1.1 	A bill for an act
1.2 	relating to taxation; individual income; providing a refundable credit for student 
1.3 	loan payments; proposing coding for new law in Minnesota Statutes, chapter 290.
1.4 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.5 	Section 1. [290.0682] STUDENT LOAN CREDIT.
1.6 		Subdivision 1.Definitions. (a) For purposes of this section, the following terms  have 
1.7 	the meanings given.
1.8 	(b) "Adjusted gross income" means federal adjusted gross income as defined in  section 
1.9 	62 of the Internal Revenue Code.
1.10 	(c) "Eligible individual" means an individual:
1.11 	(1) in a public service job, as defined under United States Code, title 20, section 
1.12 	1087e(m)(3)(B);
1.13 	(2) with a partial financial hardship, as defined under United States Code, title 20, section 
1.14 	1098e(a)(3); and
1.15 	(3) with one or more qualified education loans related to an undergraduate or graduate 
1.16 	degree program at a postsecondary educational institution.
1.17 	(d) "Eligible loan payments" means the amount the eligible individual paid during  the 
1.18 	taxable year in principal and interest on qualified education loans.
1.19 	(e) "Postsecondary educational institution" means a postsecondary institution eligible 
1.20 	for state student aid under section 136A.103 or, if the institution is not located in this state, 
2.1 	a postsecondary institution participating in the federal Pell Grant program under Title IV 
2.2 	of the Higher Education Act of 1965, Public Law 89-329, as amended.
2.3 	(f) "Qualified education loan" has the meaning given in section 221 of the Internal  
2.4 	Revenue Code, but is limited to indebtedness incurred on behalf of the eligible individual.
2.5 		Subd. 2.Credit allowed. (a) An eligible individual is allowed a credit against the tax 
2.6 	due under this chapter. The credit equals one-half of eligible loan payments in excess of 
2.7 	ten percent of adjusted gross income, up to $2,000.
2.8 	(b) For a nonresident or part-year resident, the credit must be allocated based on the 
2.9 	percentage calculated under section 290.06, subdivision 2c, paragraph (e).
2.10 	(c) An eligible individual may receive the credit under this section without regard to the 
2.11 	individual's eligibility for the public service loan forgiveness program under United States 
2.12 	Code, title 20, section 1087e(m).
2.13 	(d) In the case of a married couple, each spouse is eligible for the credit in this section.
2.14 		Subd. 3.Credit refundable. If the amount of credit that an eligible individual who is a 
2.15 	resident or part-year resident of Minnesota is eligible to receive under this section exceeds 
2.16 	the individual's tax liability under this chapter, the commissioner shall refund the excess to 
2.17 	the individual. For a nonresident taxpayer, the credit may not exceed the taxpayer's liability 
2.18 	for tax under this chapter.
2.19 		Subd. 4.Appropriation. An amount sufficient to pay the refunds required by this section 
2.20 	is appropriated to the commissioner from the general fund.

2.21 	EFFECTIVE DATE. This section is effective for taxable years beginning after December 
2.22 	31, 2016.