1.1 	A bill for an act
1.2 	relating to taxation; individual income; modifying the working family credit 
1.3 	calculation;amending Minnesota Statutes 2018, section 290.0671, subdivisions 
1.4 	1, 7.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. Minnesota Statutes 2018, section 290.0671, subdivision 1, is amended to read:
1.7 		Subdivision 1.Credit allowed. (a) An individual who is a resident of Minnesota is 
1.8 	allowed a credit against the tax imposed by this chapter equal to a percentage of earned 
1.9 	income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the 
1.10 	Internal Revenue Code, except that a taxpayer with no qualifying children who has attained 
1.11 	the age of 21, but not attained age 65 before the close of the taxable year and is otherwise 
1.12 	eligible for a credit under section 32 of the Internal Revenue Code may also receive a credit.
1.13 	(b) For individuals with no qualifying children, the credit equals 2.10 4.0 percent of the 
1.14 	first $6,180 $7,500 of earned income. The credit is reduced by 2.01 3.3 percent of earned 
1.15 	income or adjusted gross income, whichever is greater, in excess of $8,130 $11,500, but in 
1.16 	no case is the credit less than zero.
1.17 	(c) For individuals with one qualifying child, the credit equals 9.35 percent of the first 
1.18 	$11,120 $11,950 of earned income. The credit is reduced by 6.02 percent of earned income 
1.19 	or adjusted gross income, whichever is greater, in excess of $21,190 $22,770, but in no case 
1.20 	is the credit less than zero.
1.21 	(d) For individuals with two or more qualifying children, the credit equals 11 percent 
1.22 	of the first $18,240 $19,600 of earned income. The credit is reduced by 10.82 percent of 
2.1 	earned income or adjusted gross income, whichever is greater, in excess of $25,130 $27,000, 
2.2 	but in no case is the credit less than zero.
2.3 	(e) For a part-year resident, the credit must be allocated based on the percentage calculated 
2.4 	under section 290.06, subdivision 2c, paragraph (e).
2.5 	(f) For a person who was a resident for the entire tax year and has earned income not 
2.6 	subject to tax under this chapter, including income excluded under section 290.0132, 
2.7 	subdivision 10, the credit must be allocated based on the ratio of federal adjusted gross 
2.8 	income reduced by the earned income not subject to tax under this chapter over federal 
2.9 	adjusted gross income. For purposes of this paragraph, the following clauses are not 
2.10 	considered "earned income not subject to tax under this chapter":
2.11 	(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12;
2.12 	(2) the exclusion of combat pay under section 112 of the Internal Revenue Code; and
2.13 	(3) income derived from an Indian reservation by an enrolled member of the reservation 
2.14 	while living on the reservation.
2.15 	(g) For tax years beginning after December 31, 2013, the $8,130 $11,500 in paragraph 
2.16 	(b), the $21,190 $22,770 in paragraph (c), and the $25,130 $27,000 in paragraph (d), after 
2.17 	being adjusted for inflation under subdivision 7, are each increased by $5,000 for married 
2.18 	taxpayers filing joint returns. For tax years beginning after December 31, 2013, the 
2.19 	commissioner shall annually adjust the $5,000 by the percentage determined pursuant to 
2.20 	the provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B), 
2.21 	the word "2008" shall be substituted for the word "1992." For 2014, the commissioner shall 
2.22 	then determine the percent change from the 12 months ending on August 31, 2008, to the 
2.23 	12 months ending on August 31, 2013, and in each subsequent year, from the 12 months 
2.24 	ending on August 31, 2008, to the 12 months ending on August 31 of the year preceding 
2.25 	the taxable year. The earned income thresholds as adjusted for inflation must be rounded 
2.26 	to the nearest $10. If the amount ends in $5, the amount is rounded up to the nearest $10. 
2.27 	The determination of the commissioner under this subdivision is not a rule under the 
2.28 	Administrative Procedure Act.
2.29 	(h) The commissioner shall construct tables showing the amount of the credit at various 
2.30 	income levels and make them available to taxpayers. The tables shall follow the schedule 
2.31 	contained in this subdivision, except that the commissioner may graduate the transition 
2.32 	between income brackets.

3.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after December 
3.2 	31, 2018.

3.3 	Sec. 2. Minnesota Statutes 2018, section 290.0671, subdivision 7, is amended to read:
3.4 		Subd. 7.Inflation adjustment. The earned income amounts used to calculate the credit 
3.5 	and the income thresholds at which the maximum credit begins to be reduced in subdivision 
3.6 	1 must be adjusted for inflation. The commissioner shall adjust by the percentage determined 
3.7 	pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in section 
3.8 	1(f)(3)(B) the word "2013" "2018" shall be substituted for the word "1992." For 2015 2020, 
3.9 	the commissioner shall then determine the percent change from the 12 months ending on 
3.10 	August 31, 2013 2018, to the 12 months ending on August 31, 2014 2019, and in each 
3.11 	subsequent year, from the 12 months ending on August 31, 2013 2018, to the 12 months 
3.12 	ending on August 31 of the year preceding the taxable year. The earned income thresholds 
3.13 	as adjusted for inflation must be rounded to the nearest $10 amount. If the amount ends in 
3.14 	$5, the amount is rounded up to the nearest $10 amount. The determination of the 
3.15 	commissioner under this subdivision is not a rule under the Administrative Procedure Act.

3.16 	EFFECTIVE DATE. This section is effective for taxable years beginning after December 
3.17 	31, 2019.