case of a joint return or a surviving spouse;
8.3(B) $125,000 in the case of a head of a household;
8.4(C) $100,000 in the case of an individual who is not married and who is not a
8.5surviving spouse or head of a household; and
8.6(D) $75,000 in the case of a married individual filing a separate return; and
8.7(iv) the thresholds shall be increased by an amount equal to:
8.8(A) such dollar amount, multiplied by
8.9(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
8.10Revenue Code for the calendar year in which the taxable year begins, by substituting
8.11"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
8.12(21) to the extent deducted in the computation of federal taxable income, for taxable
8.13years beginning after December 31, 2010, and before January 1,2013 2012, the difference
8.14between the standard deduction allowed under section 63(c) of the Internal Revenue Code
8.15and the standard deduction allowed for 2011and 2012 under the Internal Revenue Code
8.16as amended through December 1, 2010.
8.17 Sec. 4. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19b, is
8.18amended to read:
8.19 Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
8.20and trusts, there shall be subtracted from federal taxable income:
8.21 (1) net interest income on obligations of any authority, commission, or
8.22instrumentality of the United States to the extent includable in taxable income for federal
8.23income tax purposes but exempt from state income tax under the laws of the United States;
8.24 (2) if included in federal taxable income, the amount of any overpayment of income
8.25tax to Minnesota or to any other state, for any previous taxable year, whether the amount
8.26is received as a refund or as a credit to another taxable year's income tax liability;
8.27 (3) the amount paid to others, less the amount used to claim the credit allowed under
8.28section290.0674 , not to exceed $1,625 for each qualifying child in grades kindergarten
8.29to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
8.30transportation of each qualifying child in attending an elementary or secondary school
8.31situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
8.32resident of this state may legally fulfill the state's compulsory attendance laws, which
8.33is not operated for profit, and which adheres to the provisions of the Civil Rights Act
8.34of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
8.35tuition as defined in section290.0674, subdivision 1 , clause (1). As used in this clause,
9.1"textbooks" includes books and other instructional materials and equipment purchased
9.2or leased for use in elementary and secondary schools in teaching only those subjects
9.3legally and commonly taught in public elementary and secondary schools in this state.
9.4Equipment expenses qualifying for deduction includes expenses as defined and limited in
9.5section290.0674, subdivision 1 , clause (3). "Textbooks" does not include instructional
9.6books and materials used in the teaching of religious tenets, doctrines, or worship, the
9.7purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
9.8or materials for, or transportation to, extracurricular activities including sporting events,
9.9musical or dramatic events, speech activities, driver's education, or similar programs. No
9.10deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
9.11the qualifying child's vehicle to provide such transportation for a qualifying child. For
9.12purposes of the subtraction provided by this clause, "qualifying child" has the meaning
9.13given in section 32(c)(3) of the Internal Revenue Code;
9.14 (4) income as provided under section290.0802 ;
9.15 (5) to the extent included in federal adjusted gross income, income realized on
9.16disposition of property exempt from tax under section290.491 ;
9.17 (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
9.18of the Internal Revenue Code in determining federal taxable income by an individual
9.19who does not itemize deductions for federal income tax purposes for the taxable year, an
9.20amount equal to 50 percent of the excess of charitable contributions over $500 allowable
9.21as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
9.22under the provisions of Public Law 109-1 and Public Law 111-126;
9.23 (7) for individuals who are allowed a federal foreign tax credit for taxes that do not
9.24qualify for a credit under section290.06, subdivision 22 , an amount equal to the carryover
9.25of subnational foreign taxes for the taxable year, but not to exceed the total subnational
9.26foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
9.27"federal foreign tax credit" means the credit allowed under section 27 of the Internal
9.28Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
9.29under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
9.30the extent they exceed the federal foreign tax credit;
9.31 (8) in each of the five tax years immediately following the tax year in which an
9.32addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
9.33of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
9.34of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
9.35the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
9.36subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
10.1positive value of any net operating loss under section 172 of the Internal Revenue Code
10.2generated for the tax year of the addition. The resulting delayed depreciation cannot be
10.3less than zero;
10.4 (9) job opportunity building zone income as provided under section469.316 ;
10.5 (10) to the extent included in federal taxable income, the amount of compensation
10.6paid to members of the Minnesota National Guard or other reserve components of the
10.7United States military for active service, excluding compensation for services performed
10.8under the Active Guard Reserve (AGR) program. For purposes of this clause, "active
10.9service" means (i) state active service as defined in section190.05, subdivision 5a , clause
10.10(1); or (ii) federally funded state active service as defined in section190.05, subdivision
10.115b , but "active service" excludes service performed in accordance with section
190.08,
10.12subdivision 3 ;
10.13 (11) to the extent included in federal taxable income, the amount of compensation
10.14paid to Minnesota residents who are members of the armed forces of the United States
10.15or United Nations for active duty performed under United States Code, title 10; or the
10.16authority of the United Nations;
10.17 (12) an amount, not to exceed $10,000, equal to qualified expenses related to a
10.18qualified donor's donation, while living, of one or more of the qualified donor's organs
10.19to another person for human organ transplantation. For purposes of this clause, "organ"
10.20means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
10.21"human organ transplantation" means the medical procedure by which transfer of a human
10.22organ is made from the body of one person to the body of another person; "qualified
10.23expenses" means unreimbursed expenses for both the individual and the qualified donor
10.24for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
10.25may be subtracted under this clause only once; and "qualified donor" means the individual
10.26or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
10.27individual may claim the subtraction in this clause for each instance of organ donation for
10.28transplantation during the taxable year in which the qualified expenses occur;
10.29 (13) in each of the five tax years immediately following the tax year in which an
10.30addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
10.31shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
10.32addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
10.33case of a shareholder of a corporation that is an S corporation, minus the positive value of
10.34any net operating loss under section 172 of the Internal Revenue Code generated for the
10.35tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
10.36subtraction is not allowed under this clause;
11.1 (14) to the extent included in the federal taxable income of a nonresident of
11.2Minnesota, compensation paid to a service member as defined in United States Code, title
11.310, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief
11.4Act, Public Law 108-189, section 101(2);
11.5 (15) international economic development zone income as provided under section
11.6469.325
;
11.7 (16) to the extent included in federal taxable income, the amount of national service
11.8educational awards received from the National Service Trust under United States Code,
11.9title 42, sections 12601 to 12604, for service in an approved Americorps National Service
11.10program;
11.11(17) to the extent included in federal taxable income, discharge of indebtedness
11.12income resulting from reacquisition of business indebtedness included in federal taxable
11.13income under section 108(i) of the Internal Revenue Code. This subtraction applies only
11.14to the extent that the income was included in net income in a prior year as a result of the
11.15addition under section290.01, subdivision 19a , clause (16); and
11.16(18) the amount of the net operating loss allowed under section290.095, subdivision
11.1711, paragraph (c);
11.18(19) for individuals who itemize deductions for purposes of determining federal
11.19taxable income, the amount equal to the charitable contribution deduction as defined under
11.20section 170 of the Internal Revenue Code;
11.21(20) for individuals who itemize deductions for purposes of determining federal
11.22taxable income, the amount equal to the home mortgage interest deduction as defined
11.23under section 163 of the Internal Revenue Code; and
11.24(21) $30,000 for married individuals filing joint returns; $15,000 for married
11.25individuals filing separate returns; $20,530 for unmarried individuals; and $25,260 for
11.26unmarried individuals qualifying as head of household as defined in section 2(b) of the
11.27Internal Revenue Code.
11.28EFFECTIVE DATE.This section is effective for taxable years beginning after
11.29December 31, 2011.
11.30 Sec. 5. Minnesota Statutes 2011 Supplement, section 290.06, subdivision 2c, is
11.31amended to read:
11.32 Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
11.33taxes imposed by this chapter uponmarried individuals filing joint returns and surviving
11.34spouses as defined in section 2(a) of the Internal Revenue Code estates and trusts must be
11.35computed by applying to their taxable net income the following schedule of rates:
12.1 (1) On the first$25,680 $17,290,
5.35 percent;
12.2 (2) On all over$25,680 $17,290, but not over $102,030 $68,710,
7.05 percent;
12.3 (3) On all over$102,030 $68,710,
7.85 percent.
12.4Married individuals filing separate returns, estates, and trusts must compute their
12.5income tax by applying the above rates to their taxable income, except that the income
12.6brackets will be one-half of the above amounts.
12.7 (b) The income taxes imposed by this chapter upon unmarried individuals, married
12.8individuals filing joint returns, married individuals filing separate returns, and unmarried
12.9individuals qualifying as head of household as defined in section 2(b) of the Internal
12.10Revenue Code, must be computed by applying to taxable net incomethe following
12.11schedule of rates: a rate of seven percent.
12.12(1) On the first $17,570,
5.35 percent;
12.13(2) On all over $17,570, but not over $57,710,
7.05 percent;
12.14(3) On all over $57,710,
7.85 percent.
12.15(c) The income taxes imposed by this chapter upon unmarried individuals qualifying
12.16as a head of household as defined in section 2(b) of the Internal Revenue Code must be
12.17computed by applying to taxable net income the following schedule of rates:
12.18(1) On the first $21,630,
5.35 percent;
12.19(2) On all over $21,630, but not over $86,910,
7.05 percent;
12.20(3) On all over $86,910,
7.85 percent.
12.21(d) (c) In lieu of a tax computed according to the rates set forth in this subdivision,
12.22the tax of any individual taxpayer whose taxable net income for the taxable year is less
12.23than an amount determined by the commissioner must be computed in accordance with
12.24tables prepared and issued by the commissioner of revenue based on income brackets of
12.25not more than $100. The amount of tax for each bracket shall be computed at the rates set
12.26forth in this subdivision, provided that the commissioner may disregard a fractional part of
12.27a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
12.28(e) (d) An individual who is not a Minnesota resident for the entire year must
12.29compute the individual's Minnesota income tax as provided in this subdivision. After the
12.30application of the nonrefundable credits provided in this chapter, the tax liability must
12.31then be multiplied by a fraction in which:
12.32 (1) the numerator is the individual's Minnesota source federal adjusted gross income
12.33as defined in section 62 of the Internal Revenue Code and increased by the additions
12.34required under section290.01, subdivision 19a , clauses (1), (5), (6), (7), (8), (9), (12),
12.35(13), and (16) to (18), and reduced by the Minnesota assignable portion of the subtraction
12.36for United States government interest under section290.01, subdivision 19b , clause (1),
13.1and the subtractions under section290.01, subdivision 19b , clauses (8), (9), (13), (14),
13.2(15), and (17), and (18) to (21), after applying the allocation and assignability provisions
13.3of section290.081 , clause (a), or
290.17 ; and
13.4 (2) the denominator is the individual's federal adjusted gross income as defined in
13.5section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
13.6section290.01, subdivision 19a , clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to
13.7(18), and reduced by the amounts specified in section290.01, subdivision 19b , clauses
13.8(1), (8), (9), (13), (14), (15), (17), and (18).
13.9EFFECTIVE DATE.This section is effective for taxable years beginning after
13.10December 31, 2011.
13.11 Sec. 6. Minnesota Statutes 2010, section 290.06, subdivision 2d, is amended to read:
13.12 Subd. 2d. Inflation adjustment of brackets. (a) For taxable years beginning after
13.13December 31,2000 2012, the minimum and maximum dollar amounts for each rate
13.14bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
13.15percentage determined under paragraph (b). For the purpose of making the adjustment as
13.16provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
13.17rate brackets as they existed for taxable years beginning after December 31,1999 2011,
13.18and before January 1,2001 2013. The rate applicable to any rate bracket must not be
13.19changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
13.20in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
13.21amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.
13.22(b) The commissioner shall adjust the rate brackets and by the percentage determined
13.23pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
13.24section 1(f)(3)(B) the word"1999" "2011" shall be substituted for the word "1992." For
13.252001 2013, the commissioner shall then determine the percent change from the 12 months
13.26ending on August 31,1999 2011, to the 12 months ending on August 31, 2000 2012, and
13.27in each subsequent year, from the 12 months ending on August 31,1999 2011, to the 12
13.28months ending on August 31 of the year preceding the taxable year. The determination of
13.29the commissioner pursuant to this subdivision shall not be considered a "rule" and shall
13.30not be subject to the Administrative Procedure Act contained in chapter 14.
13.31No later than December 15 of each year, the commissioner shall announce the
13.32specific percentage that will be used to adjust the tax rate brackets.
13.33EFFECTIVE DATE.This section is effective for taxable years beginning after
13.34December 31, 2012.
14.1 Sec. 7. REVISOR'S INSTRUCTION.
14.2The revisor of statutes shall identify and correct internal cross-references in
14.3Minnesota Statutes affected by amendments in sections 1 to 6. The revisor may make
14.4changes necessary to correct the punctuation, grammar, or structure of the remaining text
14.5and preserve its meaning.
14.6EFFECTIVE DATE.The changes to cross-references, language, or both in this
14.7section are effective for taxable years beginning after December 31, 2011.
1.3amending Minnesota Statutes 2010, section 290.06, subdivision 2d; Minnesota
1.4Statutes 2011 Supplement, sections 289A.08, subdivision 7; 290.01, subdivisions
1.519, 19a, 19b; 290.06, subdivision 2c.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2011 Supplement, section 289A.08, subdivision 7,
1.8is amended to read:
1.9 Subd. 7. Composite income tax returns for nonresident partners, shareholders,
1.10and beneficiaries. (a) The commissioner may allow a partnership with nonresident
1.11partners to file a composite return and to pay the tax on behalf of nonresident partners who
1.12have no other Minnesota source income. This composite return must include the names,
1.13addresses, Social Security numbers, income allocation, and tax liability for the nonresident
1.14partners electing to be covered by the composite return.
1.15(b) The computation of a partner's tax liability must be determined by multiplying
1.16the income allocated to that partner by the
1.17for individuals under section
1.18deductions, or personal exemptions are not allowed.
1.19(c) The partnership must submit a request to use this composite return filing method
1.20for nonresident partners. The requesting partnership must file a composite return in the
1.21form prescribed by the commissioner of revenue. The filing of a composite return is
1.22considered a request to use the composite return filing method.
1.23(d) The electing partner must not have any Minnesota source income other than
1.24the income from the partnership and other electing partnerships. If it is determined that
1.25the electing partner has other Minnesota source income, the inclusion of the income
2.1and tax liability for that partner under this provision will not constitute a return to
2.2satisfy the requirements of subdivision 1. The tax paid for the individual as part of the
2.3composite return is allowed as a payment of the tax by the individual on the date on
2.4which the composite return payment was made. If the electing nonresident partner has no
2.5other Minnesota source income, filing of the composite return is a return for purposes of
2.6subdivision 1.
2.7(e) This subdivision does not negate the requirement that an individual pay estimated
2.8tax if the individual's liability would exceed the requirements set forth in section
2.9The individual's liability to pay estimated tax is, however, satisfied when the partnership
2.10pays composite estimated tax in the manner prescribed in section
2.11(f) If an electing partner's share of the partnership's gross income from Minnesota
2.12sources is less than the filing requirements for a nonresident under this subdivision, the tax
2.13liability is zero. However, a statement showing the partner's share of gross income must
2.14be included as part of the composite return.
2.15(g) The election provided in this subdivision is only available to a partner who has
2.16no other Minnesota source income and who is either (1) a full-year nonresident individual
2.17or (2) a trust or estate that does not claim a deduction under either section 651 or 661 of
2.18the Internal Revenue Code.
2.19(h) A corporation defined in section
2.20make an election under this paragraph. The provisions covering the partnership apply to
2.21the corporation and the provisions applying to the partner apply to the shareholder.
2.22(i) Estates and trusts distributing current income only and the nonresident individual
2.23beneficiaries of the estates or trusts may make an election under this paragraph. The
2.24provisions covering the partnership apply to the estate or trust. The provisions applying to
2.25the partner apply to the beneficiary.
2.26(j) For the purposes of this subdivision, "income" means the partner's share of
2.27federal adjusted gross income from the partnership modified by the additions provided
2.28in section
2.29(i) section
2.30allocable to Minnesota under section
2.31clause (13). The subtraction allowed under section
2.32only allowed on the composite tax computation to the extent the electing partner would
2.33have been allowed the subtraction.
2.34EFFECTIVE DATE.This section is effective for taxable years beginning after
2.35December 31, 2011.
3.1 Sec. 2. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19, is
3.2amended to read:
3.3 Subd. 19. Net income. For purposes of this subdivision, "Internal Revenue Code"
3.4means the Internal Revenue Code of 1986, as amended through the date named in this
3.5subdivision.
3.6 For all but individuals, the term "net income" means the federal taxable income,
3.7as defined in section 63 of the Internal Revenue Code
3.8
3.9Internal Revenue Code and any elections made by the taxpayer in accordance with the
3.10Internal Revenue Code in determining federal taxable income for federal income tax
3.11purposes, and with the modifications provided in subdivisions 19a to 19f.
3.12For individuals, the term "net income" means the federal taxable income, as defined
3.13in section 63 of the Internal Revenue Code, incorporating the federal effective dates
3.14of changes to the Internal Revenue Code and any elections made by the taxpayer in
3.15accordance with the Internal Revenue Code in determining federal taxable income for
3.16federal income tax purposes, plus the amount of the standard deduction or itemized
3.17deduction used in determining federal taxable income for federal income tax purposes,
3.18and with the modifications provided in subdivisions 19a to 19f.
3.19 In the case of a regulated investment company or a fund thereof, as defined in section
3.20851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
3.21company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
3.22except that:
3.23 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
3.24Revenue Code does not apply;
3.25 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
3.26Revenue Code must be applied by allowing a deduction for capital gain dividends and
3.27exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
3.28Revenue Code; and
3.29 (3) the deduction for dividends paid must also be applied in the amount of any
3.30undistributed capital gains which the regulated investment company elects to have treated
3.31as provided in section 852(b)(3)(D) of the Internal Revenue Code.
3.32 The net income of a real estate investment trust as defined and limited by section
3.33856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
3.34taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
4.1 The net income of a designated settlement fund as defined in section 468B(d) of
4.2the Internal Revenue Code means the gross income as defined in section 468B(b) of the
4.3Internal Revenue Code.
4.4 The Internal Revenue Code of 1986, as amended through April 14, 2011, shall be
4.5in effect for taxable years beginning after December 31, 1996. The provisions of the
4.6act of January 22, 2010, Public Law 111-126, to accelerate the benefits for charitable
4.7cash contributions for the relief of victims of the Haitian earthquake, are effective at the
4.8same time they became effective for federal purposes and apply to the subtraction under
4.9subdivision 19b, clause (6). The provisions of title II, section 2112, of the act of September
4.1027, 2010, Public Law 111-240, rollovers from elective deferral plans to designated Roth
4.11accounts, are effective at the same time they became effective for federal purposes and
4.12taxable rollovers are included in net income at the same time they are included in gross
4.13income for federal purposes.
4.14 Except as otherwise provided, references to the Internal Revenue Code in
4.15subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
4.16the applicable year.
4.17EFFECTIVE DATE.This section is effective for taxable years beginning after
4.18December 31, 2011.
4.19 Sec. 3. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19a, is
4.20amended to read:
4.21 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
4.22trusts, there shall be added to federal taxable income:
4.23 (1)(i) interest income on obligations of any state other than Minnesota or a political
4.24or governmental subdivision, municipality, or governmental agency or instrumentality
4.25of any state other than Minnesota exempt from federal income taxes under the Internal
4.26Revenue Code or any other federal statute; and
4.27 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
4.28Code, except:
4.29(A) the portion of the exempt-interest dividends exempt from state taxation under
4.30the laws of the United States; and
4.31(B) the portion of the exempt-interest dividends derived from interest income
4.32on obligations of the state of Minnesota or its political or governmental subdivisions,
4.33municipalities, governmental agencies or instrumentalities, but only if the portion of the
4.34exempt-interest dividends from such Minnesota sources paid to all shareholders represents
4.3595 percent or more of the exempt-interest dividends, including any dividends exempt
5.1under subitem (A), that are paid by the regulated investment company as defined in section
5.2851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
5.3defined in section 851(g) of the Internal Revenue Code, making the payment; and
5.4 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
5.5government described in section 7871(c) of the Internal Revenue Code shall be treated as
5.6interest income on obligations of the state in which the tribe is located;
5.7 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
5.8accrued within the taxable year under this chapter and the amount of taxes based on net
5.9income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
5.10or to any province or territory of Canada, to the extent allowed as a deduction under
5.11section 63(d) of the Internal Revenue Code, but the addition may not be more than the
5.12amount by which the itemized deductions as allowed under section 63(d) of the Internal
5.13Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
5.14the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
5.15and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
5.16required under clause (21) if the taxpayer had claimed the standard deduction. For the
5.17purpose of this paragraph, the disallowance of itemized deductions under section 68 of
5.18the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
5.19taxes are the last itemized deductions disallowed;
5.20 (3) the capital gain amount of a lump-sum distribution to which the special tax under
5.21section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
5.22 (4) the amount of income taxes paid or accrued within the taxable year under this
5.23chapter and taxes based on net income paid to any other state or any province or territory
5.24of Canada, to the extent allowed as a deduction in determining federal adjusted gross
5.25income. For the purpose of this paragraph, income taxes do not include the taxes imposed
5.26by sections
5.27 (5) the amount of expense, interest, or taxes disallowed pursuant to section
5.29allowed under subdivision 19b, clause (1);
5.30 (6) the amount of a partner's pro rata share of net income which does not flow
5.31through to the partner because the partnership elected to pay the tax on the income under
5.32section 6242(a)(2) of the Internal Revenue Code;
5.33 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
5.34Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
5.35in the taxable year generates a deduction for depreciation under section 168(k) and the
5.36activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
6.1the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
6.2limited to excess of the depreciation claimed by the activity under section 168(k) over the
6.3amount of the loss from the activity that is not allowed in the taxable year. In succeeding
6.4taxable years when the losses not allowed in the taxable year are allowed, the depreciation
6.5under section 168(k) is allowed;
6.6 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
6.7Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
6.8Revenue Code of 1986, as amended through December 31, 2003;
6.9 (9) to the extent deducted in computing federal taxable income, the amount of the
6.10deduction allowable under section 199 of the Internal Revenue Code;
6.11 (10) for taxable years beginning before January 1, 2013, the exclusion allowed
6.12under section 139A of the Internal Revenue Code for federal subsidies for prescription
6.13drug plans;
6.14(11) the amount of expenses disallowed under section 290.10, subdivision 2;
6.15 (12) for taxable years beginning before January 1, 2010, the amount deducted for
6.16qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
6.17the extent deducted from gross income;
6.18 (13) for taxable years beginning before January 1, 2010, the amount deducted for
6.19certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
6.20of the Internal Revenue Code, to the extent deducted from gross income;
6.21(14) the additional standard deduction for property taxes payable that is allowable
6.22under section 63(c)(1)(C) of the Internal Revenue Code;
6.23(15) the additional standard deduction for qualified motor vehicle sales taxes
6.24allowable under section 63(c)(1)(E) of the Internal Revenue Code;
6.25(16) discharge of indebtedness income resulting from reacquisition of business
6.26indebtedness and deferred under section 108(i) of the Internal Revenue Code;
6.27(17) the amount of unemployment compensation exempt from tax under section
6.2885(c) of the Internal Revenue Code;
6.29(18) changes to federal taxable income attributable to a net operating loss that the
6.30taxpayer elected to carry back for more than two years for federal purposes but for which
6.31the losses can be carried back for only two years under section
6.33(19) to the extent included in the computation of federal taxable income in taxable
6.34years beginning after December 31, 2010, and before January 1, 2012, the amount of
6.35disallowed itemized deductions, but the amount of disallowed itemized deductions plus
6.36the addition required under clause (2) may not be more than the amount by which the
7.1itemized deductions as allowed under section 63(d) of the Internal Revenue Code exceeds
7.2the amount of the standard deduction as defined in section 63(c) of the Internal Revenue
7.3Code, disregarding the amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the
7.4Internal Revenue Code, and reduced by any addition that would have been required under
7.5clause (21) if the taxpayer had claimed the standard deduction:
7.6(i) the amount of disallowed itemized deductions is equal to the lesser of:
7.7(A) three percent of the excess of the taxpayer's federal adjusted gross income
7.8over the applicable amount; or
7.9(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
7.10taxpayer under the Internal Revenue Code for the taxable year;
7.11(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
7.12married individual filing a separate return. Each dollar amount shall be increased by
7.13an amount equal to:
7.14(A) such dollar amount, multiplied by
7.15(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
7.16Revenue Code for the calendar year in which the taxable year begins, by substituting
7.17"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
7.18(iii) the term "itemized deductions" does not include:
7.19(A) the deduction for medical expenses under section 213 of the Internal Revenue
7.20Code;
7.21(B) any deduction for investment interest as defined in section 163(d) of the Internal
7.22Revenue Code; and
7.23(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
7.24theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
7.25Code or for losses described in section 165(d) of the Internal Revenue Code;
7.26(20) to the extent included in federal taxable income in taxable years beginning after
7.27December 31, 2010, the amount of disallowed personal exemptions for taxpayers with
7.28federal adjusted gross income over the threshold amount:
7.29(i) the disallowed personal exemption amount is equal to the dollar amount of the
7.30personal exemptions claimed by the taxpayer in the computation of federal taxable income
7.31multiplied by the applicable percentage;
7.32(ii) "applicable percentage" means two percentage points for each $2,500 (or
7.33fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
7.34year exceeds the threshold amount. In the case of a married individual filing a separate
7.35return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
7.36no event shall the applicable percentage exceed 100 percent;
8.1(iii) the term "threshold amount" means:
8.2(A) $150,000 in the case of a joint return or a surviving spouse;
8.3(B) $125,000 in the case of a head of a household;
8.4(C) $100,000 in the case of an individual who is not married and who is not a
8.5surviving spouse or head of a household; and
8.6(D) $75,000 in the case of a married individual filing a separate return; and
8.7(iv) the thresholds shall be increased by an amount equal to:
8.8(A) such dollar amount, multiplied by
8.9(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
8.10Revenue Code for the calendar year in which the taxable year begins, by substituting
8.11"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
8.12(21) to the extent deducted in the computation of federal taxable income, for taxable
8.13years beginning after December 31, 2010, and before January 1,
8.14between the standard deduction allowed under section 63(c) of the Internal Revenue Code
8.15and the standard deduction allowed for 2011
8.16as amended through December 1, 2010.
8.17 Sec. 4. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19b, is
8.18amended to read:
8.19 Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
8.20and trusts, there shall be subtracted from federal taxable income:
8.21 (1) net interest income on obligations of any authority, commission, or
8.22instrumentality of the United States to the extent includable in taxable income for federal
8.23income tax purposes but exempt from state income tax under the laws of the United States;
8.24 (2) if included in federal taxable income, the amount of any overpayment of income
8.25tax to Minnesota or to any other state, for any previous taxable year, whether the amount
8.26is received as a refund or as a credit to another taxable year's income tax liability;
8.27 (3) the amount paid to others, less the amount used to claim the credit allowed under
8.28section
8.29to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
8.30transportation of each qualifying child in attending an elementary or secondary school
8.31situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
8.32resident of this state may legally fulfill the state's compulsory attendance laws, which
8.33is not operated for profit, and which adheres to the provisions of the Civil Rights Act
8.34of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
8.35tuition as defined in section
9.1"textbooks" includes books and other instructional materials and equipment purchased
9.2or leased for use in elementary and secondary schools in teaching only those subjects
9.3legally and commonly taught in public elementary and secondary schools in this state.
9.4Equipment expenses qualifying for deduction includes expenses as defined and limited in
9.5section
9.6books and materials used in the teaching of religious tenets, doctrines, or worship, the
9.7purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
9.8or materials for, or transportation to, extracurricular activities including sporting events,
9.9musical or dramatic events, speech activities, driver's education, or similar programs. No
9.10deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
9.11the qualifying child's vehicle to provide such transportation for a qualifying child. For
9.12purposes of the subtraction provided by this clause, "qualifying child" has the meaning
9.13given in section 32(c)(3) of the Internal Revenue Code;
9.14 (4) income as provided under section
9.15 (5) to the extent included in federal adjusted gross income, income realized on
9.16disposition of property exempt from tax under section
9.17 (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
9.18of the Internal Revenue Code in determining federal taxable income by an individual
9.19who does not itemize deductions for federal income tax purposes for the taxable year, an
9.20amount equal to 50 percent of the excess of charitable contributions over $500 allowable
9.21as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
9.22under the provisions of Public Law 109-1 and Public Law 111-126;
9.23 (7) for individuals who are allowed a federal foreign tax credit for taxes that do not
9.24qualify for a credit under section
9.25of subnational foreign taxes for the taxable year, but not to exceed the total subnational
9.26foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
9.27"federal foreign tax credit" means the credit allowed under section 27 of the Internal
9.28Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
9.29under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
9.30the extent they exceed the federal foreign tax credit;
9.31 (8) in each of the five tax years immediately following the tax year in which an
9.32addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
9.33of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
9.34of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
9.35the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
9.36subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
10.1positive value of any net operating loss under section 172 of the Internal Revenue Code
10.2generated for the tax year of the addition. The resulting delayed depreciation cannot be
10.3less than zero;
10.4 (9) job opportunity building zone income as provided under section
10.5 (10) to the extent included in federal taxable income, the amount of compensation
10.6paid to members of the Minnesota National Guard or other reserve components of the
10.7United States military for active service, excluding compensation for services performed
10.8under the Active Guard Reserve (AGR) program. For purposes of this clause, "active
10.9service" means (i) state active service as defined in section
10.10(1); or (ii) federally funded state active service as defined in section
10.115b
10.12subdivision 3
10.13 (11) to the extent included in federal taxable income, the amount of compensation
10.14paid to Minnesota residents who are members of the armed forces of the United States
10.15or United Nations for active duty performed under United States Code, title 10; or the
10.16authority of the United Nations;
10.17 (12) an amount, not to exceed $10,000, equal to qualified expenses related to a
10.18qualified donor's donation, while living, of one or more of the qualified donor's organs
10.19to another person for human organ transplantation. For purposes of this clause, "organ"
10.20means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
10.21"human organ transplantation" means the medical procedure by which transfer of a human
10.22organ is made from the body of one person to the body of another person; "qualified
10.23expenses" means unreimbursed expenses for both the individual and the qualified donor
10.24for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
10.25may be subtracted under this clause only once; and "qualified donor" means the individual
10.26or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
10.27individual may claim the subtraction in this clause for each instance of organ donation for
10.28transplantation during the taxable year in which the qualified expenses occur;
10.29 (13) in each of the five tax years immediately following the tax year in which an
10.30addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
10.31shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
10.32addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
10.33case of a shareholder of a corporation that is an S corporation, minus the positive value of
10.34any net operating loss under section 172 of the Internal Revenue Code generated for the
10.35tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
10.36subtraction is not allowed under this clause;
11.1 (14) to the extent included in the federal taxable income of a nonresident of
11.2Minnesota, compensation paid to a service member as defined in United States Code, title
11.310, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief
11.4Act, Public Law 108-189, section 101(2);
11.5 (15) international economic development zone income as provided under section
11.7 (16) to the extent included in federal taxable income, the amount of national service
11.8educational awards received from the National Service Trust under United States Code,
11.9title 42, sections 12601 to 12604, for service in an approved Americorps National Service
11.10program;
11.11(17) to the extent included in federal taxable income, discharge of indebtedness
11.12income resulting from reacquisition of business indebtedness included in federal taxable
11.13income under section 108(i) of the Internal Revenue Code. This subtraction applies only
11.14to the extent that the income was included in net income in a prior year as a result of the
11.15addition under section
11.16(18) the amount of the net operating loss allowed under section
11.18(19) for individuals who itemize deductions for purposes of determining federal
11.19taxable income, the amount equal to the charitable contribution deduction as defined under
11.20section 170 of the Internal Revenue Code;
11.21(20) for individuals who itemize deductions for purposes of determining federal
11.22taxable income, the amount equal to the home mortgage interest deduction as defined
11.23under section 163 of the Internal Revenue Code; and
11.24(21) $30,000 for married individuals filing joint returns; $15,000 for married
11.25individuals filing separate returns; $20,530 for unmarried individuals; and $25,260 for
11.26unmarried individuals qualifying as head of household as defined in section 2(b) of the
11.27Internal Revenue Code.
11.28EFFECTIVE DATE.This section is effective for taxable years beginning after
11.29December 31, 2011.
11.30 Sec. 5. Minnesota Statutes 2011 Supplement, section 290.06, subdivision 2c, is
11.31amended to read:
11.32 Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
11.33taxes imposed by this chapter upon
11.34
11.35computed by applying to their taxable net income the following schedule of rates:
12.1 (1) On the first
12.2 (2) On all over
12.3 (3) On all over
12.4
12.5
12.6
12.7 (b) The income taxes imposed by this chapter upon unmarried individuals, married
12.8individuals filing joint returns, married individuals filing separate returns, and unmarried
12.9individuals qualifying as head of household as defined in section 2(b) of the Internal
12.10Revenue Code, must be computed by applying to taxable net income
12.11
12.12
12.13
12.14
12.15
12.16
12.17
12.18
12.19
12.20
12.21
12.22the tax of any individual taxpayer whose taxable net income for the taxable year is less
12.23than an amount determined by the commissioner must be computed in accordance with
12.24tables prepared and issued by the commissioner of revenue based on income brackets of
12.25not more than $100. The amount of tax for each bracket shall be computed at the rates set
12.26forth in this subdivision, provided that the commissioner may disregard a fractional part of
12.27a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
12.28
12.29compute the individual's Minnesota income tax as provided in this subdivision. After the
12.30application of the nonrefundable credits provided in this chapter, the tax liability must
12.31then be multiplied by a fraction in which:
12.32 (1) the numerator is the individual's Minnesota source federal adjusted gross income
12.33as defined in section 62 of the Internal Revenue Code and increased by the additions
12.34required under section
12.35(13), and (16) to (18), and reduced by the Minnesota assignable portion of the subtraction
12.36for United States government interest under section
13.1and the subtractions under section
13.2(15), and (17)
13.3of section
13.4 (2) the denominator is the individual's federal adjusted gross income as defined in
13.5section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
13.6section
13.7(18), and reduced by the amounts specified in section
13.8(1), (8), (9), (13), (14), (15), (17), and (18).
13.9EFFECTIVE DATE.This section is effective for taxable years beginning after
13.10December 31, 2011.
13.11 Sec. 6. Minnesota Statutes 2010, section 290.06, subdivision 2d, is amended to read:
13.12 Subd. 2d. Inflation adjustment of brackets. (a) For taxable years beginning after
13.13December 31,
13.14bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
13.15percentage determined under paragraph (b). For the purpose of making the adjustment as
13.16provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
13.17rate brackets as they existed for taxable years beginning after December 31,
13.18and before January 1,
13.19changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
13.20in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
13.21amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.
13.22(b) The commissioner shall adjust the rate brackets and by the percentage determined
13.23pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
13.24section 1(f)(3)(B) the word
13.25
13.26ending on August 31,
13.27in each subsequent year, from the 12 months ending on August 31,
13.28months ending on August 31 of the year preceding the taxable year. The determination of
13.29the commissioner pursuant to this subdivision shall not be considered a "rule" and shall
13.30not be subject to the Administrative Procedure Act contained in chapter 14.
13.31No later than December 15 of each year, the commissioner shall announce the
13.32specific percentage that will be used to adjust the tax rate brackets.
13.33EFFECTIVE DATE.This section is effective for taxable years beginning after
13.34December 31, 2012.
14.1 Sec. 7. REVISOR'S INSTRUCTION.
14.2The revisor of statutes shall identify and correct internal cross-references in
14.3Minnesota Statutes affected by amendments in sections 1 to 6. The revisor may make
14.4changes necessary to correct the punctuation, grammar, or structure of the remaining text
14.5and preserve its meaning.
14.6EFFECTIVE DATE.The changes to cross-references, language, or both in this
14.7section are effective for taxable years beginning after December 31, 2011.
