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SF 2506

as introduced - 91st Legislature (2019 - 2020) Posted on 03/15/2019 09:41am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; individual income; modifying the working family credit
calculation; amending Minnesota Statutes 2018, section 290.0671, subdivisions
1, 7.

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

Section 1.

Minnesota Statutes 2018, section 290.0671, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

(a) An individual who is a resident of Minnesota is
allowed a credit against the tax imposed by this chapter equal to a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Code, except thatnew text begin :
new text end

new text begin (1)new text end a taxpayer with no qualifying children who has attained the age of 21, but not attained
age 65 before the close of the taxable year and is otherwise eligible for a credit under section
32 of the Internal Revenue Code may also receive a creditdeleted text begin .deleted text end new text begin ; and
new text end

new text begin (2) a taxpayer who is otherwise eligible for a credit under section 32 of the Internal
Revenue Code remains eligible for the credit under this section even if the taxpayer's earned
income or adjusted gross income exceeds the income limitation under section 32 of the
Internal Revenue Code.
new text end

(b) For individuals with no qualifying children, the credit equals deleted text begin 2.10deleted text end new text begin threenew text end percent of
the first deleted text begin $6,180deleted text end new text begin $6,680new text end of earned income. The credit is reduced by deleted text begin 2.01deleted text end new text begin threenew text end percent of
earned income or adjusted gross income, whichever is greater, in excess of deleted text begin $8,130deleted text end new text begin $12,710new text end ,
but in no case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals deleted text begin 9.35deleted text end new text begin 12.71new text end percent of the
first deleted text begin $11,120deleted text end new text begin $8,790new text end of earned income. The credit is reduced by deleted text begin 6.02deleted text end new text begin 5.2new text end percent of earned
income or adjusted gross income, whichever is greater, in excess of deleted text begin $21,190deleted text end new text begin $22,710new text end , but
in no case is the credit less than zero.

(d) For individuals with two or more qualifying children, the credit equals deleted text begin 11deleted text end new text begin 14.94new text end
percent of the first deleted text begin $18,240deleted text end new text begin $14,430new text end of earned income. The credit is reduced by 10.82 percent
of earned income or adjusted gross income, whichever is greater, in excess of deleted text begin $25,130deleted text end new text begin
$29,500
new text end , but in no case is the credit less than zero.

(e)new text begin For individuals with three or more qualifying children, the credit equals 15.78 percent
of the first $14,870 of earned income. The credit is reduced by 9.07 percent of earned income
or adjusted gross income, whichever is greater, in excess of $29,500, but in no case is the
credit less than zero.
new text end

new text begin (f)new text end For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).

deleted text begin (f)deleted text end new text begin (g)new text end For a person who was a resident for the entire tax year and has earned income
not subject to tax under this chapter, including income excluded under section 290.0132,
subdivision 10
, the credit must be allocated based on the ratio of federal adjusted gross
income reduced by the earned income not subject to tax under this chapter over federal
adjusted gross income. For purposes of this paragraph, the following clauses are not
considered "earned income not subject to tax under this chapter":

(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12;

(2) the exclusion of combat pay under section 112 of the Internal Revenue Code; and

(3) income derived from an Indian reservation by an enrolled member of the reservation
while living on the reservation.

deleted text begin (g)deleted text end new text begin (h)new text end For tax years beginning after December 31, deleted text begin 2013deleted text end new text begin 2018new text end , the deleted text begin $8,130deleted text end new text begin $12,710new text end in
paragraph (b), the deleted text begin $21,190deleted text end new text begin $22,710new text end in paragraph (c), deleted text begin anddeleted text end the deleted text begin $25,130deleted text end new text begin $27,000new text end in paragraph
(d)new text begin , and the $29,500 in paragraph (e)new text end , after being adjusted for inflation under subdivision
7, are each increased by deleted text begin $5,000deleted text end new text begin $5,840new text end for married taxpayers filing joint returns. deleted text begin For tax
years beginning after December 31, 2013, the commissioner shall annually adjust the $5,000
by the percentage determined pursuant to the provisions of section 1(f) of the Internal
Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for
the word "1992." For 2014, the commissioner shall then determine the percent change from
the 12 months ending on August 31, 2008, to the 12 months ending on August 31, 2013,
and in each subsequent year, from the 12 months ending on August 31, 2008, to the 12
months ending on August 31 of the year preceding the taxable year. The earned income
thresholds as adjusted for inflation must be rounded to the nearest $10. If the amount ends
in $5, the amount is rounded up to the nearest $10. The determination of the commissioner
under this subdivision is not a rule under the Administrative Procedure Act.
deleted text end

deleted text begin (h)deleted text end new text begin (i)new text end The commissioner shall construct tables showing the amount of the credit at
various income levels and make them available to taxpayers. The tables shall follow the
schedule contained in this subdivision, except that the commissioner may graduate the
transition between income brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 2.

Minnesota Statutes 2018, section 290.0671, subdivision 7, is amended to read:


Subd. 7.

Inflation adjustment.

The earned income amounts used to calculate the credit
deleted text begin anddeleted text end new text begin ,new text end the income thresholds at which the maximum credit begins to be reduced in subdivision
1new text begin , and the additional threshold amount for married taxpayers filing joint returnsnew text end must be
adjusted for inflation. The commissioner shall adjust by the percentage determined pursuant
to the provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B)
the word deleted text begin "2013"deleted text end new text begin "2018"new text end shall be substituted for the word "1992." For deleted text begin 2015deleted text end new text begin 2020new text end , the
commissioner shall then determine the percent change from the 12 months ending on August
31, deleted text begin 2013deleted text end new text begin 2018new text end , to the 12 months ending on August 31, deleted text begin 2014deleted text end new text begin 2019new text end , and in each subsequent
year, from the 12 months ending on August 31, deleted text begin 2013deleted text end new text begin 2018new text end , to the 12 months ending on
August 31 of the year preceding the taxable year. The earned income thresholds as adjusted
for inflation must be rounded to the nearest $10 amount. If the amount ends in $5, the amount
is rounded up to the nearest $10 amount. The determination of the commissioner under this
subdivision is not a rule under the Administrative Procedure Act.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2019.
new text end