1.1 	A bill for an act
1.2 	relating to financing and operation of state and local government; making changes 
1.3 	to individual income, corporate franchise, property, sales and use, estate, mineral, 
1.4 	local, and other taxes and tax-related provisions; changing property tax aids and 
1.5 	credits; modifying education aids and levies; making changes to additions and 
1.6 	subtractions from federal taxable income; providing for federal conformity; 
1.7 	changing tax rates for estates; modifying income tax credits; modifying estate tax 
1.8 	provisions; repealing the gift tax; modifying the definition of sale and purchase; 
1.9 	modifying sales tax exemptions; modifying tax increment financing rules; 
1.10 	modifying the distribution of taconite production taxes; modifying and providing 
1.11 	provisions for public finance; report; appropriating money;amending Minnesota 
1.12 	Statutes 2012, sections 16A.152, subdivisions 1b, 2, 8; 37.31, subdivision 
1.13 	8; 116J.8737, subdivisions 5, 7, 9, 12; 276A.01, by adding a subdivision; 
1.14 	276A.06, subdivisions 3, 5, 8; 289A.02, subdivision 7; 289A.08, subdivision 
1.15 	7; 289A.18, subdivision 3; 290.01, subdivision 19a, by adding a subdivision; 
1.16 	290.067, subdivisions 1, 2a, by adding a subdivision; 290.0671, subdivisions 
1.17 	1, 7; 290.0675, subdivision 1; 291.03, by adding a subdivision; 297A.68, by 
1.18 	adding a subdivision; 298.225, subdivision 1; 298.28, subdivisions 3, 5, 7, 9a, by 
1.19 	adding a subdivision; 473.39, by adding a subdivision; Minnesota Statutes 2013 
1.20 	Supplement, sections 116J.8737, subdivisions 1, 2; 126C.10, subdivisions 1, 2e; 
1.21 	126C.13, subdivision 4; 126C.17, subdivision 1; 273.117; 289A.10, subdivision 
1.22 	1; 290.01, subdivisions 19, 19b, 31; 290.06, subdivision 2c; 290.091, subdivision 
1.23 	2; 290A.03, subdivision 15; 291.005, subdivision 1; 291.03, subdivision 1; 
1.24 	297A.61, subdivision 3; 297A.68, subdivision 5; 298.17; 298.28, subdivision 10; 
1.25 	Laws 2003, chapter 127, article 12, section 28; Laws 2006, chapter 259, article 
1.26 	10, section 13, subdivision 4; Laws 2008, chapter 366, article 5, section 36, 
1.27 	subdivision 3; Laws 2013, chapter 143, article 8, section 26; proposing coding for 
1.28 	new law in Minnesota Statutes, chapter 291; repealing Minnesota Statutes 2012, 
1.29 	sections 291.03, subdivision 1b; 291.41; 291.42; 291.43; 291.44; 291.45; 291.46; 
1.30 	291.47; Minnesota Statutes 2013 Supplement, sections 291.03, subdivision 1c; 
1.31 	292.16; 292.17; 292.18; 292.19; 292.20; 292.21; 297A.61, subdivision 57.
1.32 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

2.1 	ARTICLE 1
2.2 	INCOME AND CORPORATE FRANCHISE TAX

2.3 	Section 1. Minnesota Statutes 2013 Supplement, section 116J.8737, subdivision 1, 
2.4 	is amended to read:
2.5 		Subdivision 1.Definitions. (a) For the purposes of this section, the following terms 
2.6 	have the meanings given.
2.7 	(b) "Qualified small business" means a business that has been certified by the 
2.8 	commissioner under subdivision 2.
2.9 	(c) "Qualified investor" means an investor who has been certified by the 
2.10 	commissioner under subdivision 3.
2.11 	(d) "Qualified fund" means a pooled angel investment network fund that has been 
2.12 	certified by the commissioner under subdivision 4.
2.13 	(e) "Qualified investment" means a cash investment in a qualified small business 
2.14 	of a minimum of:
2.15 	(1) $10,000 in a calendar year by a qualified investor; or
2.16 	(2) $30,000 in a calendar year by a qualified fund.
2.17 	A qualified investment must be made in exchange for common stock, a partnership 
2.18 	or membership interest, preferred stock, debt with mandatory conversion to equity, or an 
2.19 	equivalent ownership interest as determined by the commissioner.
2.20 	(f) "Family" means a family member within the meaning of the Internal Revenue 
2.21 	Code, section 267(c)(4).
2.22 	(g) "Pass-through entity" means a corporation that for the applicable taxable year is 
2.23 	treated as an S corporation or a general partnership, limited partnership, limited liability 
2.24 	partnership, trust, or limited liability company and which for the applicable taxable year is 
2.25 	not taxed as a corporation under chapter 290.
2.26 	(h) "Intern" means a student of an accredited institution of higher education, or a 
2.27 	former student who has graduated in the past six months from an accredited institution 
2.28 	of higher education, who is employed by a qualified small business in a nonpermanent 
2.29 	position for a duration of nine months or less that provides training and experience in the 
2.30 	primary business activity of the business.
2.31 	(i) "Liquidation event" means a conversion of qualified investment for cash, cash 
2.32 	and other consideration, or any other form of equity or debt interest.
2.33 	(j) "Qualified greater Minnesota business" means a qualified small business that 
2.34 	is also certified by the commissioner as a qualified greater Minnesota business under 
2.35 	subdivision 2, paragraph (h).
3.1 	(k) "Minority group member" means a United States citizen who is Asian, Pacific 
3.2 	Islander, Black, Hispanic, or Native American.
3.3 	(l) "Minority-owned business" means a business for which one or more minority 
3.4 	group members:
3.5 	(1) own at least 50 percent of the business, or, in the case of a publicly owned 
3.6 	business, own at least 51 percent of the stock; and
3.7 	(2) manage the business and control the daily business operations.
3.8 	(m) "Women" means persons of the female gender.
3.9 	(n) "Women-owned business" means a business for which one or more women:
3.10 	(1) own at least 50 percent of the business, or, in the case of a publicly owned 
3.11 	business, own at least 51 percent of the stock; and
3.12 	(2) manage the business and control the daily business operations.
3.13 	(o) "Officer" means a person elected or appointed by the board of directors to 
3.14 	manage the daily operations of the qualified small business;
3.15 	(p) "Principal" means a person having authority to act on behalf of the qualified 
3.16 	small business.

3.17 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
3.18 	December 31, 2014.

3.19 	Sec. 2. Minnesota Statutes 2013 Supplement, section 116J.8737, subdivision 2, is 
3.20 	amended to read:
3.21 		Subd. 2.Certification of qualified small businesses. (a) Businesses may apply 
3.22 	to the commissioner for certification as a qualified small business or qualified greater 
3.23 	Minnesota small business for a calendar year. The application must be in the form 
3.24 	and be made under the procedures specified by the commissioner, accompanied by an 
3.25 	application fee of $150. Application fees are deposited in the small business investment 
3.26 	tax credit administration account in the special revenue fund. The application for 
3.27 	certification for 2010 must be made available on the department's Web site by August 1, 
3.28 	2010. Applications for subsequent years' certification must be made available on the 
3.29 	department's Web site by November 1 of the preceding year.
3.30 	(b) Within 30 days of receiving an application for certification under this subdivision, 
3.31 	the commissioner must either certify the business as satisfying the conditions required 
3.32 	of a qualified small business,or qualified greater Minnesota small business, request 
3.33 	additional information from the business, or reject the application for certification. If 
3.34 	the commissioner requests additional information from the business, the commissioner 
3.35 	must either certify the business or reject the application within 30 days of receiving the 
4.1 	additional information. If the commissioner neither certifies the business nor rejects 
4.2 	the application within 30 days of receiving the original application or within 30 days of 
4.3 	receiving the additional information requested, whichever is later, then the application is 
4.4 	deemed rejected, and the commissioner must refund the $150 application fee. A business 
4.5 	that applies for certification and is rejected may reapply.
4.6 	(c) To receive certification as a qualified small business, a business must satisfy 
4.7 	all of the following conditions:
4.8 	(1) the business has its headquarters in Minnesota;
4.9 	(2) at least 51 percent of the business's employees are employed in Minnesota, and 
4.10 	51 percent of the business's total payroll is paid or incurred in the state;
4.11 	(3) the business is engaged in, or is committed to engage in, innovation in Minnesota 
4.12 	in one of the following as its primary business activity:
4.13 	(i) using proprietary technology to add value to a product, process, or service in a 
4.14 	qualified high-technology field;
4.15 	(ii) researching or developing a proprietary product, process, or service in a qualified 
4.16 	high-technology field; or
4.17 	(iii) researching, developing, or producing a new proprietary technology for use in 
4.18 	the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;
4.19 	(4) other than the activities specifically listed in clause (3), the business is not 
4.20 	engaged in real estate development, insurance, banking, lending, lobbying, political 
4.21 	consulting, information technology consulting, wholesale or retail trade, leisure, 
4.22 	hospitality, transportation, construction, ethanol production from corn, or professional 
4.23 	services provided by attorneys, accountants, business consultants, physicians, or health 
4.24 	care consultants;
4.25 	(5) the business has fewer than 25 employees;
4.26 	(6) the business must pay its employees annual wages of at least 175 percent of the 
4.27 	federal poverty guideline for the year for a family of four and must pay its interns annual 
4.28 	wages of at least 175 percent of the federal minimum wage used for federally covered 
4.29 	employers, except that this requirement must be reduced proportionately for employees 
4.30 	and interns who work less than full-time, and does not apply to an executive, officer, or 
4.31 	member of the board of the business, or to any employee who owns, controls, or holds 
4.32 	power to vote more than 20 percent of the outstanding securities of the business;
4.33 	(7) the business has (i) not been in operation for more than ten years, or (ii) not 
4.34 	been in operation for more than 20 years if the business is engaged in the research, 
4.35 	development, or production of medical devices or pharmaceuticals for which United 
5.1 	States Food and Drug Administration approval is required for use in the treatment or 
5.2 	diagnosis of a disease or condition;
5.3 	(8) the business has not previously received private equity investments of more 
5.4 	than $4,000,000;
5.5 	(9) the business is not an entity disqualified under section 80A.50, paragraph (b), 
5.6 	clause (3); and
5.7 	(10) the business has not issued securities that are traded on a public exchange.
5.8 	(d) In applying the limit under paragraph (c), clause (5), the employees in all members 
5.9 	of the unitary business, as defined in section 290.17, subdivision 4, must be included.
5.10 	(e) In order for a qualified investment in a business to be eligible for tax credits:
5.11 	(1) the business must have applied for and received certification for the calendar 
5.12 	year in which the investment was made prior to the date on which the qualified investment 
5.13 	was made;
5.14 	(2) the business must not have issued securities that are traded on a public exchange;
5.15 	(3) the business must not issue securities that are traded on a public exchange within 
5.16 	180 days after the date on which the qualified investment was made; and
5.17 	(4) the business must not have a liquidation event within 180 days after the date on 
5.18 	which the qualified investment was made.
5.19 	(f) The commissioner must maintain a list of qualified small businesses and qualified 
5.20 	greater Minnesota businesses certified under this subdivision for the calendar year and 
5.21 	make the list accessible to the public on the department's Web site.
5.22 	(g) For purposes of this subdivision, the following terms have the meanings given:
5.23 	(1) "qualified high-technology field" includes aerospace, agricultural processing, 
5.24 	renewable energy, energy efficiency and conservation, environmental engineering, food 
5.25 	technology, cellulosic ethanol, information technology, materials science technology, 
5.26 	nanotechnology, telecommunications, biotechnology, medical device products, 
5.27 	pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar 
5.28 	fields; and
5.29 	(2) "proprietary technology" means the technical innovations that are unique and 
5.30 	legally owned or licensed by a business and includes, without limitation, those innovations 
5.31 	that are patented, patent pending, a subject of trade secrets, or copyrighted.; and
5.32 	(3) "greater Minnesota" means the area of Minnesota located outside of the 
5.33 	metropolitan area as defined in section 473.121, subdivision 2.
5.34 	(h) To receive certification as a qualified greater Minnesota business, a business must 
5.35 	satisfy all of the requirements of paragraph (c) and must satisfy the following conditions:
5.36 	(1) the business has its headquarters in greater Minnesota; and
6.1 	(2) at least 51 percent of the business's employees are employed in greater Minnesota, 
6.2 	and 51 percent of the business's total payroll is paid or incurred in greater Minnesota.

6.3 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
6.4 	December 31, 2014.

6.5 	Sec. 3. Minnesota Statutes 2012, section 116J.8737, subdivision 5, is amended to read:
6.6 		Subd. 5.Credit allowed. (a) (1) A qualified investor or qualified fund is eligible 
6.7 	for a credit equal to 25 percent of the qualified investment in a qualified small business. 
6.8 	Investments made by a pass-through entity qualify for a credit only if the entity is a 
6.9 	qualified fund. The commissioner must not allocate more than $11,000,000 $15,000,000
6.10 	 $15,000,000 in credits to qualified investors or qualified funds for taxable years 
6.11 	beginning after December 31, 2009 2013, and before January 1, 2011, and must not 
6.12 	allocate more than $12,000,000 in credits per year for taxable years beginning after 
6.13 	December 31, 2010, and before January 1, 20152017; and 
6.14 	(2) for taxable years beginning after December 31, 2014, and before January 1, 
6.15 	2017, $7,500,000 must be allocated to credits for qualifying investments in qualified 
6.16 	greater Minnesota businesses and minority- or women-owned qualified small businesses 
6.17 	in Minnesota. Any portion of a taxable year's credits that is reserved for qualifying 
6.18 	investments in greater Minnesota businesses and minority- or women-owned qualified 
6.19 	small businesses in Minnesota that is not allocated by September 30 of the taxable year is 
6.20 	available for allocation to other credit applications beginning on October 1. Any portion 
6.21 	of a taxable year's credits that is not allocated by the commissioner does not cancel and 
6.22 	may be carried forward to subsequent taxable years until all credits have been allocated.
6.23 	(b) The commissioner may not allocate more than a total maximum amount in credits 
6.24 	for a taxable year to a qualified investor for the investor's cumulative qualified investments 
6.25 	as an individual qualified investor and as an investor in a qualified fund; for married 
6.26 	couples filing joint returns the maximum is $250,000, and for all other filers the maximum 
6.27 	is $125,000. The commissioner may not allocate more than a total of $1,000,000 in credits 
6.28 	over all taxable years for qualified investments in any one qualified small business.
6.29 	(c) The commissioner may not allocate a credit to a qualified investor either as an 
6.30 	individual qualified investor or as an investor in a qualified fund if the investor receives 
6.31 	more than 50 percent of the investor's gross annual income from the qualified small business 
6.32 	in which the qualified investment is proposed, at the time the investment is proposed:
6.33 	(1) the investor is an officer or principal of the qualified small business; or
7.1 	(2) the investor, either individually or in combination with one or more members of 
7.2 	the investor's family, owns, controls, or holds the power to vote 20 percent or more of 
7.3 	the outstanding securities of the qualified small business. 
7.4 	A member of the family of an individual disqualified by this paragraph is not eligible for a 
7.5 	credit under this section. For a married couple filing a joint return, the limitations in this 
7.6 	paragraph apply collectively to the investor and spouse. For purposes of determining the 
7.7 	ownership interest of an investor under this paragraph, the rules under section 267(c) and 
7.8 	267(e) of the Internal Revenue Code apply.
7.9 	(d) Applications for tax credits for 2010 must be made available on the department's 
7.10 	Web site by September 1, 2010, and the department must begin accepting applications 
7.11 	by September 1, 2010. Applications for subsequent years must be made available by 
7.12 	November 1 of the preceding year.
7.13 	(e) Qualified investors and qualified funds must apply to the commissioner for tax 
7.14 	credits. Tax credits must be allocated to qualified investors or qualified funds in the order 
7.15 	that the tax credit request applications are filed with the department. The commissioner 
7.16 	must approve or reject tax credit request applications within 15 days of receiving the 
7.17 	application. The commissioner must allocate credits to approved applications if credits 
7.18 	remain available. The investment specified in the application must be made within 60 days 
7.19 	of the allocation of the credits. If the investment is not made within 60 days, the credit 
7.20 	allocation is canceled and available for reallocation. A qualified investor or qualified fund 
7.21 	that fails to invest as specified in the application, within 60 days of allocation of the 
7.22 	credits, must notify the commissioner of the failure to invest within five business days of 
7.23 	the expiration of the 60-day investment period. Credit applications that were approved but 
7.24 	that did not receive an allocation of credits at the time of approval because the aggregate 
7.25 	limit of credits for the year was exhausted remain eligible for allocation of credits if 
7.26 	additional credits become available due to cancellations under this paragraph or due to 
7.27 	termination of the time period for credits reserved for investment in qualified greater 
7.28 	Minnesota businesses and minority- and women-owned small businesses under paragraph 
7.29 	(a). Approved credit applications that do not receive credit allocations in the tax year must 
7.30 	be resubmitted to be eligible for credit allocations in the following tax year.
7.31 	(f) All tax credit request applications filed with the department on the same day must 
7.32 	be treated as having been filed contemporaneously. If two or more qualified investors or 
7.33 	qualified funds file tax credit request applications on the same day, and the aggregate 
7.34 	amount of credit allocation claims exceeds the aggregate limit of credits under this section 
7.35 	or the lesser amount of credits that remain unallocated on that day, then the credits must 
7.36 	be allocated among the qualified investors or qualified funds who filed on that day on a 
8.1 	pro rata basis with respect to the amounts claimed. The pro rata allocation for any one 
8.2 	qualified investor or qualified fund is the product obtained by multiplying a fraction, 
8.3 	the numerator of which is the amount of the credit allocation claim filed on behalf of 
8.4 	a qualified investor and the denominator of which is the total of all credit allocation 
8.5 	claims filed on behalf of all applicants on that day, by the amount of credits that remain 
8.6 	unallocated on that day for the taxable year.
8.7 	(g) A qualified investor or qualified fund, or a qualified small business acting on their 
8.8 	behalf, must notify the commissioner when an investment for which credits were allocated 
8.9 	has been made, and the taxable year in which the investment was made. A qualified fund 
8.10 	must also provide the commissioner with a statement indicating the amount invested by 
8.11 	each investor in the qualified fund based on each investor's share of the assets of the 
8.12 	qualified fund at the time of the qualified investment. After receiving notification that the 
8.13 	investment was made, the commissioner must issue credit certificates for the taxable year 
8.14 	in which the investment was made to the qualified investor or, for an investment made by 
8.15 	a qualified fund, to each qualified investor who is an investor in the fund. The certificate 
8.16 	must state that the credit is subject to revocation if the qualified investor or qualified 
8.17 	fund does not hold the investment in the qualified small business for at least three years, 
8.18 	consisting of the calendar year in which the investment was made and the two following 
8.19 	years. The three-year holding period does not apply if:
8.20 	(1) the investment by the qualified investor or qualified fund becomes worthless 
8.21 	before the end of the three-year period;
8.22 	(2) 80 percent or more of the assets of the qualified small business is sold before 
8.23 	the end of the three-year period;
8.24 	(3) the qualified small business is sold before the end of the three-year period; or
8.25 	(4) the qualified small business's common stock begins trading on a public exchange 
8.26 	before the end of the three-year period.; or
8.27 	(5) the qualified investor dies before the end of the three-year period.
8.28 	(h) The commissioner must notify the commissioner of revenue of credit certificates 
8.29 	issued under this section.

8.30 	EFFECTIVE DATE. Changes to paragraph (a) are effective for taxable years 
8.31 	beginning after December 31, 2013. The remainder of the changes are effective for taxable 
8.32 	years beginning after December 31, 2014.

8.33 	Sec. 4. Minnesota Statutes 2012, section 116J.8737, subdivision 7, is amended to read:
8.34 		Subd. 7.Revocation of credits. (a) If the commissioner determines that a 
8.35 	qualified investor or qualified fund did not meet the three-year holding period required in 
9.1 	subdivision 5, paragraph (g), any credit allocated and certified to the investor or fund is 
9.2 	revoked and must be repaid by the investor.
9.3 	(b) If the commissioner determines that a business did not meet the employment 
9.4 	and payroll requirements in subdivision 2, paragraph (c), clause (2), or paragraph (h), as 
9.5 	applicable, in any of the five calendar years following the year in which an investment in the 
9.6 	business that qualified for a tax credit under this section was made, the business must repay 
9.7 	the following percentage of the credits allowed for qualified investments in the business:

9.8	Year following the year in which
	Percentage of credit required
	
9.9	the investment was made:
	to be repaid:
	
9.10		First
	100%
		
9.11		Second
	80%
		
9.12		Third
	60%
		
9.13		Fourth
	40%
		
9.14		Fifth
	20%
		
9.15		Sixth and later
	0
		
9.16 	(c) The commissioner must notify the commissioner of revenue of every credit 
9.17 	revoked and subject to full or partial repayment under this section.
9.18 	(d) For the repayment of credits allowed under this section and section 290.0692, 
9.19 	a qualified small business, qualified investor, or investor in a qualified fund must file an 
9.20 	amended return with the commissioner of revenue and pay any amounts required to be 
9.21 	repaid within 30 days after becoming subject to repayment under this section.

9.22 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
9.23 	December 31, 2014.

9.24 	Sec. 5. Minnesota Statutes 2012, section 116J.8737, subdivision 9, is amended to read:
9.25 		Subd. 9.Report to legislature. Beginning in 2011, the commissioner must 
9.26 	annually report by March 15 to the chairs and ranking minority members of the legislative 
9.27 	committees having jurisdiction over taxes and economic development in the senate and 
9.28 	the house of representatives, in compliance with sections 3.195 and 3.197, on the tax 
9.29 	credits issued under this section. The report must include:
9.30 	(1) the number and amount of the credits issued;
9.31 	(2) the recipients of the credits;
9.32 	(3) for each qualified small business or qualified greater Minnesota business, its 
9.33 	location, line of business, and if it received an investment resulting in certification of 
9.34 	tax credits;
9.35 	(4) the total amount of investment in each qualified small business resulting in 
9.36 	certification of tax credits;
10.1 	(5) for each qualified small business that received investments resulting in tax 
10.2 	credits, the total amount of additional investment that did not qualify for the tax credit;
10.3 	(6) the number and amount of credits revoked under subdivision 7;
10.4 	(7) the number and amount of credits that are no longer subject to the three-year 
10.5 	holding period because of the exceptions under subdivision 5, paragraph (g), clauses 
10.6 	(1) to (4); and
10.7 	(8) any other information relevant to evaluating the effect of these credits.

10.8 	EFFECTIVE DATE. This section is effective for reports required to be filed after 
10.9 	December 31, 2014.

10.10 	Sec. 6. Minnesota Statutes 2012, section 116J.8737, subdivision 12, is amended to read:
10.11 		Subd. 12.Sunset. This section expires for taxable years beginning after December 
10.12 	31, 2014 2016, except that reporting requirements under subdivision 6 and revocation 
10.13 	of credits under subdivision 7 remain in effect through 2016 2018 for qualified 
10.14 	investors and qualified funds, and through 2018 2020 for qualified small businesses, 
10.15 	reporting requirements under subdivision 9 remain in effect through 2019 2021, and the 
10.16 	appropriation in subdivision 11 remains in effect through 2018 2020.

10.17 	EFFECTIVE DATE. This section is effective the day following final enactment.

10.18 	Sec. 7. Minnesota Statutes 2012, section 289A.02, subdivision 7, is amended to read:
10.19 		Subd. 7.Internal Revenue Code. Unless specifically defined otherwise, "Internal 
10.20 	Revenue Code" means the Internal Revenue Code of 1986, as amended through April 14, 
10.21 	2011 December 20, 2013.

10.22 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
10.23 	beginning after December 31, 2012.

10.24 	Sec. 8. Minnesota Statutes 2012, section 289A.08, subdivision 7, is amended to read:
10.25 		Subd. 7.Composite income tax returns for nonresident partners, shareholders, 
10.26 	and beneficiaries. (a) The commissioner may allow a partnership with nonresident 
10.27 	partners to file a composite return and to pay the tax on behalf of nonresident partners who 
10.28 	have no other Minnesota source income. This composite return must include the names, 
10.29 	addresses, Social Security numbers, income allocation, and tax liability for the nonresident 
10.30 	partners electing to be covered by the composite return.
10.31 	(b) The computation of a partner's tax liability must be determined by multiplying 
10.32 	the income allocated to that partner by the highest rate used to determine the tax liability 
11.1 	for individuals under section 290.06, subdivision 2c. Nonbusiness deductions, standard 
11.2 	deductions, or personal exemptions are not allowed.
11.3 	(c) The partnership must submit a request to use this composite return filing method 
11.4 	for nonresident partners. The requesting partnership must file a composite return in the 
11.5 	form prescribed by the commissioner of revenue. The filing of a composite return is 
11.6 	considered a request to use the composite return filing method.
11.7 	(d) The electing partner must not have any Minnesota source income other than the 
11.8 	income from the partnership and other electing partnerships. If it is determined that the 
11.9 	electing partner has other Minnesota source income, the inclusion of the income and tax 
11.10 	liability for that partner under this provision will not constitute a return to satisfy the 
11.11 	requirements of subdivision 1. The tax paid for the individual as part of the composite return 
11.12 	is allowed as a payment of the tax by the individual on the date on which the composite 
11.13 	return payment was made. If the electing nonresident partner has no other Minnesota 
11.14 	source income, filing of the composite return is a return for purposes of subdivision 1.
11.15 	(e) This subdivision does not negate the requirement that an individual pay estimated 
11.16 	tax if the individual's liability would exceed the requirements set forth in section 289A.25. 
11.17 	The individual's liability to pay estimated tax is, however, satisfied when the partnership 
11.18 	pays composite estimated tax in the manner prescribed in section 289A.25.
11.19 	(f) If an electing partner's share of the partnership's gross income from Minnesota 
11.20 	sources is less than the filing requirements for a nonresident under this subdivision, the tax 
11.21 	liability is zero. However, a statement showing the partner's share of gross income must 
11.22 	be included as part of the composite return.
11.23 	(g) The election provided in this subdivision is only available to a partner who has 
11.24 	no other Minnesota source income and who is either (1) a full-year nonresident individual 
11.25 	or (2) a trust or estate that does not claim a deduction under either section 651 or 661 of 
11.26 	the Internal Revenue Code.
11.27 	(h) A corporation defined in section 290.9725 and its nonresident shareholders may 
11.28 	make an election under this paragraph. The provisions covering the partnership apply to 
11.29 	the corporation and the provisions applying to the partner apply to the shareholder.
11.30 	(i) Estates and trusts distributing current income only and the nonresident individual 
11.31 	beneficiaries of the estates or trusts may make an election under this paragraph. The 
11.32 	provisions covering the partnership apply to the estate or trust. The provisions applying to 
11.33 	the partner apply to the beneficiary.
11.34 	(j) For the purposes of this subdivision, "income" means the partner's share of 
11.35 	federal adjusted gross income from the partnership modified by the additions provided in 
11.36 	section 290.01, subdivision 19a, clauses (6) to (10) (9), and the subtractions provided in: 
12.1 	(i) section 290.01, subdivision 19b, clause (8), to the extent the amount is assignable or 
12.2 	allocable to Minnesota under section 290.17; and (ii) section 290.01, subdivision 19b, 
12.3 	clause (13). The subtraction allowed under section 290.01, subdivision 19b, clause (8), is 
12.4 	only allowed on the composite tax computation to the extent the electing partner would 
12.5 	have been allowed the subtraction.

12.6 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
12.7 	beginning after December 31, 2012.

12.8 	Sec. 9. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 19, is 
12.9 	amended to read:
12.10 		Subd. 19.Net income. The term "net income" means the federal taxable income, 
12.11 	as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 
12.12 	date named in this subdivision, incorporating the federal effective dates of changes to the 
12.13 	Internal Revenue Code and any elections made by the taxpayer in accordance with the 
12.14 	Internal Revenue Code in determining federal taxable income for federal income tax 
12.15 	purposes, and with the modifications provided in subdivisions 19a to 19f.
12.16 	In the case of a regulated investment company or a fund thereof, as defined in section 
12.17 	851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 
12.18 	company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 
12.19 	except that:
12.20 	(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 
12.21 	Revenue Code does not apply;
12.22 	(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 
12.23 	Revenue Code must be applied by allowing a deduction for capital gain dividends and 
12.24 	exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 
12.25 	Revenue Code; and
12.26 	(3) the deduction for dividends paid must also be applied in the amount of any 
12.27 	undistributed capital gains which the regulated investment company elects to have treated 
12.28 	as provided in section 852(b)(3)(D) of the Internal Revenue Code.
12.29 	The net income of a real estate investment trust as defined and limited by section 
12.30 	856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 
12.31 	taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
12.32 	The net income of a designated settlement fund as defined in section 468B(d) of 
12.33 	the Internal Revenue Code means the gross income as defined in section 468B(b) of the 
12.34 	Internal Revenue Code.
13.1 	The Internal Revenue Code of 1986, as amended through April 14, 2011 December 
13.2 	20, 2013, shall be in effect for taxable years beginning after December 31, 1996, and 
13.3 	before January 1, 2012, and for taxable years beginning after December 31, 2012. The 
13.4 	Internal Revenue Code of 1986, as amended through January 3, 2013, is in effect for 
13.5 	taxable years beginning after December 31, 2011, and before January 1, 2013.
13.6 	The provisions of sections 315 and 331 of the American Taxpayer Relief Act of 
13.7 	2012, Public Law 112-240, extension of increased expensing limitations and treatment 
13.8 	of certain real property as section 179 property and extension and modification of bonus 
13.9 	depreciation, are effective at the same time they become effective for federal purposes.
13.10 	Except as otherwise provided, references to the Internal Revenue Code in 
13.11 	subdivisions 19 to 19f mean the code in effect for purposes of determining net income for 
13.12 	the applicable year.

13.13 	EFFECTIVE DATE. This section is effective the day following final enactment, 
13.14 	except the changes incorporated by federal changes are effective retroactively at the same 
13.15 	time as the changes were effective for federal purposes.

13.16 	Sec. 10. Minnesota Statutes 2012, section 290.01, subdivision 19a, is amended to read:
13.17 		Subd. 19a.Additions to federal taxable income. For individuals, estates, and 
13.18 	trusts, there shall be added to federal taxable income:
13.19 	(1)(i) interest income on obligations of any state other than Minnesota or a political 
13.20 	or governmental subdivision, municipality, or governmental agency or instrumentality 
13.21 	of any state other than Minnesota exempt from federal income taxes under the Internal 
13.22 	Revenue Code or any other federal statute; and
13.23 	(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
13.24 	Code, except:
13.25 	(A) the portion of the exempt-interest dividends exempt from state taxation under 
13.26 	the laws of the United States; and
13.27 	(B) the portion of the exempt-interest dividends derived from interest income 
13.28 	on obligations of the state of Minnesota or its political or governmental subdivisions, 
13.29 	municipalities, governmental agencies or instrumentalities, but only if the portion of the 
13.30 	exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
13.31 	95 percent or more of the exempt-interest dividends, including any dividends exempt 
13.32 	under subitem (A), that are paid by the regulated investment company as defined in section 
13.33 	851(a) of the Internal Revenue Code, or the fund of the regulated investment company as 
13.34 	defined in section 851(g) of the Internal Revenue Code, making the payment; and
14.1 	(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
14.2 	government described in section 7871(c) of the Internal Revenue Code shall be treated as 
14.3 	interest income on obligations of the state in which the tribe is located;
14.4 	(2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or 
14.5 	accrued within the taxable year under this chapter and the amount of taxes based on net 
14.6 	income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state or 
14.7 	to any province or territory of Canada, to the extent allowed as a deduction under section 
14.8 	63(d) of the Internal Revenue Code, but the addition may not be more than the amount by 
14.9 	which the itemized deductions as allowed under section 63(d) of the Internal Revenue 
14.10 	Code state itemized deduction exceeds the amount of the standard deduction as defined 
14.11 	in section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under 
14.12 	sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that 
14.13 	would have been required under clause (21) (17) if the taxpayer had claimed the standard 
14.14 	deduction. For the purpose of this paragraph, the disallowance of itemizeddeductions 
14.15 	under section 68 of the Internal Revenue Code of 1986 clause, income, sales and use, motor 
14.16 	vehicle sales, or excise taxes are the last itemized deductions disallowed under clause (15);
14.17 	(3) the capital gain amount of a lump-sum distribution to which the special tax under 
14.18 	section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
14.19 	(4) the amount of income taxes paid or accrued within the taxable year under this 
14.20 	chapter and taxes based on net income paid to any other state or any province or territory 
14.21 	of Canada, to the extent allowed as a deduction in determining federal adjusted gross 
14.22 	income. For the purpose of this paragraph, income taxes do not include the taxes imposed 
14.23 	by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
14.24 	(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10 
14.25 	other than expenses or interest used in computing net interest income for the subtraction 
14.26 	allowed under subdivision 19b, clause (1);
14.27 	(6) the amount of a partner's pro rata share of net income which does not flow 
14.28 	through to the partner because the partnership elected to pay the tax on the income under 
14.29 	section 6242(a)(2) of the Internal Revenue Code;
14.30 	(7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
14.31 	Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 
14.32 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
14.33 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
14.34 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
14.35 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
14.36 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
15.1 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
15.2 	under section 168(k) is allowed;
15.3 	(8) 80 percent of the amount by which the deduction allowed by section 179 of the 
15.4 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
15.5 	Revenue Code of 1986, as amended through December 31, 2003;
15.6 	(9) to the extent deducted in computing federal taxable income, the amount of the 
15.7 	deduction allowable under section 199 of the Internal Revenue Code;
15.8 	(10) for taxable years beginning before January 1, 2013, the exclusion allowed under 
15.9 	section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
15.10 	(11) the amount of expenses disallowed under section 290.10, subdivision 2;
15.11 	(12) (11) for taxable years beginning before January 1, 2010, the amount deducted 
15.12 	for qualified tuition and related expenses under section 222 of the Internal Revenue Code, 
15.13 	to the extent deducted from gross income;
15.14 	(13) (12) for taxable years beginning before January 1, 2010, the amount deducted 
15.15 	for certain expenses of elementary and secondary school teachers under section 
15.16 	62(a)(2)(D) of the Internal Revenue Code, to the extent deducted from gross income;
15.17 	(14) the additional standard deduction for property taxes payable that is allowable 
15.18 	under section 63(c)(1)(C) of the Internal Revenue Code;
15.19 	(15) the additional standard deduction for qualified motor vehicle sales taxes 
15.20 	allowable under section 63(c)(1)(E) of the Internal Revenue Code;
15.21 	(16) (13) discharge of indebtedness income resulting from reacquisition of business 
15.22 	indebtedness and deferred under section 108(i) of the Internal Revenue Code;
15.23 	(17) the amount of unemployment compensation exempt from tax under section 
15.24 	85(c) of the Internal Revenue Code;
15.25 	(18) (14) changes to federal taxable income attributable to a net operating loss that 
15.26 	the taxpayer elected to carry back for more than two years for federal purposes but for 
15.27 	which the losses can be carried back for only two years under section 290.095, subdivision 
15.28 	11, paragraph (c);
15.29 	(19) (15) to the extent included in the computation of federal taxable income in 
15.30 	taxable years beginning after December 31, 2010, the amount of disallowed itemized 
15.31 	deductions, but the amount of disallowed itemized deductions plus the addition required 
15.32 	under clause (2) may not be more than the amount by which the itemized deductions as 
15.33 	allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the 
15.34 	standard deduction as defined in section 63(c) of the Internal Revenue Code, disregarding 
15.35 	the amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue 
16.1 	Code, and reduced by any addition that would have been required under clause (21) (17) if 
16.2 	the taxpayer had claimed the standard deduction:
16.3 	(i) the amount of disallowed itemized deductions is equal to the lesser of:
16.4 	(A) three percent of the excess of the taxpayer's federal adjusted gross income 
16.5 	over the applicable amount; or
16.6 	(B) 80 percent of the amount of the itemized deductions otherwise allowable to the 
16.7 	taxpayer under the Internal Revenue Code for the taxable year;
16.8 	(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a 
16.9 	married individual filing a separate return. Each dollar amount shall be increased by 
16.10 	an amount equal to:
16.11 	(A) such dollar amount, multiplied by
16.12 	(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 
16.13 	Revenue Code for the calendar year in which the taxable year begins, by substituting 
16.14 	"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
16.15 	(iii) the term "itemized deductions" does not include:
16.16 	(A) the deduction for medical expenses under section 213 of the Internal Revenue 
16.17 	Code;
16.18 	(B) any deduction for investment interest as defined in section 163(d) of the Internal 
16.19 	Revenue Code; and
16.20 	(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or 
16.21 	theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue 
16.22 	Code or for losses described in section 165(d) of the Internal Revenue Code;
16.23 	(20) (16) to the extent included in federal taxable income in taxable years beginning 
16.24 	after December 31, 2010, the amount of disallowed personal exemptions for taxpayers 
16.25 	with federal adjusted gross income over the threshold amount:
16.26 	(i) the disallowed personal exemption amount is equal to the dollar amount of the 
16.27 	personal exemptions claimed by the taxpayer in the computation of federal taxable income 
16.28 	multiplied by the applicable percentage;
16.29 	(ii) "applicable percentage" means two percentage points for each $2,500 (or 
16.30 	fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable 
16.31 	year exceeds the threshold amount. In the case of a married individual filing a separate 
16.32 	return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In 
16.33 	no event shall the applicable percentage exceed 100 percent;
16.34 	(iii) the term "threshold amount" means:
16.35 	(A) $150,000 in the case of a joint return or a surviving spouse;
16.36 	(B) $125,000 in the case of a head of a household;
17.1 	(C) $100,000 in the case of an individual who is not married and who is not a 
17.2 	surviving spouse or head of a household; and
17.3 	(D) $75,000 in the case of a married individual filing a separate return; and
17.4 	(iv) the thresholds shall be increased by an amount equal to:
17.5 	(A) such dollar amount, multiplied by
17.6 	(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 
17.7 	Revenue Code for the calendar year in which the taxable year begins, by substituting 
17.8 	"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
17.9 	(21) (17) to the extent deducted in the computation of federal taxable income, for 
17.10 	taxable years beginning after December 31, 2010, and before January 1, 2013 2014, the 
17.11 	difference between the standard deduction allowed under section 63(c) of the Internal 
17.12 	Revenue Code and the standard deduction allowed for 2011 and, 2012, and 2013 under the 
17.13 	Internal Revenue Code as amended through December 1, 2010.

17.14 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
17.15 	beginning after December 31, 2012.

17.16 	Sec. 11. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 19b, 
17.17 	is amended to read:
17.18 		Subd. 19b.Subtractions from federal taxable income. For individuals, estates, 
17.19 	and trusts, there shall be subtracted from federal taxable income:
17.20 	(1) net interest income on obligations of any authority, commission, or 
17.21 	instrumentality of the United States to the extent includable in taxable income for federal 
17.22 	income tax purposes but exempt from state income tax under the laws of the United States;
17.23 	(2) if included in federal taxable income, the amount of any overpayment of income 
17.24 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
17.25 	is received as a refund or as a credit to another taxable year's income tax liability;
17.26 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
17.27 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
17.28 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
17.29 	transportation of each qualifying child in attending an elementary or secondary school 
17.30 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
17.31 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
17.32 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
17.33 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
17.34 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
17.35 	"textbooks" includes books and other instructional materials and equipment purchased 
18.1 	or leased for use in elementary and secondary schools in teaching only those subjects 
18.2 	legally and commonly taught in public elementary and secondary schools in this state. 
18.3 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
18.4 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
18.5 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
18.6 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
18.7 	or materials for, or transportation to, extracurricular activities including sporting events, 
18.8 	musical or dramatic events, speech activities, driver's education, or similar programs. No 
18.9 	deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or 
18.10 	the qualifying child's vehicle to provide such transportation for a qualifying child. For 
18.11 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
18.12 	given in section 32(c)(3) of the Internal Revenue Code;
18.13 	(4) income as provided under section 290.0802;
18.14 	(5) to the extent included in federal adjusted gross income, income realized on 
18.15 	disposition of property exempt from tax under section 290.491;
18.16 	(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 
18.17 	of the Internal Revenue Code in determining federal taxable income by an individual 
18.18 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
18.19 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
18.20 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code, 
18.21 	under the provisions of Public Law 109-1 and Public Law 111-126;
18.22 	(7) for individuals who are allowed a federal foreign tax credit for taxes that do not 
18.23 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
18.24 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
18.25 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
18.26 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
18.27 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
18.28 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
18.29 	the extent they exceed the federal foreign tax credit;
18.30 	(8) in each of the five tax years immediately following the tax year in which an 
18.31 	addition is required under subdivision 19a, clause (7), or 19c, clause (12), in the case of a 
18.32 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
18.33 	delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount 
18.34 	of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c, 
18.35 	clause (12), in the case of a shareholder of an S corporation, minus the positive value of 
19.1 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
19.2 	tax year of the addition. The resulting delayed depreciation cannot be less than zero;
19.3 	(9) job opportunity building zone income as provided under section 469.316;
19.4 	(10) to the extent included in federal taxable income, the amount of compensation 
19.5 	paid to members of the Minnesota National Guard or other reserve components of the 
19.6 	United States military for active service, excluding compensation for services performed 
19.7 	under the Active Guard Reserve (AGR) program. For purposes of this clause, "active 
19.8 	service" means (i) state active service as defined in section 190.05, subdivision 5a, clause 
19.9 	(1); or (ii) federally funded state active service as defined in section 190.05, subdivision 
19.10 	5b, but "active service" excludes service performed in accordance with section 190.08, 
19.11 	subdivision 3;
19.12 	(11) to the extent included in federal taxable income, the amount of compensation 
19.13 	paid to Minnesota residents who are members of the armed forces of the United States 
19.14 	or United Nations for active duty performed under United States Code, title 10; or the 
19.15 	authority of the United Nations;
19.16 	(12) an amount, not to exceed $10,000, equal to qualified expenses related to a 
19.17 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
19.18 	to another person for human organ transplantation. For purposes of this clause, "organ" 
19.19 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
19.20 	"human organ transplantation" means the medical procedure by which transfer of a human 
19.21 	organ is made from the body of one person to the body of another person; "qualified 
19.22 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
19.23 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
19.24 	may be subtracted under this clause only once; and "qualified donor" means the individual 
19.25 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
19.26 	individual may claim the subtraction in this clause for each instance of organ donation for 
19.27 	transplantation during the taxable year in which the qualified expenses occur;
19.28 	(13) in each of the five tax years immediately following the tax year in which an 
19.29 	addition is required under subdivision 19a, clause (8), or 19c, clause (13), in the case of a 
19.30 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
19.31 	addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (13), in the 
19.32 	case of a shareholder of a corporation that is an S corporation, minus the positive value of 
19.33 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
19.34 	tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 
19.35 	subtraction is not allowed under this clause;
20.1 	(14) to the extent included in the federal taxable income of a nonresident of 
20.2 	Minnesota, compensation paid to a service member as defined in United States Code, title 
20.3 	10, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief 
20.4 	Act, Public Law 108-189, section 101(2);
20.5 	(15) to the extent included in federal taxable income, the amount of national service 
20.6 	educational awards received from the National Service Trust under United States Code, 
20.7 	title 42, sections 12601 to 12604, for service in an approved Americorps National Service 
20.8 	program;
20.9 	(16) to the extent included in federal taxable income, discharge of indebtedness 
20.10 	income resulting from reacquisition of business indebtedness included in federal taxable 
20.11 	income under section 108(i) of the Internal Revenue Code. This subtraction applies only 
20.12 	to the extent that the income was included in net income in a prior year as a result of the 
20.13 	addition under section 290.01, subdivision 19a, clause (16) (13);
20.14 	(17) the amount of the net operating loss allowed under section 290.095, subdivision 
20.15 	11, paragraph (c); and
20.16 	(18) the amount of expenses not allowed for federal income tax purposes due 
20.17 	to claiming the railroad track maintenance credit under section 45G(a) of the Internal 
20.18 	Revenue Code.;
20.19 	(19) the amount of the limitation on itemized deductions under section 68(b) of 
20.20 	the Internal Revenue Code; and
20.21 	(20) the amount of the phaseout of personal exemptions under section 151(d) of the 
20.22 	Internal Revenue Code.

20.23 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
20.24 	beginning after December 31, 2012.

20.25 	Sec. 12. Minnesota Statutes 2012, section 290.01, is amended by adding a subdivision 
20.26 	to read:
20.27 		Subd. 29a.State itemized deduction. "State itemized deduction" means 
20.28 	federal itemized deductions, as defined in section 63(d) of the Internal Revenue Code, 
20.29 	disregarding any limitation under section 68 of the Internal Revenue Code, and reduced 
20.30 	by the amount of the addition required under subdivision 19a, clause (15).

20.31 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
20.32 	beginning after December 31, 2012.

21.1 	Sec. 13. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 31, is 
21.2 	amended to read:
21.3 		Subd. 31.Internal Revenue Code. Unless specifically defined otherwise, for 
21.4 	taxable years beginning before January 1, 2012, and after December 31, 2012, "Internal 
21.5 	Revenue Code" means the Internal Revenue Code of 1986, as amended through April 14, 
21.6 	2011; and for taxable years beginning after December 31, 2011, and before January 1, 
21.7 	2013, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended 
21.8 	through January 3 December 20, 2013. Internal Revenue Code also includes any 
21.9 	uncodified provision in federal law that relates to provisions of the Internal Revenue 
21.10 	Code that are incorporated into Minnesota law. When used in this chapter, the reference 
21.11 	to "subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code" is to the 
21.12 	Internal Revenue Code as amended through March 18, 2010.

21.13 	EFFECTIVE DATE. This section is effective the day following final enactment, 
21.14 	except the changes incorporated by federal changes are effective retroactively at the same 
21.15 	time the changes were effective for federal purposes.

21.16 	Sec. 14. Minnesota Statutes 2013 Supplement, section 290.06, subdivision 2c, is 
21.17 	amended to read:
21.18 		Subd. 2c.Schedules of rates for individuals, estates, and trusts. (a) The income 
21.19 	taxes imposed by this chapter upon married individuals filing joint returns and surviving 
21.20 	spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 
21.21 	applying to their taxable net income the following schedule of rates:
21.22 	(1) On the first $35,480, 5.35 percent;
21.23 	(2) On all over $35,480, but not over $140,960, 7.05 percent;
21.24 	(3) On all over $140,960, but not over $250,000, 7.85 percent;
21.25 	(4) On all over $250,000, 9.85 percent.
21.26 	Married individuals filing separate returns, estates, and trusts must compute their 
21.27 	income tax by applying the above rates to their taxable income, except that the income 
21.28 	brackets will be one-half of the above amounts.
21.29 	(b) The income taxes imposed by this chapter upon unmarried individuals must be 
21.30 	computed by applying to taxable net income the following schedule of rates:
21.31 	(1) On the first $24,270, 5.35 percent;
21.32 	(2) On all over $24,270, but not over $79,730, 7.05 percent;
21.33 	(3) On all over $79,730, but not over $150,000, 7.85 percent;
21.34 	(4) On all over $150,000, 9.85 percent.
22.1 	(c) The income taxes imposed by this chapter upon unmarried individuals qualifying 
22.2 	as a head of household as defined in section 2(b) of the Internal Revenue Code must be 
22.3 	computed by applying to taxable net income the following schedule of rates:
22.4 	(1) On the first $29,880, 5.35 percent;
22.5 	(2) On all over $29,880, but not over $120,070, 7.05 percent;
22.6 	(3) On all over $120,070, but not over $200,000, 7.85 percent;
22.7 	(4) On all over $200,000, 9.85 percent.
22.8 	(d) In lieu of a tax computed according to the rates set forth in this subdivision, the 
22.9 	tax of any individual taxpayer whose taxable net income for the taxable year is less than 
22.10 	an amount determined by the commissioner must be computed in accordance with tables 
22.11 	prepared and issued by the commissioner of revenue based on income brackets of not 
22.12 	more than $100. The amount of tax for each bracket shall be computed at the rates set 
22.13 	forth in this subdivision, provided that the commissioner may disregard a fractional part of 
22.14 	a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
22.15 	(e) An individual who is not a Minnesota resident for the entire year must compute 
22.16 	the individual's Minnesota income tax as provided in this subdivision. After the 
22.17 	application of the nonrefundable credits provided in this chapter, the tax liability must 
22.18 	then be multiplied by a fraction in which:
22.19 	(1) the numerator is the individual's Minnesota source federal adjusted gross income 
22.20 	as defined in section 62 of the Internal Revenue Code and increased by the additions 
22.21 	required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), 
22.22 	(13), and (16) to (18) and (11) to (14), and reduced by the Minnesota assignable portion of 
22.23 	the subtraction for United States government interest under section 290.01, subdivision 
22.24 	19b, clause (1), and the subtractions under section 290.01, subdivision 19b, clauses (8), 
22.25 	(9), (13), (14), (16), and (17), after applying the allocation and assignability provisions of 
22.26 	section 290.081, clause (a), or 290.17; and
22.27 	(2) the denominator is the individual's federal adjusted gross income as defined in 
22.28 	section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 
22.29 	section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to 
22.30 	(18) and (11) to (14), and reduced by the amounts specified in section 290.01, subdivision 
22.31 	19b, clauses (1), (8), (9), (13), (14), (16), and (17).

22.32 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
22.33 	beginning after December 31, 2012.

22.34 	Sec. 15. Minnesota Statutes 2012, section 290.067, subdivision 1, is amended to read:
23.1 		Subdivision 1.Amount of credit. (a) A taxpayer may take as a credit against the 
23.2 	tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the 
23.3 	dependent care credit for which the taxpayer is eligible pursuant to the provisions of 
23.4 	section 21 of the Internal Revenue Code subject to the limitations provided in subdivision 
23.5 	2 except that in determining whether the child qualified as a dependent, income received 
23.6 	as a Minnesota family investment program grant or allowance to or on behalf of the child 
23.7 	must not be taken into account in determining whether the child received more than half 
23.8 	of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of 
23.9 	the Internal Revenue Code do not apply.
23.10 	(b) If a child who has not attained the age of six years at the close of the taxable year 
23.11 	is cared for at a licensed family day care home operated by the child's parent, the taxpayer 
23.12 	is deemed to have paid employment-related expenses. If the child is 16 months old or 
23.13 	younger at the close of the taxable year, the amount of expenses deemed to have been paid 
23.14 	equals the maximum limit for one qualified individual under section 21(c) and (d) of the 
23.15 	Internal Revenue Code. If the child is older than 16 months of age but has not attained the 
23.16 	age of six years at the close of the taxable year, the amount of expenses deemed to have 
23.17 	been paid equals the amount the licensee would charge for the care of a child of the same 
23.18 	age for the same number of hours of care.
23.19 	(c) If a married couple:
23.20 	(1) has a child who has not attained the age of one year at the close of the taxable year;
23.21 	(2) files a joint tax return for the taxable year; and
23.22 	(3) does not participate in a dependent care assistance program as defined in section 
23.23 	129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid 
23.24 	for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of 
23.25 	(i) the combined earned income of the couple or (ii) the amount of the maximum limit for 
23.26 	one qualified individual under section 21(c) and (d) of the Internal Revenue Code will 
23.27 	be deemed to be the employment related expense paid for that child. The earned income 
23.28 	limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed 
23.29 	amount. These deemed amounts apply regardless of whether any employment-related 
23.30 	expenses have been paid.
23.31 	(d) If the taxpayer is not required and does not file a federal individual income tax 
23.32 	return for the tax year, no credit is allowed for any amount paid to any person unless:
23.33 	(1) the name, address, and taxpayer identification number of the person are included 
23.34 	on the return claiming the credit; or
24.1 	(2) if the person is an organization described in section 501(c)(3) of the Internal 
24.2 	Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, 
24.3 	the name and address of the person are included on the return claiming the credit.
24.4 	In the case of a failure to provide the information required under the preceding sentence, 
24.5 	the preceding sentence does not apply if it is shown that the taxpayer exercised due 
24.6 	diligence in attempting to provide the information required.
24.7 	(e) In the case of a nonresident, part-year resident, or a person who has earned 
24.8 	income not subject to tax under this chapter including earned income excluded pursuant to 
24.9 	section 290.01, subdivision 19b, clause (9), the credit determined under section 21 of the 
24.10 	Internal Revenue Code must be allocated based on the ratio by which the earned income 
24.11 	of the claimant and the claimant's spouse from Minnesota sources bears to the total earned 
24.12 	income of the claimant and the claimant's spouse.
24.13 	(f) For residents of Minnesota, the subtractions for military pay under section 
24.14 	290.01, subdivision 19b, clauses (10) and (11), are not considered "earned income not 
24.15 	subject to tax under this chapter."
24.16 	(g) For residents of Minnesota, the exclusion of combat pay under section 112 of 
24.17 	the Internal Revenue Code is not considered "earned income not subject to tax under 
24.18 	this chapter."

24.19 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
24.20 	beginning after December 31, 2012.

24.21 	Sec. 16. Minnesota Statutes 2012, section 290.067, subdivision 2a, is amended to read:
24.22 		Subd. 2a.Income. (a) For purposes of this section, "income" means the sum of 
24.23 	the following:
24.24 	(1) federal adjusted gross income as defined in section 62 of the Internal Revenue 
24.25 	Code; and
24.26 	(2) the sum of the following amounts to the extent not included in clause (1):
24.27 	(i) all nontaxable income;
24.28 	(ii) the amount of a passive activity loss that is not disallowed as a result of section 
24.29 	469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity 
24.30 	loss carryover allowed under section 469(b) of the Internal Revenue Code;
24.31 	(iii) an amount equal to the total of any discharge of qualified farm indebtedness 
24.32 	of a solvent individual excluded from gross income under section 108(g) of the Internal 
24.33 	Revenue Code;
24.34 	(iv) cash public assistance and relief;
25.1 	(v) any pension or annuity (including railroad retirement benefits, all payments 
25.2 	received under the federal Social Security Act, supplemental security income, and veterans 
25.3 	benefits), which was not exclusively funded by the claimant or spouse, or which was 
25.4 	funded exclusively by the claimant or spouse and which funding payments were excluded 
25.5 	from federal adjusted gross income in the years when the payments were made;
25.6 	(vi) interest received from the federal or a state government or any instrumentality 
25.7 	or political subdivision thereof;
25.8 	(vii) workers' compensation;
25.9 	(viii) nontaxable strike benefits;
25.10 	(ix) the gross amounts of payments received in the nature of disability income or 
25.11 	sick pay as a result of accident, sickness, or other disability, whether funded through 
25.12 	insurance or otherwise;
25.13 	(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of 
25.14 	1986, as amended through December 31, 1995;
25.15 	(xi) contributions made by the claimant to an individual retirement account, 
25.16 	including a qualified voluntary employee contribution; simplified employee pension plan; 
25.17 	self-employed retirement plan; cash or deferred arrangement plan under section 401(k) 
25.18 	of the Internal Revenue Code; or deferred compensation plan under section 457 of the 
25.19 	Internal Revenue Code;
25.20 	(xii) nontaxable scholarship or fellowship grants;
25.21 	(xiii) the amount of deduction allowed under section 199 of the Internal Revenue 
25.22 	Code;
25.23 	(xiv) the amount of deduction allowed under section 220 or 223 of the Internal 
25.24 	Revenue Code;
25.25 	(xv) the amount of deducted for tuition expenses required to be added to income 
25.26 	under section 290.01, subdivision 19a, clause (12) under section 222 of the Internal 
25.27 	Revenue Code; and
25.28 	(xvi) the amount deducted for certain expenses of elementary and secondary school 
25.29 	teachers under section 62(a)(2)(D) of the Internal Revenue Code; and.
25.30 	(xvii) unemployment compensation.
25.31 	In the case of an individual who files an income tax return on a fiscal year basis, the 
25.32 	term "federal adjusted gross income" means federal adjusted gross income reflected in the 
25.33 	fiscal year ending in the next calendar year. Federal adjusted gross income may not be 
25.34 	reduced by the amount of a net operating loss carryback or carryforward or a capital loss 
25.35 	carryback or carryforward allowed for the year.
25.36 	(b) "Income" does not include:
26.1 	(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
26.2 	(2) amounts of any pension or annuity that were exclusively funded by the claimant 
26.3 	or spouse if the funding payments were not excluded from federal adjusted gross income 
26.4 	in the years when the payments were made;
26.5 	(3) surplus food or other relief in kind supplied by a governmental agency;
26.6 	(4) relief granted under chapter 290A;
26.7 	(5) child support payments received under a temporary or final decree of dissolution 
26.8 	or legal separation; and
26.9 	(6) restitution payments received by eligible individuals and excludable interest as 
26.10 	defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 
26.11 	2001, Public Law 107-16.

26.12 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
26.13 	beginning after December 31, 2012.

26.14 	Sec. 17. Minnesota Statutes 2012, section 290.067, is amended by adding a subdivision 
26.15 	to read:
26.16 		Subd. 2c.Dependent care credit; temporary definition. For taxable years 
26.17 	beginning after December 31, 2012, and before January 1, 2014, for purposes of this 
26.18 	section, "section 21 of the Internal Revenue Code" means section 21 of the Internal 
26.19 	Revenue Code as amended through June 1, 2001.

26.20 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
26.21 	beginning after December 31, 2012.

26.22 	Sec. 18. Minnesota Statutes 2012, section 290.0671, subdivision 1, is amended to read:
26.23 		Subdivision 1.Credit allowed. (a) An individual is allowed a credit against the tax 
26.24 	imposed by this chapter equal to a percentage of earned income. To receive a credit, a 
26.25 	taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
26.26 	(b) For individuals with no qualifying children, the credit equals 1.9125 2.10 percent 
26.27 	of the first $4,620 $6,180 of earned income. The credit is reduced by 1.9125 2.01 percent 
26.28 	of earned income or adjusted gross income, whichever is greater, in excess of $5,770
26.29 	 $8,130, but in no case is the credit less than zero.
26.30 	(c) For individuals with one qualifying child, the credit equals 8.5 9.35 percent of 
26.31 	the first $6,920 $11,120 of earned income and 8.5 percent of earned income over $12,080 
26.32 	but less than $13,450. The credit is reduced by 5.73 6.02 percent of earned income or 
27.1 	adjusted gross income, whichever is greater, in excess of $15,080 $21,190, but in no 
27.2 	case is the credit less than zero.
27.3 	(d) For individuals with two or more qualifying children, the credit equals ten 11
27.4 	 percent of the first $9,720 $18,240 of earned income and 20 percent of earned income 
27.5 	over $14,860 but less than $16,800. The credit is reduced by 10.3 10.82 percent of earned 
27.6 	income or adjusted gross income, whichever is greater, in excess of $17,890 $25,130, 
27.7 	but in no case is the credit less than zero.
27.8 	(e) For a nonresident or part-year resident, the credit must be allocated based on the 
27.9 	percentage calculated under section 290.06, subdivision 2c, paragraph (e).
27.10 	(f) For a person who was a resident for the entire tax year and has earned income 
27.11 	not subject to tax under this chapter, including income excluded under section 290.01, 
27.12 	subdivision 19b, clause (9), the credit must be allocated based on the ratio of federal 
27.13 	adjusted gross income reduced by the earned income not subject to tax under this chapter 
27.14 	over federal adjusted gross income. For purposes of this paragraph, the subtractions 
27.15 	for military pay under section 290.01, subdivision 19b, clauses (10) and (11), are not 
27.16 	considered "earned income not subject to tax under this chapter."
27.17 	For the purposes of this paragraph, the exclusion of combat pay under section 112 
27.18 	of the Internal Revenue Code is not considered "earned income not subject to tax under 
27.19 	this chapter."
27.20 	(g) For tax years beginning after December 31, 2007, and before December 31, 2010, 
27.21 	and for tax years beginning after December 31, 2017, the $5,770 $8,130 in paragraph 
27.22 	(b), the $15,080 $21,190 in paragraph (c), and the $17,890 $25,130 in paragraph (d), 
27.23 	after being adjusted for inflation under subdivision 7, are each increased by $3,000 for 
27.24 	married taxpayers filing joint returns. For tax years beginning after December 31, 2008, 
27.25 	the commissioner shall annually adjust the $3,000 by the percentage determined pursuant 
27.26 	to the provisions of section 1(f) of the Internal Revenue Code, except that in section 
27.27 	1(f)(3)(B), the word "2007" shall be substituted for the word "1992." For 2009, the 
27.28 	commissioner shall then determine the percent change from the 12 months ending on 
27.29 	August 31, 2007, to the 12 months ending on August 31, 2008, and in each subsequent 
27.30 	year, from the 12 months ending on August 31, 2007, to the 12 months ending on August 
27.31 	31 of the year preceding the taxable year. The earned income thresholds as adjusted 
27.32 	for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount 
27.33 	is rounded up to the nearest $10. The determination of the commissioner under this 
27.34 	subdivision is not a rule under the Administrative Procedure Act.
27.35 	(h) For tax years beginning after December 31, 2010, and before January 1, 2012,(1) 
27.36 	For tax years beginning after December 31, 2012, and before January 1, 2014, the $5,770 
28.1 	in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph (d), after 
28.2 	being adjusted for inflation under subdivision 7, are increased by $5,340 for married 
28.3 	taxpayers filing joint returns; and (2) for tax years beginning after December 31, 2013, 
28.4 	and before January 1, 2018, the $5,770 $8,130 in paragraph (b), the $15,080 $21,190
28.5 	 in paragraph (c), and the $17,890 $25,130 in paragraph (d), after being adjusted for 
28.6 	inflation under subdivision 7, are each increased by $5,000 for married taxpayers filing 
28.7 	joint returns. For tax years beginning after December 31, 2010, and before January 
28.8 	1, 2012, and for tax years beginning after December 31, 2013, and before January 1, 
28.9 	2018, the commissioner shall annually adjust the $5,000 by the percentage determined 
28.10 	pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in 
28.11 	section 1(f)(3)(B), the word "2008" shall be substituted for the word "1992." For 2011, 
28.12 	the commissioner shall then determine the percent change from the 12 months ending on 
28.13 	August 31, 2008, to the 12 months ending on August 31, 2010, and in each subsequent 
28.14 	year, from the 12 months ending on August 31, 2008, to the 12 months ending on August 
28.15 	31 of the year preceding the taxable year. The earned income thresholds as adjusted 
28.16 	for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount 
28.17 	is rounded up to the nearest $10. The determination of the commissioner under this 
28.18 	subdivision is not a rule under the Administrative Procedure Act.
28.19 	(i) The commissioner shall construct tables showing the amount of the credit at 
28.20 	various income levels and make them available to taxpayers. The tables shall follow 
28.21 	the schedule contained in this subdivision, except that the commissioner may graduate 
28.22 	the transition between income brackets.

28.23 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
28.24 	December 31, 2013, except that the changes in paragraph (h), clause (1), are effective 
28.25 	retroactively for taxable years beginning after December 31, 2012, and before January 
28.26 	1, 2014.

28.27 	Sec. 19. Minnesota Statutes 2012, section 290.0671, subdivision 7, is amended to read:
28.28 		Subd. 7.Inflation adjustment. The earned income amounts used to calculate 
28.29 	the credit and the income thresholds at which the maximum credit begins to be reduced 
28.30 	in subdivision 1 must be adjusted for inflation. The commissioner shall adjust by the 
28.31 	percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue 
28.32 	Code, except that in section 1(f)(3)(B) the word "1999" "2013" shall be substituted for 
28.33 	the word "1992." For 2001 2015, the commissioner shall then determine the percent 
28.34 	change from the 12 months ending on August 31, 1999 2013, to the 12 months ending 
28.35 	on August 31, 2000 2014, and in each subsequent year, from the 12 months ending on 
29.1 	August 31, 1999 2013, to the 12 months ending on August 31 of the year preceding the 
29.2 	taxable year. The earned income thresholds as adjusted for inflation must be rounded to 
29.3 	the nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest 
29.4 	$10 amount. The determination of the commissioner under this subdivision is not a rule 
29.5 	under the Administrative Procedure Act.

29.6 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
29.7 	December 31, 2014.

29.8 	Sec. 20. Minnesota Statutes 2012, section 290.0675, subdivision 1, is amended to read:
29.9 		Subdivision 1.Definitions. (a) For purposes of this section the following terms 
29.10 	have the meanings given.
29.11 	(b) "Earned income" means the sum of the following, to the extent included in 
29.12 	Minnesota taxable income:
29.13 	(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
29.14 	(2) income received from a retirement pension, profit-sharing, stock bonus, or 
29.15 	annuity plan; and
29.16 	(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue 
29.17 	Code.
29.18 	(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
29.19 	(d) "Earned income of lesser-earning spouse" means the earned income of the spouse 
29.20 	with the lesser amount of earned income as defined in paragraph (b) for the taxable year 
29.21 	minus the sum of (i) the amount for one exemption under section 151(d) of the Internal 
29.22 	Revenue Code and (ii) one-half the amount of the standard deduction under section 
29.23 	63(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition required 
29.24 	under section 290.01, subdivision 19a, clause (21) (17), and one-half of the addition that 
29.25 	would have been required under section 290.01, subdivision 19a, clause (21) (17), if the 
29.26 	taxpayer had claimed the standard deduction.

29.27 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
29.28 	beginning after December 31, 2012.

29.29 	Sec. 21. Minnesota Statutes 2013 Supplement, section 290.091, subdivision 2, is 
29.30 	amended to read:
29.31 		Subd. 2.Definitions. For purposes of the tax imposed by this section, the following 
29.32 	terms have the meanings given:
30.1 	(a) "Alternative minimum taxable income" means the sum of the following for 
30.2 	the taxable year:
30.3 	(1) the taxpayer's federal alternative minimum taxable income as defined in section 
30.4 	55(b)(2) of the Internal Revenue Code;
30.5 	(2) the taxpayer's itemized deductions allowed in computing federal alternative 
30.6 	minimum taxable income, but excluding:
30.7 	(i) the charitable contribution deduction under section 170 of the Internal Revenue 
30.8 	Code;
30.9 	(ii) the medical expense deduction;
30.10 	(iii) the casualty, theft, and disaster loss deduction; and
30.11 	(iv) the impairment-related work expenses of a disabled person;
30.12 	(3) for depletion allowances computed under section 613A(c) of the Internal 
30.13 	Revenue Code, with respect to each property (as defined in section 614 of the Internal 
30.14 	Revenue Code), to the extent not included in federal alternative minimum taxable income, 
30.15 	the excess of the deduction for depletion allowable under section 611 of the Internal 
30.16 	Revenue Code for the taxable year over the adjusted basis of the property at the end of the 
30.17 	taxable year (determined without regard to the depletion deduction for the taxable year);
30.18 	(4) to the extent not included in federal alternative minimum taxable income, the 
30.19 	amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 
30.20 	Internal Revenue Code determined without regard to subparagraph (E);
30.21 	(5) to the extent not included in federal alternative minimum taxable income, the 
30.22 	amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
30.23 	(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7) 
30.24 	to (9), (12), (13), and (16) to (18) and (11) to (14);
30.25 	less the sum of the amounts determined under the following:
30.26 	(1) interest income as defined in section 290.01, subdivision 19b, clause (1);
30.27 	(2) an overpayment of state income tax as provided by section 290.01, subdivision 
30.28 	19b, clause (2), to the extent included in federal alternative minimum taxable income;
30.29 	(3) the amount of investment interest paid or accrued within the taxable year on 
30.30 	indebtedness to the extent that the amount does not exceed net investment income, as 
30.31 	defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include 
30.32 	amounts deducted in computing federal adjusted gross income;
30.33 	(4) amounts subtracted from federal taxable income as provided by section 290.01, 
30.34 	subdivision 19b, clauses (6), (8) to (14), and (16); and
30.35 	(5) the amount of the net operating loss allowed under section 290.095, subdivision 
30.36 	11, paragraph (c).
31.1 	In the case of an estate or trust, alternative minimum taxable income must be 
31.2 	computed as provided in section 59(c) of the Internal Revenue Code.
31.3 	(b) "Investment interest" means investment interest as defined in section 163(d)(3) 
31.4 	of the Internal Revenue Code.
31.5 	(c) "Net minimum tax" means the minimum tax imposed by this section.
31.6 	(d) "Regular tax" means the tax that would be imposed under this chapter (without 
31.7 	regard to this section and section 290.032), reduced by the sum of the nonrefundable 
31.8 	credits allowed under this chapter.
31.9 	(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable 
31.10 	income after subtracting the exemption amount determined under subdivision 3.

31.11 	EFFECTIVE DATE. This section is effective retroactively for taxable years 
31.12 	beginning after December 31, 2012.

31.13 	Sec. 22. Minnesota Statutes 2013 Supplement, section 290A.03, subdivision 15, 
31.14 	is amended to read:
31.15 		Subd. 15.Internal Revenue Code. For taxable years beginning before January 1, 
31.16 	2012, and after December 31, 2012, "Internal Revenue Code" means the Internal Revenue 
31.17 	Code of 1986, as amended through April 14, 2011; and for taxable years beginning after 
31.18 	December 31, 2011, and before January 1, 2013, "Internal Revenue Code" means the 
31.19 	Internal Revenue Code of 1986, as amended through January 3 December 20, 2013.

31.20 	EFFECTIVE DATE. This section is effective retroactively for property tax refunds 
31.21 	based on property taxes payable after December 31, 2013, and rent paid after December 
31.22 	31, 2012.

31.23 	Sec. 23. INDIVIDUAL INCOME TAX COLLECTION ACTION PROHIBITED.
 31.24 	Notwithstanding any law to the contrary, the commissioner shall not increase the 
31.25 	amount due or decrease the refund for an individual income tax return for the taxable 
31.26 	year beginning after December 31, 2012, and before January 1, 2014, to the extent the 
31.27 	amount due was understated or the refund was overstated because the taxpayer calculated 
31.28 	the tax or refund based on the Internal Revenue Code, as amended through April 14, 
31.29 	2011, rather than based on the Internal Revenue Code, as amended through December 
31.30 	20, 2013, as provided in this act. 

31.31 	EFFECTIVE DATE. This section is effective the day following final enactment.

32.1 	ARTICLE 2
32.2 	SALES AND USE TAXES

32.3 	Section 1. Minnesota Statutes 2013 Supplement, section 297A.61, subdivision 3, 
32.4 	is amended to read:
32.5 		Subd. 3.Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 
32.6 	to, each of the transactions listed in this subdivision. In applying the provisions of this 
32.7 	chapter, the terms "tangible personal property" and "retail sale" include the taxable 
32.8 	services listed in paragraph (g), clause (6), items (i) to (vi) and (viii), and the provision 
32.9 	of these taxable services, unless specifically provided otherwise. Services performed by 
32.10 	an employee for an employer are not taxable. Services performed by a partnership or 
32.11 	association for another partnership or association are not taxable if one of the entities owns 
32.12 	or controls more than 80 percent of the voting power of the equity interest in the other 
32.13 	entity. Services performed between members of an affiliated group of corporations are not 
32.14 	taxable. For purposes of the preceding sentence, "affiliated group of corporations" means 
32.15 	those entities that would be classified as members of an affiliated group as defined under 
32.16 	United States Code, title 26, section 1504, disregarding the exclusions in section 1504(b).
32.17 	(b) Sale and purchase include:
32.18 	(1) any transfer of title or possession, or both, of tangible personal property, whether 
32.19 	absolutely or conditionally, for a consideration in money or by exchange or barter; and
32.20 	(2) the leasing of or the granting of a license to use or consume, for a consideration 
32.21 	in money or by exchange or barter, tangible personal property, other than a manufactured 
32.22 	home used for residential purposes for a continuous period of 30 days or more.
32.23 	(c) Sale and purchase include the production, fabrication, printing, or processing of 
32.24 	tangible personal property for a consideration for consumers who furnish either directly or 
32.25 	indirectly the materials used in the production, fabrication, printing, or processing.
32.26 	(d) Sale and purchase include the preparing for a consideration of food. 
32.27 	Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited 
32.28 	to, the following:
32.29 	(1) prepared food sold by the retailer;
32.30 	(2) soft drinks;
32.31 	(3) candy;
32.32 	(4) dietary supplements; and
32.33 	(5) all food sold through vending machines.
32.34 	(e) A sale and a purchase includes the furnishing for a consideration of electricity, 
32.35 	gas, water, or steam for use or consumption within this state.
33.1 	(f) A sale and a purchase includes the transfer for a consideration of prewritten 
33.2 	computer software whether delivered electronically, by load and leave, or otherwise.
33.3 	(g) A sale and a purchase includes the furnishing for a consideration of the following 
33.4 	services:
33.5 	(1) the privilege of admission to places of amusement, recreational areas, or athletic 
33.6 	events, and the making available of amusement devices, tanning facilities, reducing 
33.7 	salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities;
33.8 	(2) lodging and related services by a hotel, rooming house, resort, campground, 
33.9 	motel, or trailer camp, including furnishing the guest of the facility with access to 
33.10 	telecommunication services, and the granting of any similar license to use real property in 
33.11 	a specific facility, other than the renting or leasing of it for a continuous period of 30 days 
33.12 	or more under an enforceable written agreement that may not be terminated without prior 
33.13 	notice and including accommodations intermediary services provided in connection with 
33.14 	other services provided under this clause;
33.15 	(3) nonresidential parking services, whether on a contractual, hourly, or other 
33.16 	periodic basis, except for parking at a meter;
33.17 	(4) the granting of membership in a club, association, or other organization if:
33.18 	(i) the club, association, or other organization makes available for the use of its 
33.19 	members sports and athletic facilities, without regard to whether a separate charge is 
33.20 	assessed for use of the facilities; and
33.21 	(ii) use of the sports and athletic facility is not made available to the general public 
33.22 	on the same basis as it is made available to members.
33.23 	Granting of membership means both onetime initiation fees and periodic membership 
33.24 	dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 
33.25 	squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 
33.26 	swimming pools; and other similar athletic or sports facilities;
33.27 	(5) delivery of aggregate materials by a third party, excluding delivery of aggregate 
33.28 	material used in road construction; and delivery of concrete block by a third party if the 
33.29 	delivery would be subject to the sales tax if provided by the seller of the concrete block. 
33.30 	For purposes of this clause, "road construction" means construction of:
33.31 	(i) public roads;
33.32 	(ii) cartways; and
33.33 	(iii) private roads in townships located outside of the seven-county metropolitan area 
33.34 	up to the point of the emergency response location sign; and
33.35 	(6) services as provided in this clause:
34.1 	(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 
34.2 	and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 
34.3 	drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 
34.4 	include services provided by coin operated facilities operated by the customer;
34.5 	(ii) motor vehicle washing, waxing, and cleaning services, including services 
34.6 	provided by coin operated facilities operated by the customer, and rustproofing, 
34.7 	undercoating, and towing of motor vehicles;
34.8 	(iii) building and residential cleaning, maintenance, and disinfecting services and 
34.9 	pest control and exterminating services;
34.10 	(iv) detective, security, burglar, fire alarm, and armored car services; but not 
34.11 	including services performed within the jurisdiction they serve by off-duty licensed peace 
34.12 	officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit 
34.13 	organization or any organization at the direction of a county for monitoring and electronic 
34.14 	surveillance of persons placed on in-home detention pursuant to court order or under the 
34.15 	direction of the Minnesota Department of Corrections;
34.16 	(v) pet grooming services;
34.17 	(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 
34.18 	and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 
34.19 	plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 
34.20 	clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for 
34.21 	public utility lines. Services performed under a construction contract for the installation of 
34.22 	shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
34.23 	(vii) massages, except when provided by a licensed health care facility or 
34.24 	professional or upon written referral from a licensed health care facility or professional for 
34.25 	treatment of illness, injury, or disease; and
34.26 	(viii) the furnishing of lodging, board, and care services for animals in kennels and 
34.27 	other similar arrangements, but excluding veterinary and horse boarding services.
34.28 	(h) A sale and a purchase includes the furnishing for a consideration of tangible 
34.29 	personal property or taxable services by the United States or any of its agencies or 
34.30 	instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 
34.31 	subdivisions.
34.32 	(i) A sale and a purchase includes the furnishing for a consideration of 
34.33 	telecommunications services, ancillary services associated with telecommunication 
34.34 	services, and pay television services. Telecommunication services include, but are 
34.35 	not limited to, the following services, as defined in section 297A.669: air-to-ground 
34.36 	radiotelephone service, mobile telecommunication service, postpaid calling service, 
35.1 	prepaid calling service, prepaid wireless calling service, and private communication 
35.2 	services. The services in this paragraph are taxed to the extent allowed under federal law.
35.3 	(j) A sale and a purchase includes the furnishing for a consideration of installation if 
35.4 	the installation charges would be subject to the sales tax if the installation were provided 
35.5 	by the seller of the item being installed.
35.6 	(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 
35.7 	to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 
35.8 	the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 
35.9 	59B.02, subdivision 11.
35.10 	(l) A sale and a purchase includes furnishing for a consideration of specified digital 
35.11 	products or other digital products or granting the right for a consideration to use specified 
35.12 	digital products or other digital products on a temporary or permanent basis and regardless 
35.13 	of whether the purchaser is required to make continued payments for such right. Wherever 
35.14 	the term "tangible personal property" is used in this chapter, other than in subdivisions 10 
35.15 	and 38, the provisions also apply to specified digital products, or other digital products, 
35.16 	unless specifically provided otherwise or the context indicates otherwise.
35.17 	(m) A sale and purchase includes the furnishing for consideration of the following 
35.18 	services:
35.19 	(1) repairing and maintaining electronic and precision equipment, which service can 
35.20 	be deducted as a business expense under the Internal Revenue Code. This includes, but 
35.21 	is not limited to, repair or maintenance of electronic devices, computers and computer 
35.22 	peripherals, monitors, computer terminals, storage devices, and CD-ROM drives; other 
35.23 	office equipment such as photocopying machines, printers, and facsimile machines; 
35.24 	televisions, stereos, sound systems, video or digital recorders and players; two-way radios 
35.25 	and other communications equipment; radar and sonar equipment, scientific instruments, 
35.26 	microscopes, and medical equipment;
35.27 	(2) repairing and maintaining commercial and industrial machinery and equipment. 
35.28 	For purposes of this subdivision, the following items are not commercial or industrial 
35.29 	machinery and equipment: (i) motor vehicles; (ii) furniture and fixtures; (iii) ships; (iv) 
35.30 	railroad stock; and (v) aircraft; and
35.31 	(3) warehousing or storage services for tangible personal property, excluding:
35.32 	(i) agricultural products;
35.33 	(ii) refrigerated storage;
35.34 	(iii) electronic data; and
35.35 	(iv) self-storage services and storage of motor vehicles, recreational vehicles, and 
35.36 	boats, not eligible to be deducted as a business expense under the Internal Revenue Code.

36.1 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
36.2 	March 31, 2014.

36.3 	Sec. 2. Minnesota Statutes 2013 Supplement, section 297A.68, subdivision 5, is 
36.4 	amended to read:
36.5 		Subd. 5.Capital equipment. (a) Capital equipment is exempt.
36.6 	"Capital equipment" means machinery and equipment purchased or leased, and used 
36.7 	in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining, 
36.8 	or refining tangible personal property to be sold ultimately at retail if the machinery and 
36.9 	equipment are essential to the integrated production process of manufacturing, fabricating, 
36.10 	mining, or refining. Capital equipment also includes machinery and equipment 
36.11 	used primarily to electronically transmit results retrieved by a customer of an online 
36.12 	computerized data retrieval system.
36.13 	(b) Capital equipment includes, but is not limited to:
36.14 	(1) machinery and equipment used to operate, control, or regulate the production 
36.15 	equipment;
36.16 	(2) machinery and equipment used for research and development, design, quality 
36.17 	control, and testing activities;
36.18 	(3) environmental control devices that are used to maintain conditions such as 
36.19 	temperature, humidity, light, or air pressure when those conditions are essential to and are 
36.20 	part of the production process;
36.21 	(4) materials and supplies used to construct and install machinery or equipment;
36.22 	(5) repair and replacement parts, including accessories, whether purchased as spare 
36.23 	parts, repair parts, or as upgrades or modifications to machinery or equipment;
36.24 	(6) materials used for foundations that support machinery or equipment;
36.25 	(7) materials used to construct and install special purpose buildings used in the 
36.26 	production process;
36.27 	(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed 
36.28 	as part of the delivery process regardless if mounted on a chassis, repair parts for 
36.29 	ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and
36.30 	(9) machinery or equipment used for research, development, design, or production 
36.31 	of computer software.
36.32 	(c) Capital equipment does not include the following:
36.33 	(1) motor vehicles taxed under chapter 297B;
36.34 	(2) machinery or equipment used to receive or store raw materials;
37.1 	(3) building materials, except for materials included in paragraph (b), clauses (6) 
37.2 	and (7);
37.3 	(4) machinery or equipment used for nonproduction purposes, including, but not 
37.4 	limited to, the following: plant security, fire prevention, first aid, and hospital stations; 
37.5 	support operations or administration; pollution control; and plant cleaning, disposal of 
37.6 	scrap and waste, plant communications, space heating, cooling, lighting, or safety;
37.7 	(5) farm machinery and aquaculture production equipment as defined by section 
37.8 	297A.61, subdivisions 12 and 13;
37.9 	(6) machinery or equipment purchased and installed by a contractor as part of an 
37.10 	improvement to real property;
37.11 	(7) machinery and equipment used by restaurants in the furnishing, preparing, or 
37.12 	serving of prepared foods as defined in section 297A.61, subdivision 31;
37.13 	(8) machinery and equipment used to furnish the services listed in section 297A.61, 
37.14 	subdivision 3, paragraph (g), clause (6), items (i) to (vi) and (viii);
37.15 	(9) machinery or equipment used in the transportation, transmission, or distribution 
37.16 	of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines, 
37.17 	tanks, mains, or other means of transporting those products. This clause does not apply to 
37.18 	machinery or equipment used to blend petroleum or biodiesel fuel as defined in section 
37.19 	239.77; or
37.20 	(10) any other item that is not essential to the integrated process of manufacturing, 
37.21 	fabricating, mining, or refining.
37.22 	(d) For purposes of this subdivision:
37.23 	(1) "Equipment" means independent devices or tools separate from machinery but 
37.24 	essential to an integrated production process, including computers and computer software, 
37.25 	used in operating, controlling, or regulating machinery and equipment; and any subunit or 
37.26 	assembly comprising a component of any machinery or accessory or attachment parts of 
37.27 	machinery, such as tools, dies, jigs, patterns, and molds.
37.28 	(2) "Fabricating" means to make, build, create, produce, or assemble components or 
37.29 	property to work in a new or different manner.
37.30 	(3) "Integrated production process" means a process or series of operations through 
37.31 	which tangible personal property is manufactured, fabricated, mined, or refined. For 
37.32 	purposes of this clause, (i) manufacturing begins with the removal of raw materials 
37.33 	from inventory and ends when the last process prior to loading for shipment has been 
37.34 	completed; (ii) fabricating begins with the removal from storage or inventory of the 
37.35 	property to be assembled, processed, altered, or modified and ends with the creation 
37.36 	or production of the new or changed product; (iii) mining begins with the removal of 
38.1 	overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and 
38.2 	ends when the last process before stockpiling is completed; and (iv) refining begins with 
38.3 	the removal from inventory or storage of a natural resource and ends with the conversion 
38.4 	of the item to its completed form.
38.5 	(4) "Machinery" means mechanical, electronic, or electrical devices, including 
38.6 	computers and computer software, that are purchased or constructed to be used for the 
38.7 	activities set forth in paragraph (a), beginning with the removal of raw materials from 
38.8 	inventory through completion of the product, including packaging of the product.
38.9 	(5) "Machinery and equipment used for pollution control" means machinery and 
38.10 	equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity 
38.11 	described in paragraph (a).
38.12 	(6) "Manufacturing" means an operation or series of operations where raw materials 
38.13 	are changed in form, composition, or condition by machinery and equipment and which 
38.14 	results in the production of a new article of tangible personal property. For purposes of 
38.15 	this subdivision, "manufacturing" includes the generation of electricity or steam to be 
38.16 	sold at retail.
38.17 	(7) "Mining" means the extraction of minerals, ores, stone, or peat.
38.18 	(8) "Online data retrieval system" means a system whose cumulation of information 
38.19 	is equally available and accessible to all its customers.
38.20 	(9) "Primarily" means machinery and equipment used 50 percent or more of the time 
38.21 	in an activity described in paragraph (a).
38.22 	(10) "Refining" means the process of converting a natural resource to an intermediate 
38.23 	or finished product, including the treatment of water to be sold at retail.
38.24 	(11) This subdivision does not apply to telecommunications equipment as provided 
38.25 	in subdivision 35 35a, and does not apply to wire, cable, fiber, poles, or conduit for 
38.26 	telecommunications services.

38.27 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
38.28 	March 31, 2014.

38.29 	Sec. 3. Minnesota Statutes 2012, section 297A.68, is amended by adding a subdivision 
38.30 	to read:
38.31 		Subd. 35a.Telecommunications or pay television services machinery and 
38.32 	equipment. (a) Telecommunications or pay television services machinery and equipment 
38.33 	purchased or leased for use directly by a telecommunications or pay television services 
38.34 	provider primarily in the provision of telecommunications or pay television services 
39.1 	that are ultimately to be sold at retail are exempt, regardless of whether purchased by 
39.2 	the owner, a contractor, or a subcontractor.
39.3 	(b) For purposes of this subdivision, "telecommunications or pay television 
39.4 	machinery and equipment" includes, but is not limited to:
39.5 	(1) machinery, equipment, and fixtures utilized in receiving, initiating, 
39.6 	amplifying, processing, transmitting, retransmitting, recording, switching, or monitoring 
39.7 	telecommunications or pay television services, such as computers, transformers, amplifiers, 
39.8 	routers, bridges, repeaters, multiplexers, and other items performing comparable functions;
39.9 	(2) machinery, equipment, and fixtures used in the transportation of 
39.10 	telecommunications or pay television services, such as radio transmitters and receivers, 
39.11 	satellite equipment, microwave equipment, and other transporting media, but not wire, 
39.12 	cable, fiber, poles, or conduit;
39.13 	(3) ancillary machinery, equipment, and fixtures that regulate, control, protect, or 
39.14 	enable the machinery in clauses (1) and (2) to accomplish its intended function, such as 
39.15 	auxiliary power supply, test equipment, towers, heating, ventilating, and air conditioning 
39.16 	equipment necessary to the operation of the telecommunications or pay television 
39.17 	equipment; and software necessary to the operation of the telecommunications or pay 
39.18 	television equipment; and
39.19 	(4) repair and replacement parts, including accessories, whether purchased as spare 
39.20 	parts, repair parts, or as upgrades or modifications to qualified machinery or equipment.

39.21 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
39.22 	March 31, 2014.

39.23 	Sec. 4. Laws 2013, chapter 143, article 8, section 26, the effective date, is amended to 
39.24 	read:

39.25 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
39.26 	August 31, 2014 June 30, 2015.

39.27 	EFFECTIVE DATE. This section is effective the day following final enactment.

39.28 	Sec. 5.  REPEALER.
 39.29 	Minnesota Statutes 2013 Supplement, section 297A.61, subdivision 57, is repealed.

39.30 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
39.31 	March 31, 2014.

40.1 	ARTICLE 3
40.2 	ESTATE AND GIFT TAX

40.3 	Section 1. Minnesota Statutes 2013 Supplement, section 289A.10, subdivision 1, 
40.4 	is amended to read:
40.5 		Subdivision 1.Return required. In the case of a decedent who has an interest in 
40.6 	property with a situs in Minnesota, the personal representative must submit a Minnesota 
40.7 	estate tax return to the commissioner, on a form prescribed by the commissioner, if:
40.8 	(1) a federal estate tax return is required to be filed; or
40.9 	(2) the sum of the federal gross estate and federal adjusted taxable gifts, as defined in 
40.10 	section 2001(b) of the Internal Revenue Code, made within three years of the date of the 
40.11 	decedent's death exceeds $1,000,000 $1,200,000 for estates of decedents dying in 2014; 
40.12 	$1,400,000 for estates of decedents dying in 2015; $1,600,000 for estates of decedents 
40.13 	dying in 2016; $1,800,000 for estates of decedents dying in 2017; and $2,000,000 for 
40.14 	estates of decedents dying in 2018 and thereafter.
40.15 	The return must contain a computation of the Minnesota estate tax due. The return 
40.16 	must be signed by the personal representative.

40.17 	EFFECTIVE DATE. This section is effective retroactively for estates of decedents 
40.18 	dying after December 31, 2013.

40.19 	Sec. 2. Minnesota Statutes 2012, section 289A.18, subdivision 3, is amended to read:
40.20 		Subd. 3.Estate tax returns. An estate tax return must be filed with the 
40.21 	commissioner within nine months after the decedent's death. Except in the case of the 
40.22 	estate of a decedent dying after December 31, 2009, and before December 17, 2010, then 
40.23 	an estate tax return must be filed with the commissioner within nine months after the 
40.24 	decedent's death; within the time provided by section 289A.19, subdivision 4; or before 
40.25 	September 20, 2011; whichever is later.

40.26 	EFFECTIVE DATE. This section is effective the day following final enactment.

40.27 	Sec. 3. Minnesota Statutes 2013 Supplement, section 291.005, subdivision 1, is 
40.28 	amended to read:
40.29 		Subdivision 1.Scope. Unless the context otherwise clearly requires, the following 
40.30 	terms used in this chapter shall have the following meanings:
40.31 	(1) "Commissioner" means the commissioner of revenue or any person to whom the 
40.32 	commissioner has delegated functions under this chapter.
41.1 	(2) "Federal gross estate" means the gross estate of a decedent as required to be valued 
41.2 	and otherwise determined for federal estate tax purposes under the Internal Revenue Code.
41.3 	(3) "Internal Revenue Code" means the United States Internal Revenue Code of 
41.4 	1986, as amended through January 3, 2013, but without regard to the provisions of section 
41.5 	2011, paragraph (f), of the Internal Revenue Code March 1, 2014.
41.6 	(4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as 
41.7 	defined by section 2011(b)(3) of the Internal Revenue Code, plus
41.8 	(i) the amount of deduction for state death taxes allowed under section 2058 of the 
41.9 	Internal Revenue Code;
41.10 	(ii) the amount of taxable gifts, as defined in section 292.16, and made by the 
41.11 	decedent within three years of the decedent's date of death; less
41.12 	(iii)(A) the value of qualified small business property under section 291.03, 
41.13 	subdivision 9, and the value of qualified farm property under section 291.03, subdivision 
41.14 	10, or (B) $4,000,000, whichever is less.
41.15 	(5) (4) "Minnesota gross estate" means the federal gross estate of a decedent after (a) 
41.16 	excluding therefrom any property included therein in the estate which has its situs outside 
41.17 	Minnesota, and (b) including therein any property omitted from the federal gross estate 
41.18 	which is includable therein in the estate, has its situs in Minnesota, and was not disclosed 
41.19 	to federal taxing authorities.
41.20 	(6) (5) "Nonresident decedent" means an individual whose domicile at the time 
41.21 	of death was not in Minnesota.
41.22 	(7) (6) "Personal representative" means the executor, administrator or other person 
41.23 	appointed by the court to administer and dispose of the property of the decedent. If there 
41.24 	is no executor, administrator or other person appointed, qualified, and acting within this 
41.25 	state, then any person in actual or constructive possession of any property having a situs in 
41.26 	this state which is included in the federal gross estate of the decedent shall be deemed 
41.27 	to be a personal representative to the extent of the property and the Minnesota estate tax 
41.28 	due with respect to the property.
41.29 	(8) (7) "Resident decedent" means an individual whose domicile at the time of 
41.30 	death was in Minnesota.
41.31 	(9) (8) "Situs of property" means, with respect to:
41.32 	(i) real property, the state or country in which it is located;
41.33 	(ii) tangible personal property, the state or country in which it was normally kept 
41.34 	or located at the time of the decedent's death or for a gift of tangible personal property 
41.35 	within three years of death, the state or country in which it was normally kept or located 
41.36 	when the gift was executed; and
42.1 	(iii) intangible personal property, the state or country in which the decedent was 
42.2 	domiciled at death or for a gift of intangible personal property within three years of death, 
42.3 	the state or country in which the decedent was domiciled when the gift was executed.
42.4 	For a nonresident decedent with an ownership interest in a pass-through entity 
42.5 	with assets that include real or tangible personal property, situs of the real or tangible 
42.6 	personal property is determined as if the pass-through entity does not exist and the real 
42.7 	or tangible personal property is personally owned by the decedent. If the pass-through 
42.8 	entity is owned by a person or persons in addition to the decedent, ownership of the 
42.9 	property is attributed to the decedent in proportion to the decedent's capital ownership 
42.10 	share of the pass-through entity.
42.11 	(10) (9) "Pass-through entity" includes the following:
42.12 	(i) an entity electing S corporation status under section 1362 of the Internal Revenue 
42.13 	Code;
42.14 	(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
42.15 	(iii) a single-member limited liability company or similar entity, regardless of 
42.16 	whether it is taxed as an association or is disregarded for federal income tax purposes 
42.17 	under Code of Federal Regulations, title 26, section 301.7701-3; or
42.18 	(iv) a trust to the extent the property is includible in the decedent's federal gross 
42.19 	estate. ; but excludes
42.20 	(v) an entity whose ownership interest securities are traded on an exchange regulated 
42.21 	by the Securities and Exchange Commission as a national securities exchange under 
42.22 	section 6 of the Securities Exchange Act, United States Code, title 15, section 78f.

42.23 	EFFECTIVE DATE. This section is effective retroactively for estates of decedents 
42.24 	dying after December 31, 2013.

42.25 	Sec. 4. [291.016] MINNESOTA TAXABLE ESTATE.
42.26 		Subdivision 1.General. For purposes of the tax under this chapter, the Minnesota 
42.27 	taxable estate equals the federal taxable estate as provided under section 2051 of the Internal 
42.28 	Revenue Code, without regard to whether the estate is subject to the federal estate tax:
42.29 	(1) increased by the additions under subdivision 2; and
42.30 	(2) decreased by the subtraction under subdivision 3.
42.31 		Subd. 2.Additions. The following amounts, to the extent deducted in computing 
42.32 	the federal taxable estate, must be added in computing the Minnesota taxable estate:
42.33 	(1) the amount of the deduction for state death taxes allowed under section 2058 of 
42.34 	the Internal Revenue Code;
43.1 	(2) the amount of the deduction for foreign death taxes allowed under section 
43.2 	2053(d) of the Internal Revenue Code; and
43.3 	(3) the aggregate amount of taxable gifts as defined in section 2503 of the Internal 
43.4 	Revenue Code, made by the decedent within three years of the date of death. For purposes 
43.5 	of this clause, the amount of the addition equals the value of the gift under section 2512 of 
43.6 	the Internal Revenue Code and excludes any value of the gift included in the federal estate.
43.7 		Subd. 3.Subtraction. (a) The value of qualified small business property under 
43.8 	section 291.03, subdivision 9, and the value of qualified farm property under section 
43.9 	291.03, subdivision 10, or the result of $5,000,000 minus the amount for the year of death 
43.10 	listed in paragraph (b), whichever is less, may be subtracted in computing the Minnesota 
43.11 	taxable estate but must not reduce the Minnesota taxable estate to less than zero.
43.12 	(b) $1,200,000 for estates of decedents dying in 2014; $1,400,000 for estates of 
43.13 	decedents dying in 2015; $1,600,000 for estates of decedents dying in 2016; $1,800,000 
43.14 	for estates of decedents dying in 2017; and $2,000,000 for estates of decedents dying in 
43.15 	2018 and thereafter.

43.16 	EFFECTIVE DATE. This section is effective retroactively for estates of decedents 
43.17 	dying after December 31, 2013.

43.18 	Sec. 5. Minnesota Statutes 2013 Supplement, section 291.03, subdivision 1, is 
43.19 	amended to read:
43.20 		Subdivision 1.Tax amount. (a) The tax imposed shall be an amount equal to the 
43.21 	proportion of the maximum credit for state death taxes computed under section 2011 of 
43.22 	the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of federal 
43.23 	adjusted taxable estate, as the Minnesota gross estate bears to the value of the federal 
43.24 	gross estate. The tax is reduced by:
43.25 	(1) the gift tax paid by the decedent under section 292.17 on gifts included in the 
43.26 	Minnesota adjusted taxable estate and not subtracted as qualified farm or small business 
43.27 	property; and
43.28 	(2) any credit allowed under subdivision 1c.
43.29 	(b) The tax determined under this subdivision must not be greater than the sum of 
43.30 	the following amounts multiplied by a fraction, the numerator of which is the Minnesota 
43.31 	gross estate and the denominator of which is the federal gross estate:
43.32 	(1) the rates and brackets under section 2001(c) of the Internal Revenue Code 
43.33 	multiplied by the sum of:
43.34 	(i) the taxable estate, as defined under section 2051 of the Internal Revenue Code; plus
44.1 	(ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue 
44.2 	Code; less
44.3 	(iii) the lesser of (A) the sum of the value of qualified small business property 
44.4 	under subdivision 9, and the value of qualified farm property under subdivision 10, or 
44.5 	(B) $4,000,000; less
44.6 	(2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue 
44.7 	Code; and less
44.8 	(3) the federal credit allowed under section 2010 of the Internal Revenue Code.
44.9 	(c) For purposes of this subdivision, "Internal Revenue Code" means the Internal 
44.10 	Revenue Code of 1986, as amended through December 31, 2000.
44.11 	The tax imposed must be computed by applying to the Minnesota taxable estate the 
44.12 	following schedule of rates and then the resulting amount multiplied by a fraction, not 
44.13 	greater than one, the numerator of which is the value of the Minnesota gross estate plus 
44.14 	the value of gifts under section 291.016, subdivision 2, clause (3), with a Minnesota situs, 
44.15 	and the denominator of which is the federal gross estate plus the value of gifts under 
44.16 	section 291.016, subdivision 2, clause (3):
44.17 	(a) For estate of decedents dying in 2014:

44.18	Amount of Minnesota Taxable Estate
	Rate of Tax
	
44.19	Not over $1,200,000
	None
	
44.20	Over $1,200,000 but not over $1,400,000
	nine percent of the excess over $1,200,000
	
44.21
44.22	Over $1,400,000 but not over $3,600,000
	$18,000 plus ten percent of the excess over 
$1,400,000
	
44.23
44.24	Over $3,600,000 but not over $4,100,000
	$238,000 plus 10.4 percent of the excess 
over $3,600,000
	
44.25
44.26	Over $4,100,000 but not over $5,100,000
	$290,000 plus 11.2 percent of the excess 
over $4,100,000
	
44.27
44.28	Over $5,100,000 but not over $6,100,000
	$402,000 plus 12 percent of the excess over 
$5,100,000
	
44.29
44.30	Over $6,100,000 but not over $7,100,000
	$522,000 plus 12.8 percent of the excess 
over $6,100,000
	
44.31
44.32	Over $7,100,000 but not over $8,100,000
	$650,000 plus 13.6 percent of the excess 
over $7,100,000
	
44.33
44.34	Over $8,100,000 but not over $9,100,000
	$786,000 plus 14.4 percent of the excess 
over $8,100,000
	
44.35
44.36	Over $9,100,000 but not over $10,100,000
	$930,000 plus 15.2 percent of the excess 
over $9,100,000
	
44.37
44.38	Over $10,100,000
	$1,082,000 plus 16 percent of the excess 
over $10,100,000
	
44.39 	(b) For estate of decedents dying in 2015:

44.40	Amount of Minnesota Taxable Estate
	Rate of Tax
	
44.41	Not over $1,400,000
	None
	
45.1	Over $1,400,000 but not over $3,600,000
	ten percent of the excess over $1,400,000
	
45.2
45.3	Over $3,600,000 but not over $6,100,000
	$220,000 plus 12 percent of the excess over 
$3,600,000
	
45.4
45.5	Over $6,100,000 but not over $7,100,000
	$520,000 plus 12.8 percent of the excess 
over $6,100,000
	
45.6
45.7	Over $7,100,000 but not over $8,100,000
	$648,000 plus 13.6 percent of the excess 
over $7,100,000
	
45.8
45.9	Over $8,100,000 but not over $9,100,000
	$784,000 plus 14.4 percent of the excess 
over $8,100,000
	
45.10
45.11	Over $9,100,000 but not over $10,100,000
	$928,000 plus 15.2 percent of the excess 
over $9,100,000
	
45.12
45.13	Over $10,100,000 
	$1,080,000 plus 16 percent of the excess 
over $10,100,000
	
45.14 	(c) For estate of decedents dying in 2016:

45.15	Amount of Minnesota Taxable Estate
	Rate of Tax
	
45.16	Not over $1,600,000
	None
	
45.17	Over $1,600,000 but not over $2,600,000
	ten percent of the excess over $1,600,000
	
45.18
45.19	Over $2,600,000 but not over $6,100,000
	$100,000 plus 12 percent of the excess over 
$2,600,000
	
45.20
45.21	Over $6,100,000 but not over $7,100,000
	$520,000 plus 12.8 percent of the excess 
over $6,100,000
	
45.22
45.23	Over $7,100,000 but not over $8,100,000
	$648,000 plus 13.6 percent of the excess 
over $7,100,000
	
45.24
45.25	Over $8,100,000 but not over $9,100,000
	$784,000 plus 14.4 percent of the excess 
over $8,100,000
	
45.26
45.27	Over $9,100,000 but not over $10,100,000
	$928,000 plus 15.2 percent of the excess 
over $9,100,000
	
45.28
45.29	Over $10,100,000 
	$1,080,000 plus 16 percent of the excess 
over $10,100,000
	
45.30 	(d) For estates of decedents dying in 2017:

45.31	Amount of Minnesota Taxable Estate
	Rate of Tax
	
45.32	Not over $1,800,000
	None
	
45.33	Over $1,800,000 but not over $2,100,000
	ten percent of the excess over $1,800,000
	
45.34
45.35	Over $2,100,000 but not over $5,100,000
	$30,000 plus 12 percent of the excess over 
$2,100,000
	
45.36
45.37	Over $5,100,000 but not over $7,100,000
	$390,000 plus 12.8 percent of the excess 
over $5,100,000
	
45.38
45.39	Over $7,100,000 but not over $8,100,000
	$646,000 plus 13.6 percent of the excess 
over $7,100,000
	
45.40
45.41	Over $8,100,000 but not over $9,100,000
	$782,000 plus 14.4 percent of the excess 
over $8,100,000
	
45.42
45.43	Over $9,100,000 but not over $10,100,000
	$926,000 plus 15.2 percent of the excess 
over $9,100,000
	
45.44
45.45	Over $10,100,000 
	$1,078,000 plus 16 percent of the excess 
over $10,100,000
	
45.46 	(e) For estates of decedents dying in 2018 and thereafter:

46.1	Amount of Minnesota Taxable Estate
	Rate of Tax
	
46.2	Not over $2,000,000
	None
	
46.3	Over $2,000,000 but not over $2,600,000
	ten percent of the excess over $2,000,000
	
46.4
46.5	Over $2,600,000 but not over $7,100,000
	$60,000 plus 13 percent of the excess over 
$2,600,000
	
46.6
46.7	Over $7,100,000 but not over $8,100,000
	$645,000 plus 13.6 percent of the excess 
over $7,100,000
	
46.8
46.9	Over $8,100,000 but not over $9,100,000
	$781,000 plus 14.4 percent of the excess 
over $8,100,000
	
46.10
46.11	Over $9,100,000 but not over $10,100,000
	$925,000 plus 15.2 percent of the excess 
over $9,100,000
	
46.12
46.13	Over $10,100,000 
	$1,077,000 plus 16 percent of the excess 
over $10,100,000

46.14 	EFFECTIVE DATE. This section is effective retroactively for estates of decedents 
46.15 	dying after December 31, 2013.

46.16 	Sec. 6. Minnesota Statutes 2012, section 291.03, is amended by adding a subdivision 
46.17 	to read:
46.18 		Subd. 1d.Elections. (a) For the purposes of this section, the value of the Minnesota 
46.19 	taxable estate is determined by taking into account the deduction available under section 
46.20 	2056(b) of the Internal Revenue Code. An election under section 2056(b) of the Internal 
46.21 	Revenue Code may be made for Minnesota estate tax purposes regardless of whether the 
46.22 	election is made for federal estate tax purposes. The value of the gross estate includes 
46.23 	the value of any property in which the decedent had a qualifying income interest for life 
46.24 	for which an election was made under this subdivision.
46.25 	(b) Except for an election made under section 2056(b) of the Internal Revenue Code, 
46.26 	no federal election is allowable in computing the tax under this chapter unless the estate is 
46.27 	required to file a federal estate tax return, the election is made on the federal estate tax 
46.28 	return, and the election is allowed under federal law.

46.29 	EFFECTIVE DATE. This section is effective for estates of decedents dying after 
46.30 	December 31, 2013.

46.31 	Sec. 7. [291.031] CREDITS.
46.32 	(a) The estate of a nonresident decedent that is subject to tax under this chapter on 
46.33 	the value of Minnesota situs property held in a pass-through entity is allowed a credit 
46.34 	against the tax due under this section equal to the lesser of:
46.35 	(1) the amount of estate or inheritance tax paid to another state that is attributable to 
46.36 	the Minnesota situs property held in the pass-through entity; or
47.1 	(2) the amount of tax paid under this section attributable to the Minnesota situs 
47.2 	property held in the pass-through entity.
47.3 	(b) The amount of tax attributable to the Minnesota situs property held in the 
47.4 	pass-through entity must be determined by the increase in the estate or inheritance tax that 
47.5 	results from including the market value of the property in the estate or treating the value 
47.6 	as a taxable inheritance to the recipient of the property.

47.7 	EFFECTIVE DATE. This section is effective retroactively for estates of decedents 
47.8 	dying after December 31, 2013.

47.9 	Sec. 8.  REPEALER.
 47.10 	(a) Minnesota Statutes 2013 Supplement, sections 292.16; 292.17; 292.18; 292.19; 
47.11 	292.20; and 292.21, are repealed.
47.12 	(b) Minnesota Statutes 2012, section 291.03, subdivision 1b, and Minnesota Statutes 
47.13 	2013 Supplement, section 291.03, subdivision 1c, are repealed.
47.14 	(c) Minnesota Statutes 2012, sections 291.41; 291.42; 291.43; 291.44; 291.45; 
47.15 	291.46; and 291.47, are repealed.

47.16 	EFFECTIVE DATE. Paragraph (a) is effective retroactively for gifts made after 
47.17 	June 30, 2013. Paragraph (b) is effective retroactively for estates of decedents dying after 
47.18 	December 31, 2013. Paragraph (c) is effective the day following final enactment.

47.19 	ARTICLE 4
47.20 	PROPERTY TAX

47.21 	Section 1. Minnesota Statutes 2013 Supplement, section 126C.10, subdivision 1, is 
47.22 	amended to read:
47.23 		Subdivision 1.General education revenue. (a) For fiscal years 2013 and 2014, the 
47.24 	general education revenue for each district equals the sum of the district's basic revenue, 
47.25 	extended time revenue, gifted and talented revenue, small schools revenue, basic skills 
47.26 	revenue, secondary sparsity revenue, elementary sparsity revenue, transportation sparsity 
47.27 	revenue, total operating capital revenue, equity revenue, alternative teacher compensation 
47.28 	revenue, and transition revenue.
47.29 	(b) For fiscal year 2015 and later, the general education revenue for each district 
47.30 	equals the sum of the district's basic revenue, extended time revenue, gifted and talented 
47.31 	revenue, declining enrollment revenue, location equity local optional revenue, small 
47.32 	schools revenue, basic skills revenue, secondary sparsity revenue, elementary sparsity 
48.1 	revenue, transportation sparsity revenue, total operating capital revenue, equity revenue, 
48.2 	pension adjustment revenue, and transition revenue.

48.3 	EFFECTIVE DATE. This section is effective for revenue in fiscal year 2016 and 
48.4 	later.

48.5 	Sec. 2. Minnesota Statutes 2013 Supplement, section 126C.10, subdivision 2e, is 
48.6 	amended to read:
48.7 		Subd. 2e.Location equity Local optional revenue. (a) For a school district 
48.8 	with any of its area located within the seven-county metropolitan area, location equity
48.9 	 Local optional revenue for a school district equals $424 times the adjusted pupil units of 
48.10 	the district for that school year.
48.11 	(b) For all other school districts with more than 2,000 pupils in adjusted average 
48.12 	daily membership for the fiscal year ending in the year before the levy is certified, location 
48.13 	equity revenue equals $212 times the adjusted pupil units of the district for that year.
48.14 	(c) A district's location equity local optional levy equals its location equity local 
48.15 	optional revenue times the lesser of one or the ratio of its referendum market value per 
48.16 	resident pupil unit to $510,000. The location equity local optional revenue levy must be 
48.17 	spread on referendum market value. A district may levy less than the permitted amount.
48.18 	(d) (c) A district's location equity local optional aid equals its location equity local 
48.19 	optional revenue less its location equity local optional levy, times the ratio of the actual 
48.20 	amount levied to the permitted levy.
48.21 	(e) A school district may elect not to participate in the location equity revenue 
48.22 	program by a board vote taken prior to September 1 of the fiscal year before the fiscal year 
48.23 	for which the decision not to participate becomes effective. The board resolution must 
48.24 	state which fiscal years the district will not participate. A copy of the board resolution 
48.25 	to not participate must be submitted to the commissioner.

48.26 	EFFECTIVE DATE. This section is effective for revenue in fiscal year 2016 and 
48.27 	later.

48.28 	Sec. 3. Minnesota Statutes 2013 Supplement, section 126C.13, subdivision 4, is 
48.29 	amended to read:
48.30 		Subd. 4.General education aid. (a) For fiscal years 2013 and 2014 only, a district's 
48.31 	general education aid is the sum of the following amounts:
48.32 	(1) general education revenue, excluding equity revenue, total operating capital 
48.33 	revenue, alternative teacher compensation revenue, and transition revenue;
49.1 	(2) operating capital aid under section 126C.10, subdivision 13b;
49.2 	(3) equity aid under section 126C.10, subdivision 30;
49.3 	(4) alternative teacher compensation aid under section 126C.10, subdivision 36;
49.4 	(5) transition aid under section 126C.10, subdivision 33;
49.5 	(6) shared time aid under section 126C.01, subdivision 7;
49.6 	(7) referendum aid under section 126C.17, subdivisions 7 and 7a; and
49.7 	(8) online learning aid according to section 124D.096.
49.8 	(b) For fiscal year 2015 and later, a district's general education aid equals:
49.9 	(1) general education revenue, excluding operating capital revenue, equity revenue, 
49.10 	location equity local optional revenue, and transition revenue, minus the student 
49.11 	achievement levy, multiplied times the ratio of the actual amount of student achievement 
49.12 	levy levied to the permitted student achievement levy; plus
49.13 	(2) equity aid under section 126C.10, subdivision 30; plus
49.14 	(3) transition aid under section 126C.10, subdivision 33; plus
49.15 	(4) shared time aid under section 126C.10, subdivision 7; plus
49.16 	(5) referendum aid under section 126C.17, subdivisions 7 and 7a; plus
49.17 	(6) online learning aid under section 124D.096; plus
49.18 	(7) location equity local optional aid according to section 126C.10, subdivision 
49.19 	2d, paragraph (d).

49.20 	EFFECTIVE DATE. This section is effective for revenue in fiscal year 2016 and 
49.21 	later.

49.22 	Sec. 4. Minnesota Statutes 2013 Supplement, section 126C.17, subdivision 1, is 
49.23 	amended to read:
49.24 		Subdivision 1.Referendum allowance. (a) A district's initial referendum allowance 
49.25 	for fiscal year 2015 equals the result of the following calculations:
49.26 	(1) multiply the referendum allowance the district would have received for fiscal 
49.27 	year 2015 under Minnesota Statutes 2012, section 126C.17, subdivision 1, based on 
49.28 	elections held before July 1, 2013, by the resident marginal cost pupil units the district 
49.29 	would have counted for fiscal year 2015 under Minnesota Statutes 2012, section 126C.05;
49.30 	(2) add to the result of clause (1) the adjustment the district would have received 
49.31 	under Minnesota Statutes 2012, section 127A.47, subdivision 7, paragraphs (a), (b), and 
49.32 	(c), based on elections held before July 1, 2013;
49.33 	(3) divide the result of clause (2) by the district's adjusted pupil units for fiscal 
49.34 	year 2015; and
50.1 	(4) add to the result of clause (3) any additional referendum allowance per adjusted 
50.2 	pupil unit authorized by elections held between July 1, 2013, and December 31, 2013;
50.3 	(5) add to the result in clause (4) any additional referendum allowance resulting from 
50.4 	inflation adjustments approved by the voters prior to January 1, 2014;
50.5 	(6) subtract from the result of clause (5), the sum of a district's actual local optional 
50.6 	levy and local optional aid under section 126C.10, subdivision 2e, divided by the adjusted 
50.7 	pupil units of the district for that school year; and
50.8 	(4) (7) if the result of clause (3) (6) is less than zero, set the allowance to zero.
50.9 	(b) A district's referendum allowance equals the sum of the district's initial 
50.10 	referendum allowance for fiscal year 2015, plus any additional referendum allowance per 
50.11 	adjusted pupil unit authorized after June 30 December 31, 2013, minus (i) the location 
50.12 	equity revenue subtraction, and (ii) any allowances expiring in fiscal year 2016 or later, 
50.13 	provided that the allowance may not be less than zero. For a district with more than one 
50.14 	referendum allowance for fiscal year 2015 under Minnesota Statutes 2012, section 126C.17, 
50.15 	the allowance calculated under paragraph (a), clause (3), must be divided into components 
50.16 	such that the same percentage of the district's allowance expires at the same time as the old 
50.17 	allowances would have expired under Minnesota Statutes 2012, section 126C.17. For a 
50.18 	district with more than one allowance for fiscal year 2015 that expires in the same year, the 
50.19 	reduction under paragraph (a), clause (6), to offset local optional revenue shall be made 
50.20 	first from any allowances that do not have an inflation adjustment approved by the voters.
50.21 	(c) For purposes of this subdivision, a district's location equity revenue subtraction 
50.22 	equals $424 for a district receiving location equity revenue under section 126C.10, 
50.23 	subdivision 2d, paragraph (a), $212 for a district receiving location equity revenue under 
50.24 	section 126C.10, subdivision 2d, paragraph (b), and zero for all other school districts.

50.25 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2016 
50.26 	and later.

50.27 	Sec. 5. Minnesota Statutes 2013 Supplement, section 273.117, is amended to read:
50.28 	273.117 CONSERVATION PROPERTY TAX VALUATION.
50.29 	The value of real property which is subject to a conservation restriction or easement 
50.30 	shall not be reduced by the assessor if:
50.31 	(a) the restriction or easement is for a conservation purpose as defined in section 
50.32 	84.64, subdivision 2, and is recorded on the property; and
50.33 	(b) the property is being used in accordance with the terms of the conservation 
50.34 	restriction or easement.
51.1 	This section does not apply to (1) conservation restrictions or easements covering 
51.2 	riparian buffers along lakes, rivers, and streams that are used for water quantity or quality 
51.3 	control; or (2) easements in a county that has adopted, by referendum, a program to protect 
51.4 	farmland and natural areas since 1999; or (3) conservation restrictions or easements 
51.5 	entered into prior to May 23, 2013.

51.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

51.7 	Sec. 6. SUPPLEMENTAL COUNTY PROGRAM AID PAYMENTS.
 51.8 	(a) Before the money appropriated to county need aid is apportioned among the 
51.9 	counties, as provided in Minnesota Statutes, section 477A.0124, subdivision 3, for aids 
51.10 	payable in 2015 through 2024 only, the total aid paid to Beltrami County shall be increased 
51.11 	by $3,000,000. The increased aid shall be used for out-of-home placement costs.
51.12 	(b) Before the money appropriated to county need aid is apportioned among the 
51.13 	counties, as provided in Minnesota Statutes, section 477A.0124, subdivision 3, for aids 
51.14 	payable in 2015 only, the total aid paid to Mahnomen County shall be increased by 
51.15 	$1,500,000. Of this amount, $750,000 shall be paid from Mahnomen County to the White 
51.16 	Earth Band of Ojibwe for transition costs associated with health and human services.
51.17 	(c) The increased aid under this section shall be paid in the same manner and at the 
51.18 	same time as the regular aid payments under Minnesota Statutes, section 477A.0124.
51.19 	(d) For aids payable in 2015 only, the total aid paid to counties under Minnesota 
51.20 	Statutes, section 477A.03, subdivision 2b, paragraph (a), is $105,295,000
51.21 	(e) For aids payable in 2016 through 2024 only, the total aid paid to counties under 
51.22 	Minnesota Statutes, section 477A.03, subdivision 2b, paragraph (a), is $103,795,000.

51.23 	EFFECTIVE DATE. This section is effective for aids payable in 2015 through 2024.

51.24 	ARTICLE 5
51.25 	PUBLIC FINANCE

51.26 	Section 1. Minnesota Statutes 2012, section 37.31, subdivision 8, is amended to read:
51.27 		Subd. 8.Expiration. The authority to issue bonds, other than bonds to refund 
51.28 	outstanding bonds, under this section expires July 1, 2015 2025.

51.29 	EFFECTIVE DATE. This section is effective the day following final enactment.

51.30 	Sec. 2. Minnesota Statutes 2012, section 473.39, is amended by adding a subdivision 
51.31 	to read:
52.1 		Subd. 1t.Obligations. In addition to other authority in this section, the council may 
52.2 	issue certificates of indebtedness, bonds, or other obligations under this section in an 
52.3 	amount not exceeding $75,300,000 for capital expenditures as prescribed in the council's 
52.4 	transit capital improvement program and for related costs, including the costs of issuance 
52.5 	and sale of the obligations. Of this authorization, after July 1, 2014, the council may 
52.6 	issue certificates of indebtedness, bonds, or other obligations in an amount not exceeding 
52.7 	$37,000,000 and after July 1, 2015, the council may issue certificates of indebtedness, 
52.8 	bonds, or other obligations in an additional amount not exceeding $38,300,000.

52.9 	EFFECTIVE DATE; APPLICATION. This section is effective the day following 
52.10 	final enactment and applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, 
52.11 	Scott, and Washington.

52.12 	Sec. 3. Laws 2003, chapter 127, article 12, section 28, is amended to read:
52.13 	Sec. 28. NURSING HOME BONDS AUTHORIZED.
 52.14 	Itasca County may issue bonds under Minnesota Statutes, sections 376.55 and 
52.15 	376.56, to finance the construction of a 35-bed nursing home facility to replace an existing 
52.16 	35-bed private facility located in the county. The bonds issued under this section must
52.17 	 may be payable solely from revenues and or may not be general obligations of the county.

52.18 	EFFECTIVE DATE; LOCAL APPROVAL. This section is effective the day after 
52.19 	compliance by the governing body of Itasca County and its chief clerical officer with 
52.20 	Minnesota Statutes, section 645.021, subdivisions 2 and 3.

52.21 	Sec. 4. Laws 2006, chapter 259, article 10, section 13, subdivision 4, is amended to read:
52.22 		Subd. 4.Expiration. The authority to approve tax increment financing plans to 
52.23 	establish a tax increment financing redevelopment district subject to this section expires 
52.24 	on December 31, 2014 2016.

52.25 	EFFECTIVE DATE. This section is effective upon approval of the governing body 
52.26 	of the city of Detroit Lakes and compliance with Minnesota Statutes, section 645.021, 
52.27 	subdivisions 2 and 3.

52.28 	Sec. 5. Laws 2008, chapter 366, article 5, section 36, subdivision 3, is amended to read:
52.29 		Subd. 3.Authorized expenditures. Tax increment from the district may be 
52.30 	expended only to pay principal and interest on bond obligations issued by the city of St. 
52.31 	Paul Housing and Redevelopment Authority in 1996 2009 for the convention center
52.32 	 RiverCentre Arena, including payment of principal and interest on any bonds issued to 
53.1 	repay the bonds or loans. All such expenditures are deemed to be activities within the 
53.2 	district under Minnesota Statutes, section 469.1763, subdivisions 2, 3, and 4.

53.3 	EFFECTIVE DATE. This section is effective without local approval under 
53.4 	Minnesota Statutes, section 645.023, subdivision 1, paragraph (a).

53.5 	ARTICLE 6
53.6 	MISCELLANEOUS

53.7 	Section 1. Minnesota Statutes 2012, section 16A.152, subdivision 1b, is amended to 
53.8 	read:
53.9 		Subd. 1b.Budget reserve increase level. On July 1, 2003, (a) The commissioner 
53.10 	of management and budget shall transfer $300,000,000 to the budget reserve account in 
53.11 	the general fund. On July 1, 2004, the commissioner of management and budget shall 
53.12 	transfer $296,000,000 to the budget reserve account in the general fund. The amounts 
53.13 	necessary for this purpose are appropriated from the general fund calculate the budget 
53.14 	reserve level by multiplying the current biennium's general fund nondedicated revenues 
53.15 	and the most recent budget reserve percentage under subdivision 8.
53.16 	(b) If, on the basis of a November forecast of general fund revenues and 
53.17 	expenditures, the commissioner of management and budget determines that there will be 
53.18 	a positive unrestricted general fund balance at the close of the biennium and that the 
53.19 	provisions of subdivision 2, clauses (1), (2), (3), and (4), are satisfied, the commissioner 
53.20 	shall transfer to the budget reserve account in the general fund the amount necessary to 
53.21 	increase the budget reserve to the budget reserve level determined under paragraph (a). 
53.22 	The amount of the transfer authorized in this paragraph shall not exceed 33 percent of the 
53.23 	positive unrestricted general fund balance determined in the forecast.

53.24 	EFFECTIVE DATE. This section is effective for forecasts issued following final 
53.25 	enactment.

53.26 	Sec. 2. Minnesota Statutes 2012, section 16A.152, subdivision 2, is amended to read:
53.27 		Subd. 2.Additional revenues; priority. (a) If on the basis of a forecast of general 
53.28 	fund revenues and expenditures, the commissioner of management and budget determines 
53.29 	that there will be a positive unrestricted budgetary general fund balance at the close of 
53.30 	the biennium, the commissioner of management and budget must allocate money to the 
53.31 	following accounts and purposes in priority order:
53.32 	(1) the cash flow account established in subdivision 1 until that account reaches 
53.33 	$350,000,000;
54.1 	(2) the budget reserve account established in subdivision 1a until that account 
54.2 	reaches $653,000,000 $810,992,000;
54.3 	(3) the amount necessary to increase the aid payment schedule for school district 
54.4 	aids and credits payments in section 127A.45 to not more than 90 percent rounded to the 
54.5 	nearest tenth of a percent without exceeding the amount available and with any remaining 
54.6 	funds deposited in the budget reserve; and
54.7 	(4) the amount necessary to restore all or a portion of the net aid reductions under 
54.8 	section 127A.441 and to reduce the property tax revenue recognition shift under section 
54.9 	123B.75, subdivision 5, by the same amount; and.
54.10 	(5) to the state airports fund, the amount necessary to restore the amount transferred 
54.11 	from the state airports fund under Laws 2008, chapter 363, article 11, section 3, 
54.12 	subdivision 5.
54.13 	(b) The amounts necessary to meet the requirements of this section are appropriated 
54.14 	from the general fund within two weeks after the forecast is released or, in the case of 
54.15 	transfers under paragraph (a), clauses (3) and (4), as necessary to meet the appropriations 
54.16 	schedules otherwise established in statute.
54.17 	(c) The commissioner of management and budget shall certify the total dollar 
54.18 	amount of the reductions under paragraph (a), clauses (3) and (4), to the commissioner of 
54.19 	education. The commissioner of education shall increase the aid payment percentage and 
54.20 	reduce the property tax shift percentage by these amounts and apply those reductions to 
54.21 	the current fiscal year and thereafter.

54.22 	EFFECTIVE DATE. This section is effective for forecasts issued following final 
54.23 	enactment.

54.24 	Sec. 3. Minnesota Statutes 2012, section 16A.152, subdivision 8, is amended to read:
54.25 		Subd. 8.Report on budget reserve percentage. (a) The commissioner of 
54.26 	management and budget must periodically review the formula developed as part of the 
54.27 	Budget Trends Study Commission authorized by Laws 2007, chapter 148, article 2, section 
54.28 	81, to estimate the percentage of the preceding biennium's general fund expenditures 
54.29 	and transfers recommended as a budget reserve The commissioner of management and 
54.30 	budget shall develop and annually review a methodology for evaluating the adequacy of 
54.31 	the budget reserve based on the volatility of Minnesota's general fund tax structure. The 
54.32 	review must take into consideration relevant statistical and economic literature. After 
54.33 	completing the review, the commissioner may revise the methodology if necessary. The 
54.34 	commissioner must use the methodology to annually estimate the percentage of the current 
54.35 	biennium's general fund nondedicated revenues recommended as a budget reserve.
55.1 	(b) The commissioner must annually review the variables and coefficients in the 
55.2 	formula used to model the base of the general fund taxes and the mix of taxes that provide 
55.3 	revenues to the general fund. If the commissioner determines that the variables and 
55.4 	coefficients have changed enough to result in a change in the percentage of the preceding 
55.5 	biennium's general fund expenditures and transfers recommended as a budget reserve, 
55.6 	the commissioner must update the variables and coefficients in the formula to reflect the 
55.7 	current base and mix of general fund taxes By January 15 of each year, the commissioner 
55.8 	shall report the percentage of the current biennium's general fund nondedicated revenue 
55.9 	that is recommended as a budget reserve to the chairs and ranking minority members of 
55.10 	the legislative committees with jurisdiction over the Department of Management and 
55.11 	Budget. The report must also specify:
55.12 	(1) whether the commissioner revised the recommendation as a result of significant 
55.13 	changes in the mix of general fund taxes or the base of one or more general fund taxes;
55.14 	(2) whether the commissioner revised the recommendation as a result of a revision 
55.15 	to the methodology; and
55.16 	(3) any additional appropriate information.
55.17 	(c) Every ten years, the commissioner must review the methodology underlying the 
55.18 	formula, taking into consideration relevant economic literature from the past ten years, 
55.19 	and determine if the formula remains adequate as a tool for estimating the percentage of 
55.20 	the preceding biennium's general fund expenditures and transfers recommended as a 
55.21 	budget reserve. If the commissioner determines that the methodology underlying the 
55.22 	formula is outdated, the commissioner must revise the formula.
55.23 	(d) By January 15 of each year, the commissioner must report to the chairs and 
55.24 	ranking minority members of the house of representatives Committee on Ways and Means 
55.25 	and the senate Committee on Finance, in compliance with sections 3.195 and 3.197, 
55.26 	on the percentage of the preceding biennium's general fund expenditures and transfers 
55.27 	recommended as a budget reserve. The report must specify:
55.28 	(1) if the commissioner updated the variables and coefficients in the formula to 
55.29 	reflect significant changes to either the base of one or more general fund taxes or to the 
55.30 	mix of taxes that provide revenues to the general fund as provided in paragraph (b);
55.31 	(2) if the commissioner revised the formula after determining the methodology was 
55.32 	outdated as provided in paragraph (c); and
55.33 	(3) if the percentage of the preceding biennium's general fund expenditures and 
55.34 	transfers recommended as a budget reserve has changed as a result of an update of or a 
55.35 	revision to the formula.

55.36 	EFFECTIVE DATE. This section is effective the day following final enactment.

56.1 	Sec. 4. Minnesota Statutes 2012, section 276A.01, is amended by adding a subdivision 
56.2 	to read:
56.3 		Subd. 17.School fund allocation. (a) "School fund allocation" means an amount 
56.4 	up to 25 percent of the areawide levy certified by the Iron Range Resources and 
56.5 	Rehabilitation Board to be used for the purposes of the Iron Range school consolidation 
56.6 	and cooperatively operated school account under section 298.28, subdivision 7a.
56.7 	(b) The allocation under paragraph (a) shall only be made after the Iron Range 
56.8 	Resources and Rehabilitation Board has certified by June 30 that the Iron Range school 
56.9 	consolidation and cooperatively operated account has insufficient funds to make payments 
56.10 	as authorized under section 298.28, subdivision 7a.

56.11 	EFFECTIVE DATE. This section is effective beginning with taxes payable in 2015.

56.12 	Sec. 5. Minnesota Statutes 2012, section 276A.06, subdivision 3, is amended to read:
56.13 		Subd. 3.Apportionment of levy. The county auditor shall apportion the levy of 
56.14 	each governmental unit in the county in the manner prescribed by this subdivision. The 
56.15 	auditor shall:
56.16 	(a) by August 20 of 1997 2014 and each subsequent year, determine the areawide 
56.17 	portion of the levy for each governmental unit by multiplying the local tax rate of the 
56.18 	governmental unit for the preceding levy year times the distribution value set forth in 
56.19 	subdivision 2, clause (b), times a fraction, the numerator of which is the difference 
56.20 	between the sum of the areawide levies for all governmental units in the area minus 
56.21 	the school fund allocation and the denominator is the sum of the areawide levy for all 
56.22 	governmental units in the area; and
56.23 	(b) by September 5 of 1997 2014 and each subsequent year, determine the local 
56.24 	portion of the current year's levy by subtracting the resulting amount from clause (a) from 
56.25 	the governmental unit's current year's levy; and
56.26 	(c) for determinations made under paragraph (a) in the case of school districts, 
56.27 	for taxes payable in 2002, exclude the general education tax rate and the portion of the 
56.28 	referendum tax rate attributable to the first $415 per pupil unit from the local tax rate for 
56.29 	the preceding levy year.

56.30 	EFFECTIVE DATE. This section is effective beginning with taxes payable in 2015.

56.31 	Sec. 6. Minnesota Statutes 2012, section 276A.06, subdivision 5, is amended to read:
56.32 		Subd. 5.Areawide tax rate. On or before August 25 of 1997 and each subsequent 
56.33 	year, the county auditor shall certify to the administrative auditor that portion of the 
57.1 	levy of each governmental unit determined pursuant to subdivision 3, clause (a). The 
57.2 	administrative auditor shall then determine the areawide tax rate sufficient to yield an 
57.3 	amount equal to the sum of the levies from the areawide net tax capacity plus the school 
57.4 	fund allocation. On or before September 1, the administrative auditor shall certify the 
57.5 	areawide tax rate to each of the county auditors.

57.6 	EFFECTIVE DATE. This section is effective beginning with taxes payable in 2015.

57.7 	Sec. 7. Minnesota Statutes 2012, section 276A.06, subdivision 8, is amended to read:
57.8 		Subd. 8.Certification of values; payment. The administrative auditor shall 
57.9 	determine for each county the difference between the total levy on distribution value 
57.10 	pursuant to subdivision 3, clause (a), including the school fund allocation within the 
57.11 	county and the total tax on contribution value pursuant to subdivision 7, within the county. 
57.12 	On or before May 16 of each year, the administrative auditor shall certify the differences 
57.13 	so determined and the county's portion of the school fund allocation to each county 
57.14 	auditor. In addition, the administrative auditor shall certify to those county auditors for 
57.15 	whose county the total tax on contribution value exceeds the total levy on distribution 
57.16 	value the settlement the county is to make to the other counties of the excess of the total 
57.17 	tax on contribution value over the total levy on distribution value in the county. On or 
57.18 	before June 15 and November 15 of each year, each county treasurer in a county having a 
57.19 	total tax on contribution value in excess of the total levy on distribution value shall pay 
57.20 	one-half of the excess to the other counties in accordance with the administrative auditor's 
57.21 	certification. On or before June 15 and November 15 of each year, each county treasurer 
57.22 	shall pay to the administrative auditor that county's share of the school fund allocation. On 
57.23 	or before December 1 of each year, the administrative auditor shall pay the school fund 
57.24 	allocation to the Iron Range Resources and Rehabilitation Board for deposit in the Iron 
57.25 	Range school consolidation and cooperatively operated account.

57.26 	EFFECTIVE DATE. This section is effective beginning with taxes payable in 2015.

57.27 	Sec. 8. Minnesota Statutes 2013 Supplement, section 298.17, is amended to read:
57.28 	298.17 OCCUPATION TAXES TO BE APPORTIONED.
57.29 	(a) All occupation taxes paid by persons, copartnerships, companies, joint stock 
57.30 	companies, corporations, and associations, however or for whatever purpose organized, 
57.31 	engaged in the business of mining or producing iron ore or other ores, when collected 
57.32 	shall be apportioned and distributed in accordance with the Constitution of the state of 
57.33 	Minnesota, article X, section 3, in the manner following: 90 percent shall be deposited 
58.1 	in the state treasury and credited to the general fund of which four-ninths shall be used 
58.2 	for the support of elementary and secondary schools; and ten percent of the proceeds of 
58.3 	the tax imposed by this section shall be deposited in the state treasury and credited to the 
58.4 	general fund for the general support of the university.
58.5 	(b) Of the money apportioned to the general fund by this section: (1) there is 
58.6 	annually appropriated and credited to the mining environmental and regulatory account 
58.7 	in the special revenue fund an amount equal to that which would have been generated 
58.8 	by a 2-1/2 cent tax imposed by section 298.24 on each taxable ton produced in the 
58.9 	preceding calendar year. Money in the mining environmental and regulatory account is 
58.10 	appropriated annually to the commissioner of natural resources to fund agency staff to 
58.11 	work on environmental issues and provide regulatory services for ferrous and nonferrous 
58.12 	mining operations in this state. Payment to the mining environmental and regulatory 
58.13 	account shall be made by July 1 annually. The commissioner of natural resources shall 
58.14 	execute an interagency agreement with the Pollution Control Agency to assist with the 
58.15 	provision of environmental regulatory services such as monitoring and permitting required 
58.16 	for ferrous and nonferrous mining operations; and (2) there is annually appropriated and 
58.17 	credited to the Iron Range Resources and Rehabilitation Board account in the special 
58.18 	revenue fund an amount equal to that which would have been generated by a 1.5 cent tax 
58.19 	imposed by section 298.24 on each taxable ton produced in the preceding calendar year, to 
58.20 	be expended for the purposes of section 298.22; and (3) there is annually appropriated 
58.21 	and credited to the Iron Range Resources and Rehabilitation Board account in the special 
58.22 	revenue fund for transfer to the Iron Range school consolidation and cooperatively 
58.23 	operated school account under section 298.28, subdivision 7a, an amount equal to that 
58.24 	which would have been generated by a six cent tax imposed by section 298.24 on each 
58.25 	taxable ton produced in the preceding calendar year. Payment to the Iron Range Resources 
58.26 	and Rehabilitation Board account shall be made by May 15 annually.
58.27 	(c) The money appropriated pursuant to paragraph (b), clause (2), shall be used (i) 
58.28 	to provide environmental development grants to local governments located within any 
58.29 	county in region 3 as defined in governor's executive order number 60, issued on June 
58.30 	12, 1970, which does not contain a municipality qualifying pursuant to section 273.134, 
58.31 	paragraph (b), or (ii) to provide economic development loans or grants to businesses 
58.32 	located within any such county, provided that the county board or an advisory group 
58.33 	appointed by the county board to provide recommendations on economic development 
58.34 	shall make recommendations to the Iron Range Resources and Rehabilitation Board 
58.35 	regarding the loans. Payment to the Iron Range Resources and Rehabilitation Board 
58.36 	account shall be made by May 15 annually.
59.1 	(d) Of the money allocated to Koochiching County, one-third must be paid to the 
59.2 	Koochiching County Economic Development Commission.

59.3 	EFFECTIVE DATE. This section is effective beginning with the 2014 production 
59.4 	year.

59.5 	Sec. 9. Minnesota Statutes 2012, section 298.225, subdivision 1, is amended to read:
59.6 		Subdivision 1.Guaranteed distribution. (a) The distribution of the taconite 
59.7 	production tax as provided in section 298.28, subdivisions 3 to 5, 6, paragraph (b), 7, and 
59.8 	8, shall equal the lesser of the following amounts:
59.9 	(1) the amount distributed pursuant to this section and section 298.28, with respect 
59.10 	to 1983 production if the production for the year prior to the distribution year is no less 
59.11 	than 42,000,000 taxable tons. If the production is less than 42,000,000 taxable tons, the 
59.12 	amount of the distributions shall be reduced proportionately at the rate of two percent 
59.13 	for each 1,000,000 tons, or part of 1,000,000 tons by which the production is less than 
59.14 	42,000,000 tons; or
59.15 	(2)(i) for the distributions made pursuant to section 298.28, subdivisions 4, 
59.16 	paragraphs (b) and (c), and 6, paragraph (c), 31.2 percent of the amount distributed 
59.17 	pursuant to this section and section 298.28, with respect to 1983 production;
59.18 	(ii) for the distributions made pursuant to section 298.28, subdivision 5, paragraphs 
59.19 	(b) and (d), 75 percent of the amount distributed pursuant to this section and section 
59.20 	298.28, with respect to 1983 production provided that the aid guarantee for distributions 
59.21 	under section 298.28, subdivision 5, paragraph (b), shall be reduced by five cents per 
59.22 	taxable ton for production years 2014 and thereafter.
59.23 	(b) The distribution of the taconite production tax as provided in section 298.28, 
59.24 	subdivision 2, shall equal the following amount:
59.25 	(1) if the production for the year prior to the distribution year is at least 42,000,000 
59.26 	taxable tons, the amount distributed pursuant to this section and section 298.28 with 
59.27 	respect to 1999 production; or
59.28 	(2) if the production for the year prior to the distribution year is less than 42,000,000 
59.29 	taxable tons, the amount distributed pursuant to this section and section 298.28 with respect 
59.30 	to 1999 production, reduced proportionately at the rate of two percent for each 1,000,000 
59.31 	tons or part of 1,000,000 tons by which the production is less than 42,000,000 tons.

59.32 	EFFECTIVE DATE. This section is effective beginning with the 2015 distribution.

59.33 	Sec. 10. Minnesota Statutes 2012, section 298.28, subdivision 3, is amended to read:
60.1 		Subd. 3.Cities; towns. (a) 12.5 cents per taxable ton, less any amount distributed 
60.2 	under subdivision 8, and paragraph (b), must be allocated to the taconite municipal aid 
60.3 	account to be distributed as provided in section 298.282.
60.4 	(b) An amount must be allocated to towns or cities that is annually certified by 
60.5 	the county auditor of a county containing a taconite tax relief area as defined in section 
60.6 	273.134, paragraph (b), within which there is (1) an organized township if, as of January 
60.7 	2, 1982, more than 75 percent of the assessed valuation of the township consists of iron 
60.8 	ore or (2) a city if, as of January 2, 1980, more than 75 percent of the assessed valuation 
60.9 	of the city consists of iron ore.
60.10 	(c) The amount allocated under paragraph (b) will be the portion of a township's or 
60.11 	city's certified levy equal to the proportion of (1) the difference between 50 percent of 
60.12 	January 2, 1982, assessed value in the case of a township and 50 percent of the January 2, 
60.13 	1980, assessed value in the case of a city and its current assessed value to (2) the sum of 
60.14 	its current assessed value plus the difference determined in (1), provided that the amount 
60.15 	distributed shall not exceed $55 per capita in the case of a township or $75 per capita in 
60.16 	the case of a city. For purposes of this limitation, population will be determined according 
60.17 	to the 1980 decennial census conducted by the United States Bureau of the Census. If the 
60.18 	current assessed value of the township exceeds 50 percent of the township's January 2, 
60.19 	1982, assessed value, or if the current assessed value of the city exceeds 50 percent of the 
60.20 	city's January 2, 1980, assessed value, this paragraph shall not apply. For purposes of this 
60.21 	paragraph, "assessed value," when used in reference to years other than 1980 or 1982, 
60.22 	means the appropriate net tax capacities multiplied by 10.2.
60.23 	(d) In addition to other distributions under this subdivision, three cents per taxable 
60.24 	ton for distributions in 2009 must be allocated for distribution to towns that are entirely 
60.25 	located within the taconite tax relief area defined in section 273.134, paragraph (b). For 
60.26 	distribution in 2010 through 2014 and for distribution in 2018 and subsequent years, the 
60.27 	three-cent amount must be annually increased in the same proportion as the increase 
60.28 	in the implicit price deflator as provided in section 298.24, subdivision 1. The amount 
60.29 	available under this paragraph will be distributed to eligible towns on a per capita basis, 
60.30 	provided that no town may receive more than $50,000 in any year under this paragraph. 
60.31 	Any amount of the distribution that exceeds the $50,000 limitation for a town under this 
60.32 	paragraph must be redistributed on a per capita basis among the other eligible towns, to 
60.33 	whose distributions do not exceed $50,000.

60.34 	EFFECTIVE DATE. This section is effective beginning for the 2014 distribution.

60.35 	Sec. 11. Minnesota Statutes 2012, section 298.28, subdivision 5, is amended to read:
61.1 		Subd. 5.Counties. (a) 26.05 21.05 cents per taxable ton is allocated to counties to 
61.2 	be distributed, based upon certification by the commissioner of revenue, under paragraphs 
61.3 	(b) to (d).
61.4 	(b) 15.525 10.525 cents per taxable ton shall be distributed to the county in which 
61.5 	the taconite is mined or quarried or in which the concentrate is produced, less any 
61.6 	amount which is to be distributed pursuant to paragraph (c). The apportionment formula 
61.7 	prescribed in subdivision 2 is the basis for the distribution.
61.8 	(c) If an electric power plant owned by and providing the primary source of power for 
61.9 	a taxpayer mining and concentrating taconite is located in a county other than the county 
61.10 	in which the mining and the concentrating processes are conducted, one cent per taxable 
61.11 	ton of the tax distributed to the counties pursuant to paragraph (b) and imposed on and 
61.12 	collected from such taxpayer shall be paid to the county in which the power plant is located.
61.13 	(d) 10.525 cents per taxable ton shall be paid to the county from which the taconite 
61.14 	was mined, quarried or concentrated to be deposited in the county road and bridge fund. 
61.15 	If the mining, quarrying and concentrating, or separate steps in any of those processes 
61.16 	are carried on in more than one county, the commissioner shall follow the apportionment 
61.17 	formula prescribed in subdivision 2.

61.18 	EFFECTIVE DATE. This section is effective beginning with the 2015 distribution.

61.19 	Sec. 12. Minnesota Statutes 2012, section 298.28, subdivision 7, is amended to read:
61.20 		Subd. 7.Iron Range Resources and Rehabilitation Board. For the 1998 
61.21 	distribution, 6.5 cents per taxable ton shall be paid to the Iron Range Resources and 
61.22 	Rehabilitation Board for the purposes of section 298.22. That amount shall be increased
61.23 	 in for distribution years 1999 through 2014 and for distribution in 2018 and subsequent 
61.24 	years in the same proportion as the increase in the implicit price deflator as provided in 
61.25 	section 298.24, subdivision 1. The amount distributed pursuant to this subdivision shall 
61.26 	be expended within or for the benefit of the taconite assistance area defined in section 
61.27 	273.1341. No part of the fund provided in this subdivision may be used to provide loans 
61.28 	for the operation of private business unless the loan is approved by the governor.

61.29 	EFFECTIVE DATE. This section is effective beginning for the 2014 distribution.

61.30 	Sec. 13. Minnesota Statutes 2012, section 298.28, is amended by adding a subdivision 
61.31 	to read:
61.32 		Subd. 7a.Iron Range school consolidation and cooperatively operated school 
61.33 	account. The following amounts must be allocated to the Iron Range Resources and 
62.1 	Rehabilitation Board to be deposited in the Iron Range school consolidation and 
62.2 	cooperatively operated school account that is hereby created:
62.3 	(1) ten cents per taxable ton of the tax imposed under section 298.24;
62.4 	(2) the amount as determined under section 298.17, paragraph (b), clause (3); and
62.5 	(3) for distributions in 2015 through 2017, an amount equal to two-thirds of the 
62.6 	increased tax proceeds attributable to the increase in the implicit price deflator as provided 
62.7 	in section 298.24, subdivision 1.
62.8 	Expenditures from this account shall be made only to provide disbursements to 
62.9 	assist school districts with the payment of bonds that were issued for qualified school 
62.10 	projects, or for any other disbursement as approved by the Iron Range Resources and 
62.11 	Rehabilitation Board. For purposes of this section, "qualified school projects" means 
62.12 	school projects within the taconite assistance area as defined in section 273.1341, that 
62.13 	were (1) approved, by referendum, after December 7, 2009; and (2) approved by the 
62.14 	commissioner of education pursuant to section 123B.71.
62.15 	No expenditure under this section shall be made unless approved by seven members 
62.16 	of the Iron Range Resources and Rehabilitation Board.

62.17 	EFFECTIVE DATE. This section is effective for production year 2014 and 
62.18 	thereafter.

62.19 	Sec. 14. Minnesota Statutes 2012, section 298.28, subdivision 9a, is amended to read:
62.20 		Subd. 9a.Taconite economic development fund. (a) 30.1 25.1 cents per ton for 
62.21 	distributions in 2002 and thereafter must be paid to the taconite economic development 
62.22 	fund. No distribution shall be made under this paragraph in 2004 or any subsequent year 
62.23 	in which total industry production falls below 30 million tons. Distribution shall only be 
62.24 	made to a taconite producer's fund under section 298.227 if the producer timely pays its 
62.25 	tax under section 298.24 by the dates provided under section 298.27, or pursuant to the 
62.26 	due dates provided by an administrative agreement with the commissioner.
62.27 	(b) An amount equal to 50 percent of the tax under section 298.24 for concentrate 
62.28 	sold in the form of pellet chips and fines not exceeding 5/16 inch in size and not including 
62.29 	crushed pellets shall be paid to the taconite economic development fund. The amount 
62.30 	paid shall not exceed $700,000 annually for all companies. If the initial amount to be 
62.31 	paid to the fund exceeds this amount, each company's payment shall be prorated so the 
62.32 	total does not exceed $700,000.

62.33 	EFFECTIVE DATE. This section is effective beginning with the 2015 distribution.

63.1 	Sec. 15. Minnesota Statutes 2013 Supplement, section 298.28, subdivision 10, is 
63.2 	amended to read:
63.3 		Subd. 10.Increase. (a) Except as provided in paragraph (b), beginning with for
63.4 	 distributions in 2000 through 2014 and for distributions in 2018 and subsequent years, 
63.5 	the amount determined under subdivision 9 shall be increased in the same proportion 
63.6 	as the increase in the implicit price deflator as provided in section 298.24, subdivision 
63.7 	1. Beginning with distributions in 2015 2018, the amount determined under subdivision 
63.8 	6, paragraph (a), shall be increased in the same proportion as the increase in the implicit 
63.9 	price deflator as provided in section 298.24, subdivision 1.
63.10 	(b) For distributions in 2005 and subsequent years, an amount equal to the increased 
63.11 	tax proceeds attributable to the increase in the implicit price deflator as provided in 
63.12 	section 298.24, subdivision 1, for taxes paid in 2005, except for the amount of revenue 
63.13 	increases provided in subdivision 4, paragraph (d), is distributed to the grant and loan fund 
63.14 	established in section 298.2961, subdivision 4.
63.15 	(c) For distributions in 2015 through 2017, an amount equal to two-thirds of the 
63.16 	increased tax proceeds attributable to the increase in the implicit price deflator as provided 
63.17 	in section 298.24, subdivision 1, is distributed to the Iron Range school consolidation and 
63.18 	cooperatively operated school account in section 298.28, subdivision 7a, with the remaining 
63.19 	one-third to be distributed to the Douglas J. Johnson Economic Protection Trust Fund.

63.20 	EFFECTIVE DATE. This section is effective beginning for the 2015 distribution.

63.21 	Sec. 16. BUDGET RESERVE INCREASE.
 63.22 	On July 1, 2014, the commissioner of management and budget shall transfer 
63.23 	$150,000,000 to the budget reserve in the general fund.

63.24 	EFFECTIVE DATE. This section is effective July 1, 2014.

63.25 	Sec. 17. APPROPRIATION.
 63.26 	$1,000,000 is appropriated from the general fund to the commissioner of revenue 
63.27 	in fiscal year 2014 for the cost of administering this act. This appropriation does not 
63.28 	cancel but is available until June 30, 2015. This is a onetime appropriation and does not 
63.29 	renew or become part of the base budget.

63.30 	EFFECTIVE DATE. This section is effective the day following final enactment.