1.1 	A bill for an act
1.2 	relating to taxation; changing competition of the
1.3 	research credit; amending Minnesota Statutes 2004,
1.4 	section 290.068, subdivision 1.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. Minnesota Statutes 2004, section 290.068,
1.7 	subdivision 1, is amended to read:
1.8 		Subdivision 1.Credit allowed.  A corporation, other than
1.9 	a corporation treated as an "S" corporation under section
1.10 	290.9725, is allowed a credit against the portion of the
1.11 	franchise tax computed under section 290.06, subdivision 1, for
1.12 	the taxable year equal to:
1.13 	(a) 5 percent of the first $2,000,000 of the excess (if
1.14 	any) of
1.15 	(1) the qualified research expenses for the taxable year,
1.16 	over
1.17 	(2) the base amount; and
1.18 	(b) 2.5 percent the following percentage on all of such
1.19 	excess expenses over $2,000,000.:
1.20 	(1) for taxable years beginning during calendar year 2006,
1.21 	three percent;
1.22 	(2) for taxable years beginning during calendar year 2007,
1.23 	four percent; and 
1.24 	(3) for taxable years beginning during calendar year 2008,
1.25 	and thereafter, five percent.