HF 8

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 02/06/2017 03:51pm

A bill for an act
relating to taxation; individual income; providing a refundable credit for student
loan payments; proposing coding for new law in Minnesota Statutes, chapter 290.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [290.0682] STUDENT LOAN CREDIT.
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new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
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new text begin (b) "Adjusted gross income" means federal adjusted gross income as defined in section
62 of the Internal Revenue Code.
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new text begin (c) "Eligible individual" means an individual:
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new text begin (1) in a public service job, as defined under United States Code, title 20, section
1087e(m)(3)(B);
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new text begin (2) with a partial financial hardship, as defined under United States Code, title 20, section
1098e(a)(3); and
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new text begin (3) with one or more qualified education loans related to an undergraduate or graduate
degree program at a postsecondary educational institution.
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new text begin (d) "Eligible loan payments" means the amount the eligible individual paid during the
taxable year in principal and interest on qualified education loans.
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new text begin (e) "Postsecondary educational institution" means a postsecondary institution eligible
for state student aid under section 136A.103 or, if the institution is not located in this state,
a postsecondary institution participating in the federal Pell Grant program under Title IV
of the Higher Education Act of 1965, Public Law 89-329, as amended.
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new text begin (f) "Qualified education loan" has the meaning given in section 221 of the Internal
Revenue Code, but is limited to indebtedness incurred on behalf of the eligible individual.
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new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An eligible individual is allowed a credit against the tax
due under this chapter. The credit equals one-half of eligible loan payments in excess of
ten percent of adjusted gross income, up to $2,000.
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new text begin (b) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
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new text begin (c) An eligible individual may receive the credit under this section without regard to the
individual's eligibility for the public service loan forgiveness program under United States
Code, title 20, section 1087e(m).
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new text begin (d) In the case of a married couple, each spouse is eligible for the credit in this section.
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new text begin Subd. 3. new text end

new text begin Credit refundable. new text end

new text begin If the amount of credit that an eligible individual who is a
resident or part-year resident of Minnesota is eligible to receive under this section exceeds
the individual's tax liability under this chapter, the commissioner shall refund the excess to
the individual. For a nonresident taxpayer, the credit may not exceed the taxpayer's liability
for tax under this chapter.
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new text begin Subd. 4. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds required by this section
is appropriated to the commissioner from the general fund.
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new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2016.
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