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HF 387

as introduced - 90th Legislature (2017 - 2018) Posted on 02/13/2017 12:23pm

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

Bill Text Versions

Engrossments
Introduction Posted on 01/23/2017

Current Version - as introduced

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A bill for an act
relating to taxation; individual income; modifying the K-12 education expense
subtraction and credit; extending the credit to tuition; increasing the subtraction
and credit amounts; increasing the income phaseout for the credit; adjusting the
credit and subtraction amount and credit phaseout threshold for inflation; amending
Minnesota Statutes 2016, sections 290.0132, subdivision 4; 290.0674, subdivisions
1, 2, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2016, section 290.0132, subdivision 4, is amended to read:


Subd. 4.

Education expenses.

(a) Subject to the limits in paragraph (b), the following
amounts paid to others for deleted text begin each qualifying childdeleted text end new text begin education-related expenses, as defined in
section 290.0674, subdivision 1, less any amount used to claim the credit under section
290.0674,
new text end are a subtractiondeleted text begin :deleted text end new text begin .
new text end

deleted text begin (1) education-related expenses; plus
deleted text end

deleted text begin (2) tuition and fees paid to attend a school described in section 290.0674, subdivision
1
, clause (4), that are not included in education-related expenses; less
deleted text end

deleted text begin (3) any amount used to claim the credit under section 290.0674.
deleted text end

(b) The maximum subtraction allowed under this subdivision is:

(1) deleted text begin $1,625deleted text end new text begin $2,600new text end for each qualifying child in kindergarten through grade 6; and

(2) deleted text begin $2,500deleted text end new text begin $3,900new text end for each qualifying child in grades 7 through 12.

(c) The definitions in section 290.0674, subdivision 1, apply to this subdivision.

new text begin (d) The maximum amounts allowed for each qualifying child under this paragraph must
be adjusted for inflation. The commissioner shall adjust the maximum amount 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 "2016" shall be substituted for the word
"1992." For 2018, the commissioner shall then determine the percent change from the 12
months ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in
each subsequent year, from the 12 months ending August 31, 2016, to the 12 months ending
on August 31 of the year preceding the taxable year. The amounts 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 subject to the Administrative Procedure Act in chapter 14, including section
14.386.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2016, section 290.0674, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

An individual is allowed a credit against the tax imposed
by this chapter in an amount equal to 75 percent of the amount paid for education-related
expenses for a qualifying child in kindergarten through grade 12. For purposes of this section,
"education-related expenses" means:

(1) fees or tuition for instruction by an instructor under section 120A.22, subdivision
10
, clause (1), (2), (3), (4), or (5), or a member of the Minnesota Music Teachers Association,
and who is not a lineal ancestor or sibling of the dependent for instruction outside the regular
school day or school year, including tutoring, driver's education offered as part of school
curriculum, regardless of whether it is taken from a public or private entity or summer
camps, in grade or age appropriate curricula that supplement curricula and instruction
available during the regular school year, that assists a dependent to improve knowledge of
core curriculum areas or to expand knowledge and skills under the required academic
standards under section 120B.021, subdivision 1, and the elective standard under section
120B.022, subdivision 1, clause (2), and that do not include the teaching of religious tenets,
doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship;

(2) expenses for textbooks, including books and other instructional materials and
equipment purchased or leased for use in elementary and secondary schools in teaching
only those subjects legally and commonly taught in public elementary and secondary schools
in this state. "Textbooks" does not include instructional books and materials used in the
teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such
tenets, doctrines, or worship, nor does it include books or materials for extracurricular
activities including sporting events, musical or dramatic events, speech activities, driver's
education, or similar programs;

(3) a maximum expense of $200 per family for personal computer hardware, excluding
single purpose processors, and educational software that assists a dependent to improve
knowledge of core curriculum areas or to expand knowledge and skills under the required
academic standards under section 120B.021, subdivision 1, and the elective standard under
section 120B.022, subdivision 1, clause (2), purchased for use in the taxpayer's home and
not used in a trade or business regardless of whether the computer is required by the
dependent's school; and

(4) the amount paid to others for new text begin tuition and new text end transportation of a qualifying child attending
an elementary or secondary school situated in Minnesota, North Dakota, South Dakota,
Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory
attendance laws, which is not operated for profit, and which adheres to the provisions of
the Civil Rights Act of 1964 and chapter 363A. Amounts under this clause exclude any
expense the taxpayer incurred in using the taxpayer's or the qualifying child's vehicle.

For purposes of this section, "qualifying child" has the meaning given in section 32(c)(3)
of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2016, section 290.0674, subdivision 2, is amended to read:


Subd. 2.

Limitations.

(a) For claimants with income not greater than deleted text begin $33,500deleted text end new text begin $50,000new text end ,
the maximum credit allowed for a family is deleted text begin $1,000deleted text end new text begin $1,500new text end multiplied by the number of
qualifying children in kindergarten through grade 12 in the family. The maximum credit
for families with one qualifying child in kindergarten through grade 12 is reduced by $1
for each deleted text begin $4deleted text end new text begin $6new text end of household income over deleted text begin $33,500deleted text end new text begin $50,000new text end , and the maximum credit for
families with two or more qualifying children in kindergarten through grade 12 is reduced
by deleted text begin $2deleted text end new text begin $1new text end for each deleted text begin $4deleted text end new text begin $3new text end of household income over deleted text begin $33,500deleted text end new text begin $50,000new text end , but in no case is the
credit less than zero.

For purposes of this section "income" has the meaning given in section 290.067,
subdivision 2a
. In the case of a married claimant, a credit is not allowed unless a joint income
tax return is filed.

(b) For a nonresident or part-year resident, the credit determined under subdivision 1
and the maximum credit amount in paragraph (a) must be allocated using the percentage
calculated in section 290.06, subdivision 2c, paragraph (e).

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2016, section 290.0674, is amended by adding a subdivision
to read:


new text begin Subd. 6. new text end

new text begin Inflation adjustment. new text end

new text begin The credit amount and the income threshold at which
the maximum credit begins to be reduced in subdivision 2 must be adjusted for inflation.
The commissioner shall adjust the credit amount and income threshold 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 "2016" shall be substituted for the word "1992." For
2018, the commissioner shall then determine the percent change from the 12 months ending
on August 31, 2016, to the 12 months ending on August 31, 2017, and in each subsequent
year, from the 12 months ending August 31, 2016, to the 12 months ending on August 31
of the year preceding the taxable year. The credit amount and income threshold 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 subject to the Administrative Procedure Act in chapter 14, including
section 14.386.
new text end

new text begin EFFECTIVE DATE. new text end

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