Bill Text: MN SF2388 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Federal conformity of individual income tax and corporate franchise taxes; working family credit phaseout for married filers extension
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2014-03-10 - Author added Rest [SF2388 Detail]
Download: Minnesota-2013-SF2388-Introduced.html
1.2relating to taxation; income and franchise; conforming to changes in the Internal
1.3Revenue Code; extending the working family credit phase-out for married
1.4filers;amending Minnesota Statutes 2012, sections 289A.02, subdivision 7;
1.5289A.08, subdivision 7; 290.01, subdivision 19a; 290.067, subdivision 2a;
1.6290.0671, subdivision 1; 290.0675, subdivision 1; Minnesota Statutes 2013
1.7Supplement, sections 290.01, subdivisions 19, 31; 290.06, subdivision 2c;
1.8290.091, subdivision 2; 290A.03, subdivision 15.
1.9BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.10 Section 1. Minnesota Statutes 2012, section 289A.02, subdivision 7, is amended to read:
1.11 Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal
1.12Revenue Code" means the Internal Revenue Code of 1986, as amended throughApril 14,
1.132011 December 20, 2013.
1.14EFFECTIVE DATE.This section is effective retroactively for taxable years
1.15beginning after December 31, 2012.
1.16 Sec. 2. Minnesota Statutes 2012, section 289A.08, subdivision 7, is amended to read:
1.17 Subd. 7. Composite income tax returns for nonresident partners, shareholders,
1.18and beneficiaries. (a) The commissioner may allow a partnership with nonresident
1.19partners to file a composite return and to pay the tax on behalf of nonresident partners who
1.20have no other Minnesota source income. This composite return must include the names,
1.21addresses, Social Security numbers, income allocation, and tax liability for the nonresident
1.22partners electing to be covered by the composite return.
1.23(b) The computation of a partner's tax liability must be determined by multiplying
1.24the income allocated to that partner by the highest rate used to determine the tax liability
2.1for individuals under section290.06, subdivision 2c . Nonbusiness deductions, standard
2.2deductions, or personal exemptions are not allowed.
2.3(c) The partnership must submit a request to use this composite return filing method
2.4for nonresident partners. The requesting partnership must file a composite return in the
2.5form prescribed by the commissioner of revenue. The filing of a composite return is
2.6considered a request to use the composite return filing method.
2.7(d) The electing partner must not have any Minnesota source income other than the
2.8income from the partnership and other electing partnerships. If it is determined that the
2.9electing partner has other Minnesota source income, the inclusion of the income and tax
2.10liability for that partner under this provision will not constitute a return to satisfy the
2.11requirements of subdivision 1. The tax paid for the individual as part of the composite return
2.12is allowed as a payment of the tax by the individual on the date on which the composite
2.13return payment was made. If the electing nonresident partner has no other Minnesota
2.14source income, filing of the composite return is a return for purposes of subdivision 1.
2.15(e) This subdivision does not negate the requirement that an individual pay estimated
2.16tax if the individual's liability would exceed the requirements set forth in section289A.25 .
2.17The individual's liability to pay estimated tax is, however, satisfied when the partnership
2.18pays composite estimated tax in the manner prescribed in section289A.25 .
2.19(f) If an electing partner's share of the partnership's gross income from Minnesota
2.20sources is less than the filing requirements for a nonresident under this subdivision, the tax
2.21liability is zero. However, a statement showing the partner's share of gross income must
2.22be included as part of the composite return.
2.23(g) The election provided in this subdivision is only available to a partner who has
2.24no other Minnesota source income and who is either (1) a full-year nonresident individual
2.25or (2) a trust or estate that does not claim a deduction under either section 651 or 661 of
2.26the Internal Revenue Code.
2.27(h) A corporation defined in section290.9725 and its nonresident shareholders may
2.28make an election under this paragraph. The provisions covering the partnership apply to
2.29the corporation and the provisions applying to the partner apply to the shareholder.
2.30(i) Estates and trusts distributing current income only and the nonresident individual
2.31beneficiaries of the estates or trusts may make an election under this paragraph. The
2.32provisions covering the partnership apply to the estate or trust. The provisions applying to
2.33the partner apply to the beneficiary.
2.34(j) For the purposes of this subdivision, "income" means the partner's share of
2.35federal adjusted gross income from the partnership modified by the additions provided in
2.36section290.01, subdivision 19a , clauses (6) to (10) (9), and the subtractions provided in:
3.1(i) section290.01, subdivision 19b , clause (8), to the extent the amount is assignable or
3.2allocable to Minnesota under section290.17 ; and (ii) section
290.01, subdivision 19b ,
3.3clause (13). The subtraction allowed under section290.01, subdivision 19b , clause (8), is
3.4only allowed on the composite tax computation to the extent the electing partner would
3.5have been allowed the subtraction.
3.6EFFECTIVE DATE.This section is effective retroactively for taxable years
3.7beginning after December 31, 2012.
3.8 Sec. 3. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 19, is
3.9amended to read:
3.10 Subd. 19. Net income. The term "net income" means the federal taxable income,
3.11as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
3.12date named in this subdivision, incorporating the federal effective dates of changes to the
3.13Internal Revenue Code and any elections made by the taxpayer in accordance with the
3.14Internal Revenue Code in determining federal taxable income for federal income tax
3.15purposes, and with the modifications provided in subdivisions 19a to 19f.
3.16 In the case of a regulated investment company or a fund thereof, as defined in section
3.17851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
3.18company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
3.19except that:
3.20 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
3.21Revenue Code does not apply;
3.22 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
3.23Revenue Code must be applied by allowing a deduction for capital gain dividends and
3.24exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
3.25Revenue Code; and
3.26 (3) the deduction for dividends paid must also be applied in the amount of any
3.27undistributed capital gains which the regulated investment company elects to have treated
3.28as provided in section 852(b)(3)(D) of the Internal Revenue Code.
3.29 The net income of a real estate investment trust as defined and limited by section
3.30856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
3.31taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
3.32 The net income of a designated settlement fund as defined in section 468B(d) of
3.33the Internal Revenue Code means the gross income as defined in section 468B(b) of the
3.34Internal Revenue Code.
4.1 The Internal Revenue Code of 1986, as amended throughApril 14, 2011 December
4.220, 2013, shall be in effect for taxable years beginning after December 31, 1996, and
4.3before January 1, 2012, and for taxable years beginning after December 31, 2012. The
4.4Internal Revenue Code of 1986, as amended through January 3, 2013, is in effect for
4.5taxable years beginning after December 31, 2011, and before January 1, 2013.
4.6The provisions of sections 315 and 331 of the American Taxpayer Relief Act of
4.72012, Public Law 112-240, extension of increased expensing limitations and treatment
4.8of certain real property as section 179 property and extension and modification of bonus
4.9depreciation, are effective at the same time they become effective for federal purposes.
4.10 Except as otherwise provided, references to the Internal Revenue Code in
4.11subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
4.12the applicable year.
4.13EFFECTIVE DATE.This section is effective the day following final enactment,
4.14except the changes incorporated by federal changes are effective retroactively from the
4.15same time as the changes were effective for federal purposes.
4.16 Sec. 4. Minnesota Statutes 2012, section 290.01, subdivision 19a, is amended to read:
4.17 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
4.18trusts, there shall be added to federal taxable income:
4.19 (1)(i) interest income on obligations of any state other than Minnesota or a political
4.20or governmental subdivision, municipality, or governmental agency or instrumentality
4.21of any state other than Minnesota exempt from federal income taxes under the Internal
4.22Revenue Code or any other federal statute; and
4.23 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
4.24Code, except:
4.25(A) the portion of the exempt-interest dividends exempt from state taxation under
4.26the laws of the United States; and
4.27(B) the portion of the exempt-interest dividends derived from interest income
4.28on obligations of the state of Minnesota or its political or governmental subdivisions,
4.29municipalities, governmental agencies or instrumentalities, but only if the portion of the
4.30exempt-interest dividends from such Minnesota sources paid to all shareholders represents
4.3195 percent or more of the exempt-interest dividends, including any dividends exempt
4.32under subitem (A), that are paid by the regulated investment company as defined in section
4.33851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
4.34defined in section 851(g) of the Internal Revenue Code, making the payment; and
5.1 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
5.2government described in section 7871(c) of the Internal Revenue Code shall be treated as
5.3interest income on obligations of the state in which the tribe is located;
5.4 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
5.5accrued within the taxable year under this chapter and the amount of taxes based on net
5.6income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
5.7or to any province or territory of Canada, to the extent allowed as a deduction under
5.8section 63(d) of the Internal Revenue Code, but the addition may not be more than the
5.9amount by which the itemized deductions as allowed under section 63(d) of the Internal
5.10Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
5.11the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
5.12and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
5.13required under clause (21) if the taxpayer had claimed the standard deduction. For the
5.14purpose of this paragraph, the disallowance of itemized deductions under section 68 of
5.15the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
5.16taxes are the last itemized deductions disallowed;
5.17 (3) the capital gain amount of a lump-sum distribution to which the special tax under
5.18section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
5.19 (4) the amount of income taxes paid or accrued within the taxable year under this
5.20chapter and taxes based on net income paid to any other state or any province or territory
5.21of Canada, to the extent allowed as a deduction in determining federal adjusted gross
5.22income. For the purpose of this paragraph, income taxes do not include the taxes imposed
5.23by sections290.0922, subdivision 1 , paragraph (b),
290.9727 ,
290.9728 , and
290.9729 ;
5.24 (5) the amount of expense, interest, or taxes disallowed pursuant to section290.10
5.25other than expenses or interest used in computing net interest income for the subtraction
5.26allowed under subdivision 19b, clause (1);
5.27 (6) the amount of a partner's pro rata share of net income which does not flow
5.28through to the partner because the partnership elected to pay the tax on the income under
5.29section 6242(a)(2) of the Internal Revenue Code;
5.30 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
5.31Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
5.32in the taxable year generates a deduction for depreciation under section 168(k) and the
5.33activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
5.34the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
5.35limited to excess of the depreciation claimed by the activity under section 168(k) over the
5.36amount of the loss from the activity that is not allowed in the taxable year. In succeeding
6.1taxable years when the losses not allowed in the taxable year are allowed, the depreciation
6.2under section 168(k) is allowed;
6.3 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
6.4Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
6.5Revenue Code of 1986, as amended through December 31, 2003;
6.6 (9) to the extent deducted in computing federal taxable income, the amount of the
6.7deduction allowable under section 199 of the Internal Revenue Code;
6.8 (10)for taxable years beginning before January 1, 2013, the exclusion allowed under
6.9section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
6.10(11) the amount of expenses disallowed under section 290.10, subdivision 2;
6.11(12) for taxable years beginning before January 1, 2010, the amount deducted for
6.12qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
6.13the extent deducted from gross income;
6.14(13) for taxable years beginning before January 1, 2010, the amount deducted for
6.15certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
6.16of the Internal Revenue Code, to the extent deducted from gross income;
6.17(14) the additional standard deduction for property taxes payable that is allowable
6.18under section 63(c)(1)(C) of the Internal Revenue Code;
6.19(15) the additional standard deduction for qualified motor vehicle sales taxes
6.20allowable under section 63(c)(1)(E) of the Internal Revenue Code;
6.21(16) (11) discharge of indebtedness income resulting from reacquisition of business
6.22indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
6.23(17) the amount of unemployment compensation exempt from tax under section
6.2485(c) of the Internal Revenue Code;
6.25(18) (12) changes to federal taxable income attributable to a net operating loss that
6.26the taxpayer elected to carry back for more than two years for federal purposes but for
6.27which the losses can be carried back for only two years under section290.095, subdivision
6.2811 , paragraph (c);.
6.29(19) to the extent included in the computation of federal taxable income in taxable
6.30years beginning after December 31, 2010, the amount of disallowed itemized deductions,
6.31but the amount of disallowed itemized deductions plus the addition required under clause
6.32(2) may not be more than the amount by which the itemized deductions as allowed under
6.33section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction
6.34as defined in section 63(c) of the Internal Revenue Code, disregarding the amounts
6.35allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code, and
7.1reduced by any addition that would have been required under clause (21) if the taxpayer
7.2had claimed the standard deduction:
7.3(i) the amount of disallowed itemized deductions is equal to the lesser of:
7.4(A) three percent of the excess of the taxpayer's federal adjusted gross income
7.5over the applicable amount; or
7.6(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
7.7taxpayer under the Internal Revenue Code for the taxable year;
7.8(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
7.9married individual filing a separate return. Each dollar amount shall be increased by
7.10an amount equal to:
7.11(A) such dollar amount, multiplied by
7.12(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
7.13Revenue Code for the calendar year in which the taxable year begins, by substituting
7.14"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
7.15(iii) the term "itemized deductions" does not include:
7.16(A) the deduction for medical expenses under section 213 of the Internal Revenue
7.17Code;
7.18(B) any deduction for investment interest as defined in section 163(d) of the Internal
7.19Revenue Code; and
7.20(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
7.21theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
7.22Code or for losses described in section 165(d) of the Internal Revenue Code;
7.23(20) to the extent included in federal taxable income in taxable years beginning after
7.24December 31, 2010, the amount of disallowed personal exemptions for taxpayers with
7.25federal adjusted gross income over the threshold amount:
7.26(i) the disallowed personal exemption amount is equal to the dollar amount of the
7.27personal exemptions claimed by the taxpayer in the computation of federal taxable income
7.28multiplied by the applicable percentage;
7.29(ii) "applicable percentage" means two percentage points for each $2,500 (or
7.30fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
7.31year exceeds the threshold amount. In the case of a married individual filing a separate
7.32return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
7.33no event shall the applicable percentage exceed 100 percent;
7.34(iii) the term "threshold amount" means:
7.35(A) $150,000 in the case of a joint return or a surviving spouse;
7.36(B) $125,000 in the case of a head of a household;
8.1(C) $100,000 in the case of an individual who is not married and who is not a
8.2surviving spouse or head of a household; and
8.3(D) $75,000 in the case of a married individual filing a separate return; and
8.4(iv) the thresholds shall be increased by an amount equal to:
8.5(A) such dollar amount, multiplied by
8.6(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
8.7Revenue Code for the calendar year in which the taxable year begins, by substituting
8.8"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
8.9(21) to the extent deducted in the computation of federal taxable income, for taxable
8.10years beginning after December 31, 2010, and before January 1, 2013, the difference
8.11between the standard deduction allowed under section 63(c) of the Internal Revenue Code
8.12and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code
8.13as amended through December 1, 2010.
8.14EFFECTIVE DATE.This section is effective retroactively for taxable years
8.15beginning after December 31, 2012.
8.16 Sec. 5. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 31, is
8.17amended to read:
8.18 Subd. 31. Internal Revenue Code. Unless specifically defined otherwise,for
8.19taxable years beginning before January 1, 2012, and after December 31, 2012, "Internal
8.20Revenue Code" means the Internal Revenue Code of 1986, as amended throughApril 14,
8.212011; and for taxable years beginning after December 31, 2011, and before January 1,
8.222013, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
8.23through January 3 December 20, 2013. Internal Revenue Code also includes any
8.24uncodified provision in federal law that relates to provisions of the Internal Revenue
8.25Code that are incorporated into Minnesota law. When used in this chapter, the reference
8.26to "subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code" is to the
8.27Internal Revenue Code as amended through March 18, 2010.
8.28EFFECTIVE DATE.This section is effective the day following final enactment,
8.29except the changes incorporated by federal changes are effective retroactively from the
8.30same time the changes were effective for federal purposes.
8.31 Sec. 6. Minnesota Statutes 2013 Supplement, section 290.06, subdivision 2c, is
8.32amended to read:
9.1 Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
9.2taxes imposed by this chapter upon married individuals filing joint returns and surviving
9.3spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
9.4applying to their taxable net income the following schedule of rates:
9.5 (1) On the first $35,480, 5.35 percent;
9.6 (2) On all over $35,480, but not over $140,960, 7.05 percent;
9.7 (3) On all over $140,960, but not over $250,000, 7.85 percent;
9.8(4) On all over $250,000, 9.85 percent.
9.9 Married individuals filing separate returns, estates, and trusts must compute their
9.10income tax by applying the above rates to their taxable income, except that the income
9.11brackets will be one-half of the above amounts.
9.12 (b) The income taxes imposed by this chapter upon unmarried individuals must be
9.13computed by applying to taxable net income the following schedule of rates:
9.14 (1) On the first $24,270, 5.35 percent;
9.15 (2) On all over $24,270, but not over $79,730, 7.05 percent;
9.16 (3) On all over $79,730, but not over $150,000, 7.85 percent;
9.17(4) On all over $150,000, 9.85 percent.
9.18 (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
9.19as a head of household as defined in section 2(b) of the Internal Revenue Code must be
9.20computed by applying to taxable net income the following schedule of rates:
9.21 (1) On the first $29,880, 5.35 percent;
9.22 (2) On all over $29,880, but not over $120,070, 7.05 percent;
9.23 (3) On all over $120,070, but not over $200,000, 7.85 percent;
9.24(4) On all over $200,000, 9.85 percent.
9.25 (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
9.26tax of any individual taxpayer whose taxable net income for the taxable year is less than
9.27an amount determined by the commissioner must be computed in accordance with tables
9.28prepared and issued by the commissioner of revenue based on income brackets of not
9.29more than $100. The amount of tax for each bracket shall be computed at the rates set
9.30forth in this subdivision, provided that the commissioner may disregard a fractional part of
9.31a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
9.32 (e) An individual who is not a Minnesota resident for the entire year must compute
9.33the individual's Minnesota income tax as provided in this subdivision. After the
9.34application of the nonrefundable credits provided in this chapter, the tax liability must
9.35then be multiplied by a fraction in which:
10.1 (1) the numerator is the individual's Minnesota source federal adjusted gross income
10.2as defined in section 62 of the Internal Revenue Code and increased by the additions
10.3required under section290.01, subdivision 19a , clauses (1), (5), (6), (7), (8), (9), (12),
10.4(13), and (16) to (18) (11), and (12), and reduced by the Minnesota assignable portion of
10.5the subtraction for United States government interest under section290.01, subdivision
10.619b , clause (1), and the subtractions under section
290.01, subdivision 19b , clauses (8),
10.7(9), (13), (14), (16), and (17), after applying the allocation and assignability provisions of
10.8section290.081 , clause (a), or
290.17 ; and
10.9 (2) the denominator is the individual's federal adjusted gross income as defined in
10.10section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
10.11section290.01, subdivision 19a , clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to
10.12(18) (11), and (12), and reduced by the amounts specified in section
290.01, subdivision
10.1319b , clauses (1), (8), (9), (13), (14), (16), and (17).
10.14EFFECTIVE DATE.This section is effective retroactively for taxable years
10.15beginning after December 31, 2012.
10.16 Sec. 7. Minnesota Statutes 2012, section 290.067, subdivision 2a, is amended to read:
10.17 Subd. 2a. Income. (a) For purposes of this section, "income" means the sum of
10.18the following:
10.19(1) federal adjusted gross income as defined in section 62 of the Internal Revenue
10.20Code; and
10.21(2) the sum of the following amounts to the extent not included in clause (1):
10.22(i) all nontaxable income;
10.23(ii) the amount of a passive activity loss that is not disallowed as a result of section
10.24469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity
10.25loss carryover allowed under section 469(b) of the Internal Revenue Code;
10.26(iii) an amount equal to the total of any discharge of qualified farm indebtedness
10.27of a solvent individual excluded from gross income under section 108(g) of the Internal
10.28Revenue Code;
10.29(iv) cash public assistance and relief;
10.30(v) any pension or annuity (including railroad retirement benefits, all payments
10.31received under the federal Social Security Act, supplemental security income, and veterans
10.32benefits), which was not exclusively funded by the claimant or spouse, or which was
10.33funded exclusively by the claimant or spouse and which funding payments were excluded
10.34from federal adjusted gross income in the years when the payments were made;
11.1(vi) interest received from the federal or a state government or any instrumentality
11.2or political subdivision thereof;
11.3(vii) workers' compensation;
11.4(viii) nontaxable strike benefits;
11.5(ix) the gross amounts of payments received in the nature of disability income or
11.6sick pay as a result of accident, sickness, or other disability, whether funded through
11.7insurance or otherwise;
11.8(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
11.91986, as amended through December 31, 1995;
11.10(xi) contributions made by the claimant to an individual retirement account,
11.11including a qualified voluntary employee contribution; simplified employee pension plan;
11.12self-employed retirement plan; cash or deferred arrangement plan under section 401(k)
11.13of the Internal Revenue Code; or deferred compensation plan under section 457 of the
11.14Internal Revenue Code;
11.15(xii) nontaxable scholarship or fellowship grants;
11.16(xiii) the amount of deduction allowed under section 199 of the Internal Revenue
11.17Code;
11.18(xiv) the amount of deduction allowed under section 220 or 223 of the Internal
11.19Revenue Code;
11.20(xv) the amountof deducted for tuition expenses required to be added to income
11.21under section
290.01, subdivision 19a, clause (12) under section 222 of the Internal
11.22Revenue Code; and
11.23(xvi) the amount deducted for certain expenses of elementary and secondary school
11.24teachers under section 62(a)(2)(D) of the Internal Revenue Code; and.
11.25(xvii) unemployment compensation.
11.26In the case of an individual who files an income tax return on a fiscal year basis, the
11.27term "federal adjusted gross income" means federal adjusted gross income reflected in the
11.28fiscal year ending in the next calendar year. Federal adjusted gross income may not be
11.29reduced by the amount of a net operating loss carryback or carryforward or a capital loss
11.30carryback or carryforward allowed for the year.
11.31(b) "Income" does not include:
11.32(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
11.33(2) amounts of any pension or annuity that were exclusively funded by the claimant
11.34or spouse if the funding payments were not excluded from federal adjusted gross income
11.35in the years when the payments were made;
11.36(3) surplus food or other relief in kind supplied by a governmental agency;
12.1(4) relief granted under chapter 290A;
12.2(5) child support payments received under a temporary or final decree of dissolution
12.3or legal separation; and
12.4(6) restitution payments received by eligible individuals and excludable interest as
12.5defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
12.62001, Public Law 107-16.
12.7EFFECTIVE DATE.This section is effective retroactively for taxable years
12.8beginning after December 31, 2012.
12.9 Sec. 8. Minnesota Statutes 2012, section 290.0671, subdivision 1, is amended to read:
12.10 Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
12.11imposed by this chapter equal to a percentage of earned income. To receive a credit, a
12.12taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
12.13(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
12.14the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
12.15income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
12.16case is the credit less than zero.
12.17(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
12.18$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
12.19$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
12.20whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
12.21(d) For individuals with two or more qualifying children, the credit equals ten percent
12.22of the first $9,720 of earned income and 20 percent of earned income over $14,860 but less
12.23than $16,800. The credit is reduced by 10.3 percent of earned income or adjusted gross
12.24income, whichever is greater, in excess of $17,890, but in no case is the credit less than zero.
12.25(e) For a nonresident or part-year resident, the credit must be allocated based on the
12.26percentage calculated under section290.06, subdivision 2c , paragraph (e).
12.27(f) For a person who was a resident for the entire tax year and has earned income
12.28not subject to tax under this chapter, including income excluded under section290.01,
12.29subdivision 19b , clause (9), the credit must be allocated based on the ratio of federal
12.30adjusted gross income reduced by the earned income not subject to tax under this chapter
12.31over federal adjusted gross income. For purposes of this paragraph, the subtractions
12.32for military pay under section290.01, subdivision 19b , clauses (10) and (11), are not
12.33considered "earned income not subject to tax under this chapter."
13.1For the purposes of this paragraph, the exclusion of combat pay under section 112
13.2of the Internal Revenue Code is not considered "earned income not subject to tax under
13.3this chapter."
13.4(g) For tax years beginning after December 31, 2007, and before December 31,
13.52010, and for tax years beginning after December 31, 2017, the $5,770 in paragraph (b),
13.6the $15,080 in paragraph (c), and the $17,890 in paragraph (d), after being adjusted for
13.7inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint
13.8returns. For tax years beginning after December 31, 2008, the commissioner shall annually
13.9adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f)
13.10of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be
13.11substituted for the word "1992." For 2009, the commissioner shall then determine the
13.12percent change from the 12 months ending on August 31, 2007, to the 12 months ending on
13.13August 31, 2008, and in each subsequent year, from the 12 months ending on August 31,
13.142007, to the 12 months ending on August 31 of the year preceding the taxable year. The
13.15earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the
13.16amount ends in $5, the amount is rounded up to the nearest $10. The determination of the
13.17commissioner under this subdivision is not a rule under the Administrative Procedure Act.
13.18(h) For tax years beginning after December 31, 2010, and before January 1, 2012,
13.19 and for tax years beginning after December 31, 2012, and before January 1, 2018, the
13.20$5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
13.21(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000
13.22for married taxpayers filing joint returns. For tax years beginning after December 31,
13.232010, and before January 1, 2012, and for tax years beginning after December 31, 2012,
13.24and before January 1, 2018, the commissioner shall annually adjust the $5,000 by the
13.25percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue
13.26Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for the word
13.27"1992." For 2011, the commissioner shall then determine the percent change from the 12
13.28months ending on August 31, 2008, to the 12 months ending on August 31, 2010, and in
13.29each subsequent year from the 12 months ending on August 31, 2008, to the 12 months
13.30ending on August 31 of the year preceding the taxable year. The earned income thresholds
13.31as adjusted for inflation must be rounded to the nearest $10. If the amount ends in $5, the
13.32amount is rounded up to the nearest $10. The determination of the commissioner under
13.33this subdivision is not a rule under the Administrative Procedure Act.
13.34(i) The commissioner shall construct tables showing the amount of the credit at
13.35various income levels and make them available to taxpayers. The tables shall follow
14.1the schedule contained in this subdivision, except that the commissioner may graduate
14.2the transition between income brackets.
14.3EFFECTIVE DATE.This section is effective retroactively for taxable years
14.4beginning after December 31, 2012.
14.5 Sec. 9. Minnesota Statutes 2012, section 290.0675, subdivision 1, is amended to read:
14.6 Subdivision 1. Definitions. (a) For purposes of this section the following terms
14.7have the meanings given.
14.8(b) "Earned income" means the sum of the following, to the extent included in
14.9Minnesota taxable income:
14.10(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
14.11(2) income received from a retirement pension, profit-sharing, stock bonus, or
14.12annuity plan; and
14.13(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue
14.14Code.
14.15(c) "Taxable income" means net income as defined in section290.01, subdivision 19 .
14.16(d) "Earned income of lesser-earning spouse" means the earned income of the
14.17spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable
14.18year minus the sum of (i) the amount for one exemption under section 151(d) of the
14.19Internal Revenue Code and (ii) one-half the amount of the standard deduction under
14.20section 63(c)(2)(A) and (4) of the Internal Revenue Codeminus one-half of any addition
14.21required under section
290.01, subdivision 19a, clause (21), and one-half of the addition
14.22that would have been required under section
290.01, subdivision 19a, clause (21), if the
14.23taxpayer had claimed the standard deduction.
14.24EFFECTIVE DATE.This section is effective retroactively for taxable years
14.25beginning after December 31, 2012.
14.26 Sec. 10. Minnesota Statutes 2013 Supplement, section 290.091, subdivision 2, is
14.27amended to read:
14.28 Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
14.29terms have the meanings given:
14.30 (a) "Alternative minimum taxable income" means the sum of the following for
14.31the taxable year:
14.32 (1) the taxpayer's federal alternative minimum taxable income as defined in section
14.3355(b)(2) of the Internal Revenue Code;
15.1 (2) the taxpayer's itemized deductions allowed in computing federal alternative
15.2minimum taxable income, but excluding:
15.3 (i) the charitable contribution deduction under section 170 of the Internal Revenue
15.4Code;
15.5 (ii) the medical expense deduction;
15.6 (iii) the casualty, theft, and disaster loss deduction; and
15.7 (iv) the impairment-related work expenses of a disabled person;
15.8 (3) for depletion allowances computed under section 613A(c) of the Internal
15.9Revenue Code, with respect to each property (as defined in section 614 of the Internal
15.10Revenue Code), to the extent not included in federal alternative minimum taxable income,
15.11the excess of the deduction for depletion allowable under section 611 of the Internal
15.12Revenue Code for the taxable year over the adjusted basis of the property at the end of the
15.13taxable year (determined without regard to the depletion deduction for the taxable year);
15.14 (4) to the extent not included in federal alternative minimum taxable income, the
15.15amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
15.16Internal Revenue Code determined without regard to subparagraph (E);
15.17 (5) to the extent not included in federal alternative minimum taxable income, the
15.18amount of interest income as provided by section290.01, subdivision 19a , clause (1); and
15.19 (6) the amount of addition required by section290.01, subdivision 19a , clauses (7)
15.20to (9), (11), and (12), (13), and (16) to (18);
15.21 less the sum of the amounts determined under the following:
15.22 (1) interest income as defined in section290.01, subdivision 19b , clause (1);
15.23 (2) an overpayment of state income tax as provided by section290.01, subdivision
15.2419b , clause (2), to the extent included in federal alternative minimum taxable income;
15.25 (3) the amount of investment interest paid or accrued within the taxable year on
15.26indebtedness to the extent that the amount does not exceed net investment income, as
15.27defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
15.28amounts deducted in computing federal adjusted gross income;
15.29 (4) amounts subtracted from federal taxable income as provided by section290.01,
15.30subdivision 19b , clauses (6), (8) to (14), and (16); and
15.31(5) the amount of the net operating loss allowed under section290.095, subdivision
15.3211 , paragraph (c).
15.33 In the case of an estate or trust, alternative minimum taxable income must be
15.34computed as provided in section 59(c) of the Internal Revenue Code.
15.35 (b) "Investment interest" means investment interest as defined in section 163(d)(3)
15.36of the Internal Revenue Code.
16.1 (c) "Net minimum tax" means the minimum tax imposed by this section.
16.2 (d) "Regular tax" means the tax that would be imposed under this chapter (without
16.3regard to this section and section 290.032), reduced by the sum of the nonrefundable
16.4credits allowed under this chapter.
16.5 (e) "Tentative minimum tax" equals6.75 percent of alternative minimum taxable
16.6income after subtracting the exemption amount determined under subdivision 3.
16.7EFFECTIVE DATE.This section is effective retroactively for taxable years
16.8beginning after December 31, 2012.
16.9 Sec. 11. Minnesota Statutes 2013 Supplement, section 290A.03, subdivision 15,
16.10is amended to read:
16.11 Subd. 15. Internal Revenue Code.For taxable years beginning before January 1,
16.122012, and after December 31, 2012, "Internal Revenue Code" means the Internal Revenue
16.13Code of 1986, as amended throughApril 14, 2011; and for taxable years beginning after
16.14December 31, 2011, and before January 1, 2013, "Internal Revenue Code" means the
16.15Internal Revenue Code of 1986, as amended through January 3 December 20, 2013.
16.16EFFECTIVE DATE.This section is effective retroactively for property tax refunds
16.17based on property taxes payable after December 31, 2013, and rent paid after December
16.1831, 2012.
1.3Revenue Code; extending the working family credit phase-out for married
1.4filers;amending Minnesota Statutes 2012, sections 289A.02, subdivision 7;
1.5289A.08, subdivision 7; 290.01, subdivision 19a; 290.067, subdivision 2a;
1.6290.0671, subdivision 1; 290.0675, subdivision 1; Minnesota Statutes 2013
1.7Supplement, sections 290.01, subdivisions 19, 31; 290.06, subdivision 2c;
1.8290.091, subdivision 2; 290A.03, subdivision 15.
1.9BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.10 Section 1. Minnesota Statutes 2012, section 289A.02, subdivision 7, is amended to read:
1.11 Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal
1.12Revenue Code" means the Internal Revenue Code of 1986, as amended through
1.13
1.14EFFECTIVE DATE.This section is effective retroactively for taxable years
1.15beginning after December 31, 2012.
1.16 Sec. 2. Minnesota Statutes 2012, section 289A.08, subdivision 7, is amended to read:
1.17 Subd. 7. Composite income tax returns for nonresident partners, shareholders,
1.18and beneficiaries. (a) The commissioner may allow a partnership with nonresident
1.19partners to file a composite return and to pay the tax on behalf of nonresident partners who
1.20have no other Minnesota source income. This composite return must include the names,
1.21addresses, Social Security numbers, income allocation, and tax liability for the nonresident
1.22partners electing to be covered by the composite return.
1.23(b) The computation of a partner's tax liability must be determined by multiplying
1.24the income allocated to that partner by the highest rate used to determine the tax liability
2.1for individuals under section
2.2deductions, or personal exemptions are not allowed.
2.3(c) The partnership must submit a request to use this composite return filing method
2.4for nonresident partners. The requesting partnership must file a composite return in the
2.5form prescribed by the commissioner of revenue. The filing of a composite return is
2.6considered a request to use the composite return filing method.
2.7(d) The electing partner must not have any Minnesota source income other than the
2.8income from the partnership and other electing partnerships. If it is determined that the
2.9electing partner has other Minnesota source income, the inclusion of the income and tax
2.10liability for that partner under this provision will not constitute a return to satisfy the
2.11requirements of subdivision 1. The tax paid for the individual as part of the composite return
2.12is allowed as a payment of the tax by the individual on the date on which the composite
2.13return payment was made. If the electing nonresident partner has no other Minnesota
2.14source income, filing of the composite return is a return for purposes of subdivision 1.
2.15(e) This subdivision does not negate the requirement that an individual pay estimated
2.16tax if the individual's liability would exceed the requirements set forth in section
2.17The individual's liability to pay estimated tax is, however, satisfied when the partnership
2.18pays composite estimated tax in the manner prescribed in section
2.19(f) If an electing partner's share of the partnership's gross income from Minnesota
2.20sources is less than the filing requirements for a nonresident under this subdivision, the tax
2.21liability is zero. However, a statement showing the partner's share of gross income must
2.22be included as part of the composite return.
2.23(g) The election provided in this subdivision is only available to a partner who has
2.24no other Minnesota source income and who is either (1) a full-year nonresident individual
2.25or (2) a trust or estate that does not claim a deduction under either section 651 or 661 of
2.26the Internal Revenue Code.
2.27(h) A corporation defined in section
2.28make an election under this paragraph. The provisions covering the partnership apply to
2.29the corporation and the provisions applying to the partner apply to the shareholder.
2.30(i) Estates and trusts distributing current income only and the nonresident individual
2.31beneficiaries of the estates or trusts may make an election under this paragraph. The
2.32provisions covering the partnership apply to the estate or trust. The provisions applying to
2.33the partner apply to the beneficiary.
2.34(j) For the purposes of this subdivision, "income" means the partner's share of
2.35federal adjusted gross income from the partnership modified by the additions provided in
2.36section
3.1(i) section
3.2allocable to Minnesota under section
3.3clause (13). The subtraction allowed under section
3.4only allowed on the composite tax computation to the extent the electing partner would
3.5have been allowed the subtraction.
3.6EFFECTIVE DATE.This section is effective retroactively for taxable years
3.7beginning after December 31, 2012.
3.8 Sec. 3. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 19, is
3.9amended to read:
3.10 Subd. 19. Net income. The term "net income" means the federal taxable income,
3.11as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
3.12date named in this subdivision, incorporating the federal effective dates of changes to the
3.13Internal Revenue Code and any elections made by the taxpayer in accordance with the
3.14Internal Revenue Code in determining federal taxable income for federal income tax
3.15purposes, and with the modifications provided in subdivisions 19a to 19f.
3.16 In the case of a regulated investment company or a fund thereof, as defined in section
3.17851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
3.18company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
3.19except that:
3.20 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
3.21Revenue Code does not apply;
3.22 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
3.23Revenue Code must be applied by allowing a deduction for capital gain dividends and
3.24exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
3.25Revenue Code; and
3.26 (3) the deduction for dividends paid must also be applied in the amount of any
3.27undistributed capital gains which the regulated investment company elects to have treated
3.28as provided in section 852(b)(3)(D) of the Internal Revenue Code.
3.29 The net income of a real estate investment trust as defined and limited by section
3.30856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
3.31taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
3.32 The net income of a designated settlement fund as defined in section 468B(d) of
3.33the Internal Revenue Code means the gross income as defined in section 468B(b) of the
3.34Internal Revenue Code.
4.1 The Internal Revenue Code of 1986, as amended through
4.220, 2013, shall be in effect for taxable years beginning after December 31, 1996
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10 Except as otherwise provided, references to the Internal Revenue Code in
4.11subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
4.12the applicable year.
4.13EFFECTIVE DATE.This section is effective the day following final enactment,
4.14except the changes incorporated by federal changes are effective retroactively from the
4.15same time as the changes were effective for federal purposes.
4.16 Sec. 4. Minnesota Statutes 2012, section 290.01, subdivision 19a, is amended to read:
4.17 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
4.18trusts, there shall be added to federal taxable income:
4.19 (1)(i) interest income on obligations of any state other than Minnesota or a political
4.20or governmental subdivision, municipality, or governmental agency or instrumentality
4.21of any state other than Minnesota exempt from federal income taxes under the Internal
4.22Revenue Code or any other federal statute; and
4.23 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
4.24Code, except:
4.25(A) the portion of the exempt-interest dividends exempt from state taxation under
4.26the laws of the United States; and
4.27(B) the portion of the exempt-interest dividends derived from interest income
4.28on obligations of the state of Minnesota or its political or governmental subdivisions,
4.29municipalities, governmental agencies or instrumentalities, but only if the portion of the
4.30exempt-interest dividends from such Minnesota sources paid to all shareholders represents
4.3195 percent or more of the exempt-interest dividends, including any dividends exempt
4.32under subitem (A), that are paid by the regulated investment company as defined in section
4.33851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
4.34defined in section 851(g) of the Internal Revenue Code, making the payment; and
5.1 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
5.2government described in section 7871(c) of the Internal Revenue Code shall be treated as
5.3interest income on obligations of the state in which the tribe is located;
5.4 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
5.5accrued within the taxable year under this chapter and the amount of taxes based on net
5.6income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
5.7or to any province or territory of Canada, to the extent allowed as a deduction under
5.8section 63(d) of the Internal Revenue Code, but the addition may not be more than the
5.9amount by which the itemized deductions as allowed under section 63(d) of the Internal
5.10Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
5.11the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
5.12and 63(c)(1)(E) of the Internal Revenue Code
5.13
5.14purpose of this paragraph, the disallowance of itemized deductions under section 68 of
5.15the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
5.16taxes are the last itemized deductions disallowed;
5.17 (3) the capital gain amount of a lump-sum distribution to which the special tax under
5.18section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
5.19 (4) the amount of income taxes paid or accrued within the taxable year under this
5.20chapter and taxes based on net income paid to any other state or any province or territory
5.21of Canada, to the extent allowed as a deduction in determining federal adjusted gross
5.22income. For the purpose of this paragraph, income taxes do not include the taxes imposed
5.23by sections
5.24 (5) the amount of expense, interest, or taxes disallowed pursuant to section
5.26allowed under subdivision 19b, clause (1);
5.27 (6) the amount of a partner's pro rata share of net income which does not flow
5.28through to the partner because the partnership elected to pay the tax on the income under
5.29section 6242(a)(2) of the Internal Revenue Code;
5.30 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
5.31Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
5.32in the taxable year generates a deduction for depreciation under section 168(k) and the
5.33activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
5.34the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
5.35limited to excess of the depreciation claimed by the activity under section 168(k) over the
5.36amount of the loss from the activity that is not allowed in the taxable year. In succeeding
6.1taxable years when the losses not allowed in the taxable year are allowed, the depreciation
6.2under section 168(k) is allowed;
6.3 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
6.4Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
6.5Revenue Code of 1986, as amended through December 31, 2003;
6.6 (9) to the extent deducted in computing federal taxable income, the amount of the
6.7deduction allowable under section 199 of the Internal Revenue Code;
6.8 (10)
6.9
6.10
6.11
6.12
6.13
6.14
6.15
6.16
6.17
6.18
6.19
6.20
6.21
6.22indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
6.23
6.24
6.25
6.26the taxpayer elected to carry back for more than two years for federal purposes but for
6.27which the losses can be carried back for only two years under section
6.2811
6.29
6.30
6.31
6.32
6.33
6.34
6.35
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13
7.14
7.15
7.16
7.17
7.18
7.19
7.20
7.21
7.22
7.23
7.24
7.25
7.26
7.27
7.28
7.29
7.30
7.31
7.32
7.33
7.34
7.35
7.36
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
8.9
8.10
8.11
8.12
8.13
8.14EFFECTIVE DATE.This section is effective retroactively for taxable years
8.15beginning after December 31, 2012.
8.16 Sec. 5. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 31, is
8.17amended to read:
8.18 Subd. 31. Internal Revenue Code. Unless specifically defined otherwise,
8.19
8.20Revenue Code" means the Internal Revenue Code of 1986, as amended through
8.21
8.22
8.23
8.24uncodified provision in federal law that relates to provisions of the Internal Revenue
8.25Code that are incorporated into Minnesota law. When used in this chapter, the reference
8.26to "subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code" is to the
8.27Internal Revenue Code as amended through March 18, 2010.
8.28EFFECTIVE DATE.This section is effective the day following final enactment,
8.29except the changes incorporated by federal changes are effective retroactively from the
8.30same time the changes were effective for federal purposes.
8.31 Sec. 6. Minnesota Statutes 2013 Supplement, section 290.06, subdivision 2c, is
8.32amended to read:
9.1 Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
9.2taxes imposed by this chapter upon married individuals filing joint returns and surviving
9.3spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
9.4applying to their taxable net income the following schedule of rates:
9.5 (1) On the first $35,480, 5.35 percent;
9.6 (2) On all over $35,480, but not over $140,960, 7.05 percent;
9.7 (3) On all over $140,960, but not over $250,000, 7.85 percent;
9.8(4) On all over $250,000, 9.85 percent.
9.9 Married individuals filing separate returns, estates, and trusts must compute their
9.10income tax by applying the above rates to their taxable income, except that the income
9.11brackets will be one-half of the above amounts.
9.12 (b) The income taxes imposed by this chapter upon unmarried individuals must be
9.13computed by applying to taxable net income the following schedule of rates:
9.14 (1) On the first $24,270, 5.35 percent;
9.15 (2) On all over $24,270, but not over $79,730, 7.05 percent;
9.16 (3) On all over $79,730, but not over $150,000, 7.85 percent;
9.17(4) On all over $150,000, 9.85 percent.
9.18 (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
9.19as a head of household as defined in section 2(b) of the Internal Revenue Code must be
9.20computed by applying to taxable net income the following schedule of rates:
9.21 (1) On the first $29,880, 5.35 percent;
9.22 (2) On all over $29,880, but not over $120,070, 7.05 percent;
9.23 (3) On all over $120,070, but not over $200,000, 7.85 percent;
9.24(4) On all over $200,000, 9.85 percent.
9.25 (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
9.26tax of any individual taxpayer whose taxable net income for the taxable year is less than
9.27an amount determined by the commissioner must be computed in accordance with tables
9.28prepared and issued by the commissioner of revenue based on income brackets of not
9.29more than $100. The amount of tax for each bracket shall be computed at the rates set
9.30forth in this subdivision, provided that the commissioner may disregard a fractional part of
9.31a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
9.32 (e) An individual who is not a Minnesota resident for the entire year must compute
9.33the individual's Minnesota income tax as provided in this subdivision. After the
9.34application of the nonrefundable credits provided in this chapter, the tax liability must
9.35then be multiplied by a fraction in which:
10.1 (1) the numerator is the individual's Minnesota source federal adjusted gross income
10.2as defined in section 62 of the Internal Revenue Code and increased by the additions
10.3required under section
10.4
10.5the subtraction for United States government interest under section
10.619b
10.7(9), (13), (14), (16), and (17), after applying the allocation and assignability provisions of
10.8section
10.9 (2) the denominator is the individual's federal adjusted gross income as defined in
10.10section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
10.11section
10.12
10.1319b
10.14EFFECTIVE DATE.This section is effective retroactively for taxable years
10.15beginning after December 31, 2012.
10.16 Sec. 7. Minnesota Statutes 2012, section 290.067, subdivision 2a, is amended to read:
10.17 Subd. 2a. Income. (a) For purposes of this section, "income" means the sum of
10.18the following:
10.19(1) federal adjusted gross income as defined in section 62 of the Internal Revenue
10.20Code; and
10.21(2) the sum of the following amounts to the extent not included in clause (1):
10.22(i) all nontaxable income;
10.23(ii) the amount of a passive activity loss that is not disallowed as a result of section
10.24469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity
10.25loss carryover allowed under section 469(b) of the Internal Revenue Code;
10.26(iii) an amount equal to the total of any discharge of qualified farm indebtedness
10.27of a solvent individual excluded from gross income under section 108(g) of the Internal
10.28Revenue Code;
10.29(iv) cash public assistance and relief;
10.30(v) any pension or annuity (including railroad retirement benefits, all payments
10.31received under the federal Social Security Act, supplemental security income, and veterans
10.32benefits), which was not exclusively funded by the claimant or spouse, or which was
10.33funded exclusively by the claimant or spouse and which funding payments were excluded
10.34from federal adjusted gross income in the years when the payments were made;
11.1(vi) interest received from the federal or a state government or any instrumentality
11.2or political subdivision thereof;
11.3(vii) workers' compensation;
11.4(viii) nontaxable strike benefits;
11.5(ix) the gross amounts of payments received in the nature of disability income or
11.6sick pay as a result of accident, sickness, or other disability, whether funded through
11.7insurance or otherwise;
11.8(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
11.91986, as amended through December 31, 1995;
11.10(xi) contributions made by the claimant to an individual retirement account,
11.11including a qualified voluntary employee contribution; simplified employee pension plan;
11.12self-employed retirement plan; cash or deferred arrangement plan under section 401(k)
11.13of the Internal Revenue Code; or deferred compensation plan under section 457 of the
11.14Internal Revenue Code;
11.15(xii) nontaxable scholarship or fellowship grants;
11.16(xiii) the amount of deduction allowed under section 199 of the Internal Revenue
11.17Code;
11.18(xiv) the amount of deduction allowed under section 220 or 223 of the Internal
11.19Revenue Code;
11.20(xv) the amount
11.21
11.22Revenue Code; and
11.23(xvi) the amount deducted for certain expenses of elementary and secondary school
11.24teachers under section 62(a)(2)(D) of the Internal Revenue Code
11.25
11.26In the case of an individual who files an income tax return on a fiscal year basis, the
11.27term "federal adjusted gross income" means federal adjusted gross income reflected in the
11.28fiscal year ending in the next calendar year. Federal adjusted gross income may not be
11.29reduced by the amount of a net operating loss carryback or carryforward or a capital loss
11.30carryback or carryforward allowed for the year.
11.31(b) "Income" does not include:
11.32(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
11.33(2) amounts of any pension or annuity that were exclusively funded by the claimant
11.34or spouse if the funding payments were not excluded from federal adjusted gross income
11.35in the years when the payments were made;
11.36(3) surplus food or other relief in kind supplied by a governmental agency;
12.1(4) relief granted under chapter 290A;
12.2(5) child support payments received under a temporary or final decree of dissolution
12.3or legal separation; and
12.4(6) restitution payments received by eligible individuals and excludable interest as
12.5defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
12.62001, Public Law 107-16.
12.7EFFECTIVE DATE.This section is effective retroactively for taxable years
12.8beginning after December 31, 2012.
12.9 Sec. 8. Minnesota Statutes 2012, section 290.0671, subdivision 1, is amended to read:
12.10 Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
12.11imposed by this chapter equal to a percentage of earned income. To receive a credit, a
12.12taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
12.13(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
12.14the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
12.15income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
12.16case is the credit less than zero.
12.17(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
12.18$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
12.19$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
12.20whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
12.21(d) For individuals with two or more qualifying children, the credit equals ten percent
12.22of the first $9,720 of earned income and 20 percent of earned income over $14,860 but less
12.23than $16,800. The credit is reduced by 10.3 percent of earned income or adjusted gross
12.24income, whichever is greater, in excess of $17,890, but in no case is the credit less than zero.
12.25(e) For a nonresident or part-year resident, the credit must be allocated based on the
12.26percentage calculated under section
12.27(f) For a person who was a resident for the entire tax year and has earned income
12.28not subject to tax under this chapter, including income excluded under section
12.29subdivision 19b
12.30adjusted gross income reduced by the earned income not subject to tax under this chapter
12.31over federal adjusted gross income. For purposes of this paragraph, the subtractions
12.32for military pay under section
12.33considered "earned income not subject to tax under this chapter."
13.1For the purposes of this paragraph, the exclusion of combat pay under section 112
13.2of the Internal Revenue Code is not considered "earned income not subject to tax under
13.3this chapter."
13.4(g) For tax years beginning after December 31, 2007, and before December 31,
13.52010, and for tax years beginning after December 31, 2017, the $5,770 in paragraph (b),
13.6the $15,080 in paragraph (c), and the $17,890 in paragraph (d), after being adjusted for
13.7inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint
13.8returns. For tax years beginning after December 31, 2008, the commissioner shall annually
13.9adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f)
13.10of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be
13.11substituted for the word "1992." For 2009, the commissioner shall then determine the
13.12percent change from the 12 months ending on August 31, 2007, to the 12 months ending on
13.13August 31, 2008, and in each subsequent year, from the 12 months ending on August 31,
13.142007, to the 12 months ending on August 31 of the year preceding the taxable year. The
13.15earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the
13.16amount ends in $5, the amount is rounded up to the nearest $10. The determination of the
13.17commissioner under this subdivision is not a rule under the Administrative Procedure Act.
13.18(h) For tax years beginning after December 31, 2010, and before January 1, 2012,
13.19 and for tax years beginning after December 31, 2012, and before January 1, 2018, the
13.20$5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
13.21(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000
13.22for married taxpayers filing joint returns. For tax years beginning after December 31,
13.232010, and before January 1, 2012, and for tax years beginning after December 31, 2012,
13.24and before January 1, 2018, the commissioner shall annually adjust the $5,000 by the
13.25percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue
13.26Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for the word
13.27"1992." For 2011, the commissioner shall then determine the percent change from the 12
13.28months ending on August 31, 2008, to the 12 months ending on August 31, 2010, and in
13.29each subsequent year from the 12 months ending on August 31, 2008, to the 12 months
13.30ending on August 31 of the year preceding the taxable year. The earned income thresholds
13.31as adjusted for inflation must be rounded to the nearest $10. If the amount ends in $5, the
13.32amount is rounded up to the nearest $10. The determination of the commissioner under
13.33this subdivision is not a rule under the Administrative Procedure Act.
13.34(i) The commissioner shall construct tables showing the amount of the credit at
13.35various income levels and make them available to taxpayers. The tables shall follow
14.1the schedule contained in this subdivision, except that the commissioner may graduate
14.2the transition between income brackets.
14.3EFFECTIVE DATE.This section is effective retroactively for taxable years
14.4beginning after December 31, 2012.
14.5 Sec. 9. Minnesota Statutes 2012, section 290.0675, subdivision 1, is amended to read:
14.6 Subdivision 1. Definitions. (a) For purposes of this section the following terms
14.7have the meanings given.
14.8(b) "Earned income" means the sum of the following, to the extent included in
14.9Minnesota taxable income:
14.10(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
14.11(2) income received from a retirement pension, profit-sharing, stock bonus, or
14.12annuity plan; and
14.13(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue
14.14Code.
14.15(c) "Taxable income" means net income as defined in section
14.16(d) "Earned income of lesser-earning spouse" means the earned income of the
14.17spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable
14.18year minus the sum of (i) the amount for one exemption under section 151(d) of the
14.19Internal Revenue Code and (ii) one-half the amount of the standard deduction under
14.20section 63(c)(2)(A) and (4) of the Internal Revenue Code
14.21
14.22
14.23
14.24EFFECTIVE DATE.This section is effective retroactively for taxable years
14.25beginning after December 31, 2012.
14.26 Sec. 10. Minnesota Statutes 2013 Supplement, section 290.091, subdivision 2, is
14.27amended to read:
14.28 Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
14.29terms have the meanings given:
14.30 (a) "Alternative minimum taxable income" means the sum of the following for
14.31the taxable year:
14.32 (1) the taxpayer's federal alternative minimum taxable income as defined in section
14.3355(b)(2) of the Internal Revenue Code;
15.1 (2) the taxpayer's itemized deductions allowed in computing federal alternative
15.2minimum taxable income, but excluding:
15.3 (i) the charitable contribution deduction under section 170 of the Internal Revenue
15.4Code;
15.5 (ii) the medical expense deduction;
15.6 (iii) the casualty, theft, and disaster loss deduction; and
15.7 (iv) the impairment-related work expenses of a disabled person;
15.8 (3) for depletion allowances computed under section 613A(c) of the Internal
15.9Revenue Code, with respect to each property (as defined in section 614 of the Internal
15.10Revenue Code), to the extent not included in federal alternative minimum taxable income,
15.11the excess of the deduction for depletion allowable under section 611 of the Internal
15.12Revenue Code for the taxable year over the adjusted basis of the property at the end of the
15.13taxable year (determined without regard to the depletion deduction for the taxable year);
15.14 (4) to the extent not included in federal alternative minimum taxable income, the
15.15amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
15.16Internal Revenue Code determined without regard to subparagraph (E);
15.17 (5) to the extent not included in federal alternative minimum taxable income, the
15.18amount of interest income as provided by section
15.19 (6) the amount of addition required by section
15.20to (9), (11), and (12)
15.21 less the sum of the amounts determined under the following:
15.22 (1) interest income as defined in section
15.23 (2) an overpayment of state income tax as provided by section
15.2419b
15.25 (3) the amount of investment interest paid or accrued within the taxable year on
15.26indebtedness to the extent that the amount does not exceed net investment income, as
15.27defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
15.28amounts deducted in computing federal adjusted gross income;
15.29 (4) amounts subtracted from federal taxable income as provided by section
15.30subdivision 19b
15.31(5) the amount of the net operating loss allowed under section
15.3211
15.33 In the case of an estate or trust, alternative minimum taxable income must be
15.34computed as provided in section 59(c) of the Internal Revenue Code.
15.35 (b) "Investment interest" means investment interest as defined in section 163(d)(3)
15.36of the Internal Revenue Code.
16.1 (c) "Net minimum tax" means the minimum tax imposed by this section.
16.2 (d) "Regular tax" means the tax that would be imposed under this chapter (without
16.3regard to this section and section 290.032), reduced by the sum of the nonrefundable
16.4credits allowed under this chapter.
16.5 (e) "Tentative minimum tax" equals
16.6income after subtracting the exemption amount determined under subdivision 3.
16.7EFFECTIVE DATE.This section is effective retroactively for taxable years
16.8beginning after December 31, 2012.
16.9 Sec. 11. Minnesota Statutes 2013 Supplement, section 290A.03, subdivision 15,
16.10is amended to read:
16.11 Subd. 15. Internal Revenue Code.
16.12
16.13Code of 1986, as amended through
16.14
16.15
16.16EFFECTIVE DATE.This section is effective retroactively for property tax refunds
16.17based on property taxes payable after December 31, 2013, and rent paid after December
16.1831, 2012.
