Engrossments
Introduction		Posted on 01/05/2017
1st Engrossment		Posted on 03/27/2017
2nd Engrossment		Posted on 03/28/2017
3rd Engrossment		Posted on 03/30/2017
4th Engrossment		Posted on 05/16/2017

Unofficial Engrossments
1st Unofficial Engrossment		Posted on 04/04/2017

Conference Committee Reports
CCR-HF0004A		Posted on 05/09/2017

ARTICLE 1

INDIVIDUAL INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

Section 1.

new text begin [41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Agricultural assets" means agricultural land, livestock, facilities, buildings, and
machinery used for farming in Minnesota.
new text end

new text begin (c) "Beginning farmer" means an individual who:
new text end

new text begin (1) is a resident of Minnesota;
new text end

new text begin (2) is seeking entry, or has entered within the last ten years, into farming;
new text end

new text begin (3) intends to farm land located within the state borders of Minnesota;
new text end

new text begin (4) is not and whose spouse is not a family member of the owner of the agricultural
assets from whom the beginning farmer is seeking to purchase or rent agricultural assets;
new text end

new text begin (5) is not and whose spouse is not a family member of a partner, member, shareholder,
or trustee of the owner of agricultural assets from whom the beginning farmer is seeking to
purchase or rent agricultural assets; and
new text end

new text begin (6) meets the following eligibility requirements as determined by the authority:
new text end

new text begin (i) has a net worth that does not exceed the limit provided under section 41B.03,
subdivision 3, paragraph (a), clause (2);
new text end

new text begin (ii) provides the majority of the day-to-day physical labor and management of the farm;
new text end

new text begin (iii) has, by the judgment of the authority, adequate farming experience or demonstrates
knowledge in the type of farming for which the beginning farmer seeks assistance from the
authority;
new text end

new text begin (iv) demonstrates to the authority a profit potential by submitting projected earnings
statements;
new text end

new text begin (v) asserts to the satisfaction of the authority that farming will be a significant source
of income for the beginning farmer;
new text end

new text begin (vi) participates in a financial management program approved by the authority or the
commissioner of agriculture;
new text end

new text begin (vii) agrees to notify the authority if the beginning farmer no longer meets the eligibility
requirements within the three-year certification period, in which case the beginning farmer
is no longer eligible for credits under this section; and
new text end

new text begin (viii) has other qualifications as specified by the authority.
new text end

new text begin (d) "Family member" means a family member within the meaning of the Internal Revenue
Code, section 267(c)(4).
new text end

new text begin (e) "Farm product" means plants and animals useful to humans and includes, but is not
limited to, forage and sod crops, oilseeds, grain and feed crops, dairy and dairy products,
poultry and poultry products, livestock, fruits, and vegetables.
new text end

new text begin (f) "Farming" means the active use, management, and operation of real and personal
property for the production of a farm product.
new text end

new text begin (g) "Owner of agricultural assets" means an individual, trust, or pass-through entity that
is the owner in fee of agricultural land or has legal title to any other agricultural asset. Owner
of agricultural assets does not mean an equipment dealer, livestock dealer defined in section
17A.03, subdivision 7, or comparable entity that is engaged in the business of selling
agricultural assets for profit and that is not engaged in farming as its primary business
activity. An owner of agricultural assets approved and certified by the authority under
subdivision 4 must notify the authority if the owner no longer meets the definition in this
paragraph within the three year certification period and is then no longer eligible for credits
under this section.
new text end

new text begin (h) "Share rent agreement" means a rental agreement in which the principal consideration
given to the owner of agricultural assets is a predetermined portion of the production of
farm products produced from the rented agricultural assets and which provides for sharing
production costs or risk of loss, or both.
new text end

new text begin Subd. 2. new text end

new text begin Tax credit for owners of agricultural assets. new text end

new text begin (a) An owner of agricultural
assets may take a credit against the tax due under chapter 290 for the sale or rental of
agricultural assets to a beginning farmer. An owner of agricultural assets may take a credit
equal to:
new text end

new text begin (1) five percent of the lesser of the sale price or the fair market value of the agricultural
asset;
new text end

new text begin (2) ten percent of the gross rental income in each of the first, second, and third years of
a rental agreement; or
new text end

new text begin (3) 15 percent of the cash equivalent of the gross rental income in each of the first,
second, and third years of a share rent agreement.
new text end

new text begin (b) A qualifying rental agreement includes cash rent of agricultural assets or a share rent
agreement. The agricultural asset must be rented at prevailing community rates as determined
by the authority. The credit may be claimed only after approval and certification by the
authority.
new text end

new text begin (c) An owner of agricultural assets or beginning farmer may terminate a rental agreement,
including a share rent agreement, for reasonable cause upon approval of the authority. If a
rental agreement is terminated without the fault of the owner of agricultural assets, the tax
credits shall not be retroactively disallowed. In determining reasonable cause, the authority
must look at which party was at fault in the termination of the agreement. If the authority
determines the owner of agricultural assets did not have reasonable cause, the owner of
agricultural assets must repay all credits received as a result of the rental agreement to the
commissioner of revenue. The repayment is additional income tax for the taxable year in
which the authority makes its decision or when a final adjudication under subdivision 5,
paragraph (a), is made, whichever is later.
new text end

new text begin (d) The credit is limited to the liability for tax as computed under chapter 290 for the
taxable year. If the amount of the credit determined under this section for any taxable year
exceeds this limitation, the excess is a beginning farmer incentive credit carryover according
to section 290.06, subdivision 37.
new text end

new text begin Subd. 3. new text end

new text begin Beginning farmer management tax credit. new text end

new text begin (a) A beginning farmer may take
a credit against the tax due under chapter 290 for participating in a financial management
program approved by the authority. The credit is equal to 100 percent of the amount paid
for participating in the program, not to exceed $1,500. The credit is available for up to three
years while the farmer is in the program. The authority shall maintain a list of approved
financial management programs and establish a procedure for approving equivalent programs
that are not on the list.
new text end

new text begin (b) The credit is limited to the liability for tax as computed under chapter 290 for the
taxable year. If the amount of the credit determined under this section for any taxable year
exceeds this limitation, the excess is a beginning farmer management credit carryover
according to section 290.06, subdivision 38.
new text end

new text begin Subd. 4. new text end

new text begin Authority duties. new text end

new text begin (a) The authority shall:
new text end

new text begin (1) approve and certify or recertify beginning farmers as eligible for the program under
this section;
new text end

new text begin (2) approve and certify or recertify owners of agricultural assets as eligible for the tax
credit under subdivision 2;
new text end

new text begin (3) provide necessary and reasonable assistance and support to beginning farmers for
qualification and participation in financial management programs approved by the authority;
new text end

new text begin (4) refer beginning farmers to agencies and organizations that may provide additional
pertinent information and assistance; and
new text end

new text begin (5) notwithstanding section 41B.211, the Rural Finance Authority must share information
with the commissioner of revenue to the extent necessary to administer provisions under
this subdivision and section 290.06, subdivisions 37 and 38. The Rural Finance Authority
must annually notify the commissioner of revenue of approval and certification or
recertification of beginning farmers and owners of agricultural assets under this section.
new text end

new text begin (b) The certification of a beginning farmer or an owner of agricultural assets under this
section is valid for the year of the certification and the two following years, after which
time the beginning farmer or owner of agricultural assets must apply to the authority for
recertification.
new text end

new text begin Subd. 5. new text end

new text begin Appeals of authority determinations. new text end

new text begin (a) Any decision of the authority under
this section may be challenged as a contested case under chapter 14. The contested case
proceeding must be initiated within 60 days of the date of written notification by the office.
new text end

new text begin (b) If a taxpayer challenges a decision of the authority under this subdivision, upon
perfection of the appeal the authority must notify the commissioner of revenue of the
challenge within 5 days.
new text end

new text begin (c) Nothing in this subdivision affects the commissioner of revenue's authority to audit,
review, correct, or adjust returns claiming the credit.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2016, section 116J.8737, subdivision 5, is amended to read:

Subd. 5.

Credit allowed.

(a)(1) A qualified investor or qualified fund is eligible for a
credit equal to 25 percent of the qualified investment in a qualified small business.
Investments made by a pass-through entity qualify for a credit only if the entity is a qualified
fund. The commissioner must not allocate more than $15,000,000 in credits to qualified
investors or qualified funds for taxable years beginning after December 31, 2013, and before
January 1, 2017, and must not allocate more than $10,000,000 in credits to qualified investors
or qualified funds for taxable years beginning after December 31, 2016, and before January
1, 2018new text begin , and must not allocate more than $10,000,000 in credits to qualified investors or
qualified funds for taxable years beginning after December 31, 2017, and before January
1, 2020new text end ; and

(2) for taxable years beginning after December 31, 2014, and before January 1, deleted text begin 2018deleted text end new text begin
2020new text end , 50 percent must be allocated to credits for qualifying investments in qualified greater
Minnesota businesses and minority- or women-owned qualified small businesses in
Minnesota. Any portion of a taxable year's credits that is reserved for qualifying investments
in greater Minnesota businesses and minority- or women-owned qualified small businesses
in Minnesota that is not allocated by September 30 of the taxable year is available for
allocation to other credit applications beginning on October 1. Any portion of a taxable
year's credits that is not allocated by the commissioner does not cancel and may be carried
forward to subsequent taxable years until all credits have been allocated.

(b) The commissioner may not allocate more than a total maximum amount in credits
for a taxable year to a qualified investor for the investor's cumulative qualified investments
as an individual qualified investor and as an investor in a qualified fund; for married couples
filing joint returns the maximum is $250,000, and for all other filers the maximum is
$125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
over all taxable years for qualified investments in any one qualified small business.

(c) The commissioner may not allocate a credit to a qualified investor either as an
individual qualified investor or as an investor in a qualified fund if, at the time the investment
is proposed:

(1) the investor is an officer or principal of the qualified small business; or

(2) the investor, either individually or in combination with one or more members of the
investor's family, owns, controls, or holds the power to vote 20 percent or more of the
outstanding securities of the qualified small business.

A member of the family of an individual disqualified by this paragraph is not eligible for a
credit under this section. For a married couple filing a joint return, the limitations in this
paragraph apply collectively to the investor and spouse. For purposes of determining the
ownership interest of an investor under this paragraph, the rules under section 267(c) and
267(e) of the Internal Revenue Code apply.

(d) Applications for tax credits for 2010 must be made available on the department's
Web site by September 1, 2010, and the department must begin accepting applications by
September 1, 2010. Applications for subsequent years must be made available by November
1 of the preceding year.

(e) Qualified investors and qualified funds must apply to the commissioner for tax credits.
Tax credits must be allocated to qualified investors or qualified funds in the order that the
tax credit request applications are filed with the department. The commissioner must approve
or reject tax credit request applications within 15 days of receiving the application. The
investment specified in the application must be made within 60 days of the allocation of
the credits. If the investment is not made within 60 days, the credit allocation is canceled
and available for reallocation. A qualified investor or qualified fund that fails to invest as
specified in the application, within 60 days of allocation of the credits, must notify the
commissioner of the failure to invest within five business days of the expiration of the
60-day investment period.

(f) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified investors or
qualified funds file tax credit request applications on the same day, and the aggregate amount
of credit allocation claims exceeds the aggregate limit of credits under this section or the
lesser amount of credits that remain unallocated on that day, then the credits must be allocated
among the qualified investors or qualified funds who filed on that day on a pro rata basis
with respect to the amounts claimed. The pro rata allocation for any one qualified investor
or qualified fund is the product obtained by multiplying a fraction, the numerator of which
is the amount of the credit allocation claim filed on behalf of a qualified investor and the
denominator of which is the total of all credit allocation claims filed on behalf of all
applicants on that day, by the amount of credits that remain unallocated on that day for the
taxable year.

(g) A qualified investor or qualified fund, or a qualified small business acting on their
behalf, must notify the commissioner when an investment for which credits were allocated
has been made, and the taxable year in which the investment was made. A qualified fund
must also provide the commissioner with a statement indicating the amount invested by
each investor in the qualified fund based on each investor's share of the assets of the qualified
fund at the time of the qualified investment. After receiving notification that the investment
was made, the commissioner must issue credit certificates for the taxable year in which the
investment was made to the qualified investor or, for an investment made by a qualified
fund, to each qualified investor who is an investor in the fund. The certificate must state
that the credit is subject to revocation if the qualified investor or qualified fund does not
hold the investment in the qualified small business for at least three years, consisting of the
calendar year in which the investment was made and the two following years. The three-year
holding period does not apply if:

(1) the investment by the qualified investor or qualified fund becomes worthless before
the end of the three-year period;

(2) 80 percent or more of the assets of the qualified small business is sold before the end
of the three-year period;

(3) the qualified small business is sold before the end of the three-year period;

(4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period; or

(5) the qualified investor dies before the end of the three-year period.

(h) The commissioner must notify the commissioner of revenue of credit certificates
issued under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 3.

Minnesota Statutes 2016, section 116J.8737, subdivision 12, is amended to read:

Subd. 12.

Sunset.

This section expires for taxable years beginning after December 31,
deleted text begin 2017deleted text end new text begin 2019new text end , except that reporting requirements under subdivision 6 and revocation of credits
under subdivision 7 remain in effect through deleted text begin 2019deleted text end new text begin 2021new text end for qualified investors and qualified
funds, and through deleted text begin 2021deleted text end new text begin 2023new text end for qualified small businesses, reporting requirements under
subdivision 9 remain in effect through deleted text begin 2022deleted text end new text begin 2024new text end , and the appropriation in subdivision 11
remains in effect through deleted text begin 2021deleted text end new text begin 2023new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2016, section 289A.10, subdivision 1, is amended to read:

Subdivision 1.

Return required.

In the case of a decedent who has an interest in property
with a situs in Minnesota, the personal representative must submit a Minnesota estate tax
return to the commissioner, on a form prescribed by the commissioner, ifdeleted text begin :
deleted text end

deleted text begin (1)deleted text end a federal estate tax return is required to be fileddeleted text begin ; ordeleted text end new text begin under the Internal Revenue Code.
new text end

deleted text begin (2) the sum of the federal gross estate and federal adjusted taxable gifts, as defined in
section 2001(b) of the Internal Revenue Code, made within three years of the date of the
decedent's death exceeds $1,200,000 for estates of decedents dying in 2014; $1,400,000 for
estates of decedents dying in 2015; $1,600,000 for estates of decedents dying in 2016;
$1,800,000 for estates of decedents dying in 2017; and $2,000,000 for estates of decedents
dying in 2018 and thereafter.
deleted text end

The return must contain a computation of the Minnesota estate tax due. The return must
be signed by the personal representative.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2016.
new text end

Sec. 5.

Minnesota Statutes 2016, section 290.01, subdivision 7, is amended to read:

Subd. 7.

Resident.

(a) The term "resident" means any individual domiciled in Minnesota,
except that an individual is not a "resident" for the period of time that the individual is a
"qualified individual" as defined in section 911(d)(1) of the Internal Revenue Code, if the
qualified individual notifies the county within three months of moving out of the country
that homestead status be revoked for the Minnesota residence of the qualified individual,
and the property is not classified as a homestead while the individual remains a qualified
individual.

(b) "Resident" also means any individual domiciled outside the state who maintains a
place of abode in the state and spends in the aggregate more than one-half of the tax year
in Minnesota, unless:

(1) the individual or the spouse of the individual is in the armed forces of the United
States; or

(2) the individual is covered under the reciprocity provisions in section 290.081.

For purposes of this subdivision, presence within the state for any part of a calendar day
constitutes a day spent in the state. Individuals shall keep adequate records to substantiate
the days spent outside the state.

The term "abode" means a dwelling maintained by an individual, whether or not owned
by the individual and whether or not occupied by the individual, and includes a dwelling
place owned or leased by the individual's spouse.

(c) new text begin In determining where an individual is domiciled, new text end neither the commissioner nor any
court shall considernew text begin :
new text end

new text begin (1)new text end charitable contributions made by deleted text begin andeleted text end new text begin thenew text end individual within or without the state deleted text begin in
determining if the individual is domiciled in Minnesotadeleted text end new text begin ;
new text end

new text begin (2) the location of the individual's attorney, certified public accountant, or financial
adviser; or
new text end

new text begin (3) the place of business of a financial institution at which the individual applies for any
new type of credit or at which the individual opens or maintains any type of accountnew text end .

new text begin (d) For purposes of this subdivision, the following terms have the meanings given them:
new text end

new text begin (1) "financial adviser" means:
new text end

new text begin (i) an individual or business entity engaged in business as a certified financial planner,
registered investment adviser, licensed insurance producer or agent, or registered securities
broker-dealer representative; or
new text end

new text begin (ii) a financial institution providing services related to trust or estate administration,
investment management, or financial planning; and
new text end

new text begin (2) "financial institution" means a financial institution as defined in section 47.015,
subdivision 1; a state or nationally chartered credit union; or a registered broker-dealer
under the Securities and Exchange Act of 1934.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

Minnesota Statutes 2016, section 290.0131, subdivision 10, as amended by Laws
2017, chapter 1, section 4, is amended to read:

Subd. 10.

Section 179 expensing.

new text begin For taxable years beginning before January 1, 2018,
new text end 80 percent of the amount by which the deduction allowed under the dollar limits of section
179 of the Internal Revenue Code exceeds the deduction allowable by section 179 of the
Internal Revenue Code, as amended through December 31, 2003, is an addition.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 7.

Minnesota Statutes 2016, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 14. new text end

new text begin First-time home buyer savings account. new text end

new text begin The amount for a first-time home
buyer savings account required by section 462D.06, subdivision 2, is an addition.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 8.

Minnesota Statutes 2016, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin Equity and opportunity donations to qualified foundations. new text end

new text begin The amount
of the deduction under section 170 of the Internal Revenue Code that represents contributions
to a qualified foundation under section 290.0693 is an addition.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 9.

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

Subd. 4.

Education expenses.

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

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

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

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

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

(1) $1,625 for each qualifying child in new text begin a prekindergarten educational program or in
new text end kindergarten through grade 6; and

(2) $2,500 for each qualifying child in grades 7 through 12.

new text begin EFFECTIVE DATE. new text end

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

Sec. 10.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 23. new text end

new text begin Contributions to 529 plan. new text end

new text begin (a) The amount equal to the contributions made
during the taxable year to one or more accounts in plans qualifying under section 529 of
the Internal Revenue Code, reduced by any withdrawals from accounts during the taxable
year, is a subtraction.
new text end

new text begin (b) The subtraction under this subdivision does not include amounts rolled over from
other college savings plan accounts.
new text end

new text begin (c) The subtraction under this subdivision must not exceed $3,000 for married couples
filing joint returns and $1,500 for all other filers, and is limited to individuals who do not
claim the credit under section 290.0683.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 11.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 24. new text end

new text begin Discharge of indebtedness; education loans. new text end

new text begin (a) The amount equal to the
discharge of indebtedness of the taxpayer is a subtraction if:
new text end

new text begin (1) the indebtedness discharged is a qualified education loan; and
new text end

new text begin (2) the indebtedness was discharged under section 136A.1791, or following the taxpayer's
completion of an income-driven repayment plan.
new text end

new text begin (b) For the purposes of this subdivision, "qualified education loan" has the meaning
given in section 221 of the Internal Revenue Code.
new text end

new text begin (c) For purposes of this subdivision, "income-driven repayment plan" means a payment
plan established by the United States Department of Education that sets monthly student
loan payments based on income and family size under United States Code, title 20, section
1087e, or similar authority and specifically includes, but is not limited to:
new text end

new text begin (1) the income-based repayment plan under United States Code, title 20, section 1098e;
new text end

new text begin (2) the income contingent repayment plan established under United States Code, title
20, section 1087e, subsection (e); and
new text end

new text begin (3) the PAYE program or REPAYE program established by the Department of Education
under administrative regulations.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 12.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 25. new text end

new text begin First-time home buyer savings account. new text end

new text begin (a) For purposes of this subdivision,
the terms defined in section 462D.02 have the meanings given in that section.
new text end

new text begin (b) The amount an account holder contributes to and earnings on a first-time home buyer
savings account allowed by section 462D.06, subdivision 1, is a subtraction.
new text end

new text begin (c) The subtraction allowed under this subdivision for a taxable year is limited to $7,500,
or $15,000 for married joint filers. For a taxpayer whose adjusted gross income, as defined
in section 62 of the Internal Revenue Code, for the taxable year exceeds $125,000, or
$250,000 for married joint filers, the maximum subtraction is reduced $1 for each $4 of
adjusted gross income in excess of that threshold.
new text end

new text begin (d) The adjusted gross income thresholds under paragraph (c) must be adjusted for
inflation. The commissioner shall adjust the dollar amount of the income thresholds at which
the maximum subtraction begins to be reduced under paragraph (b) by the percentage
determined under section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B)
the word "2016" is substituted for the word "1992." For 2018, the commissioner shall then
determine the percent change from the 12 months ending on August 31, 2016, to the 12
months ending on August 31, 2017, and in each subsequent year, from the 12 months ending
on August 31, 2016, to the 12 months ending on August 31 of the year preceding the taxable
year. The determination of the commissioner under this subdivision is not a "rule" and is
not subject to the Administrative Procedure Act in chapter 14, including section 14.386.
The threshold amount as adjusted must be rounded to the nearest $100 amount. If the amount
ends in $50, the amount is rounded up to the nearest $100 amount.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 13.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 26. new text end

new text begin Social Security benefits. new text end

new text begin (a) A portion of Social Security benefits is allowed
as a subtraction. The subtraction equals the lesser of Social Security benefits or a maximum
subtraction subject to the limits under paragraphs (b), (c), and (d).
new text end

new text begin (b) For married taxpayers filing a joint return and surviving spouses, the maximum
subtraction equals $8,250. The maximum subtraction is reduced by 20 percent of provisional
income over $77,000. In no case is the subtraction less than zero.
new text end

new text begin (c) For single or head-of-household taxpayers, the maximum subtraction equals $6,500.
The maximum subtraction is reduced by 20 percent of provisional income over $60,200.
In no case is the subtraction less than zero.
new text end

new text begin (d) For married taxpayers filing separate returns, the maximum subtraction equals $4,125.
The maximum subtraction is reduced by 20 percent of provisional income over $38,500.
In no case is the subtraction less than zero.
new text end

new text begin (e) For purposes of this subdivision, "provisional income" means modified adjusted
gross income as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of
the Social Security benefits received during the taxable year, and "Social Security benefits"
has the meaning given in section 86(d)(1) of the Internal Revenue Code.
new text end

new text begin (f) The commissioner shall adjust the dollar amounts in paragraphs (b) to (d) by the
percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue
Code, except that in section 1(f)(3)(B) of the Internal Revenue Code the word "2016" shall
be substituted for the word "1992." For 2018, the commissioner shall then determine the
percentage change from the 12 months ending on August 31, 2016, to the 12 months ending
on August 31, 2017, and in each subsequent year, from the 12 months ending on August
31, 2016, to the 12 months ending on August 31 of the year preceding the taxable year. The
determination of the commissioner pursuant to this subdivision must not be considered a
rule and is not subject to the Administrative Procedure Act contained in chapter 14, including
section 14.386. The threshold amount as adjusted must be rounded to the nearest $10 amount.
If the amount ends in $5, the amount is rounded up to the nearest $10 amount.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 14.

Minnesota Statutes 2016, section 290.0133, subdivision 12, as amended by Laws
2017, chapter 1, section 5, is amended to read:

Subd. 12.

Section 179 expensing.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 15.

Minnesota Statutes 2016, section 290.0133, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin Equity and opportunity donations to qualified foundations. new text end

new text begin The amount
of the deduction under section 170 of the Internal Revenue Code that represents contributions
to a qualified foundation under section 290.0693 is an addition.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 16.

new text begin [290.016] CONFORMITY TO FEDERAL TAX EXTENDERS BY
ADMINISTRATIVE ACTION.
new text end

new text begin Subdivision 1. new text end

new text begin Legislative purpose. new text end

new text begin (a) The legislature intends this section to provide
an ongoing mechanism for conforming the Minnesota individual income and corporate
franchise taxes and the property tax refund and homestead credit refund programs to federal
tax legislation enacted after the legislature has adjourned that extends existing provisions
of federal law, if the provisions affect tax liability in a calendar year that ends before the
legislature is scheduled to reconvene in regular session. Congress has regularly enacted
changes of that type that affect computation of Minnesota tax through its links to federal
law. The federal changes consist mainly of extending provisions that reduce revenues and
are scheduled to expire. Because Minnesota law is linked to federal law as of a specific
date, taxpayers and the Department of Revenue must assume that Minnesota law does not
include the effect of these federal changes even though the legislature regularly adopts most
of the federal provisions retroactively in the next legislative session. This situation
undermines compliance and administration of Minnesota taxes, causing delay, uncertainty,
and added costs. This section provides an administrative mechanism to conform to most of
these federal changes. The legislature's intent is to conform to the federal tax extenders,
including minor modifications of them, and to set aside the necessary state budget resources
to do so.
new text end

new text begin (b) By expressing its intent regarding specific federal provisions and indicating how to
treat each federal extender provision, the legislature is exercising its legislative power and
is not delegating to Congress or the commissioner the authority to determine Minnesota tax
law. The legislature believes that this section is consistent with the Minnesota Supreme
Court's ruling in the case of Wallace v. Commissioner of Taxation, 289 Minn. 220 (1971).
new text end

new text begin Subd. 2. new text end

new text begin Federal tax conformity account established; transfer. new text end

new text begin (a) A federal tax
conformity account is established in the general fund. Money in the account is available for
transfer to the general fund to offset the reduction in general fund revenues resulting from
conforming Minnesota tax law to federal law under this section.
new text end

new text begin (b) $20,000,000 is transferred from the general fund to the federal tax conformity account,
effective July 1, 2017.
new text end

new text begin (c) Each year, within ten days after receiving notice of the amount from the commissioner,
the commissioner of management and budget shall transfer from the account to the general
fund the amount the commissioner determines is required under subdivision 4.
new text end

new text begin Subd. 3. new text end

new text begin Eligible federal tax preferences. new text end

new text begin For purposes of this section and section
290.01, the term "eligible federal tax preferences" means any of the following items that
are not in effect under the Internal Revenue Code for future taxable years beginning after
December 31, 2016:
new text end

new text begin (1) discharge of qualified principal residence indebtedness under section 108(a)(1)(E)
of the Internal Revenue Code;
new text end

new text begin (2) mortgage insurance premiums treated as qualified residence interest under section
163(h)(3)(E) of the Internal Revenue Code;
new text end

new text begin (3) qualified tuition and related expenses under section 222 of the Internal Revenue
Code;
new text end

new text begin (4) classification of certain race horses as three-year property under section
168(e)(3)(A)(i) and (ii) of the Internal Revenue Code;
new text end

new text begin (5) the seven-year recovery period for motorsports entertainment complexes under
section 168(i)(15) of the Internal Revenue Code;
new text end

new text begin (6) the accelerated depreciation for business property on an Indian reservation under
section 168(j) of the Internal Revenue Code;
new text end

new text begin (7) the election to expense mine safety equipment under section 179E of the Internal
Revenue Code;
new text end

new text begin (8) the special expensing rules for certain film and television productions under section
181 of the Internal Revenue Code;
new text end

new text begin (9) the special allowance for second-generation biofuel plant property under section
168(l) of the Internal Revenue Code;
new text end

new text begin (10) the energy efficient commercial buildings deduction under section 179D of the
Internal Revenue Code;
new text end

new text begin (11) the five-year recovery period for property described in section 168(e)(3)(B)(vi)(I)
of the Internal Revenue Code and qualifying for an energy credit under section 48(a)(3)(A)
of the Internal Revenue Code; and
new text end

new text begin (12) the amount of the additional section 179 allowance in an empowerment zone under
section 1397A of the Internal Revenue Code.
new text end

new text begin Subd. 4. new text end

new text begin Designation of qualifying federal conformity items. new text end

new text begin (a) If, after final
adjournment of a regular session of the legislature, Congress enacts a law that extends one
or more of the eligible federal tax preferences to taxable years beginning during the calendar
year in which the legislature adjourned, the commissioner shall prepare a list of qualifying
federal conformity items and publish it on the Department of Revenue's Web site within 30
days following enactment of the law. In preparing the list, the commissioner shall estimate
the change in revenue resulting from allowing the eligible federal tax preferences, including
the effect of subdivision 6, for the current and succeeding biennia only. The commissioner
shall not include an item on the list of qualifying federal conformity items if the commissioner
estimates that its inclusion would reduce general fund revenues for the current and succeeding
biennia by more than the balance in the federal tax conformity account.
new text end

new text begin (b) The commissioner shall consider the provisions of subdivision 6 as the first item to
include on the list of qualifying conformity items. The commissioner shall apply the following
priorities in determining which additional items to include:
new text end

new text begin (1) the effect of all eligible federal tax preferences on computation of federal adjusted
gross income under this chapter and household income under chapter 290A, is the first
priority;
new text end

new text begin (2) the effect of the federal law on computation of Minnesota tax credits is the second
priority;
new text end

new text begin (3) the items in subdivision 3, clauses (4) to (12), in that order, are the third priority;
and
new text end

new text begin (4) the items in subdivision 3, clauses (1) to (3), in that order, are the last priority.
new text end

new text begin (c) In determining whether to include an eligible federal tax preference on the list of
qualifying federal conformity items, the commissioner may include items in which
nonmaterial changes were made in the federal law extending allowance of the eligible federal
tax preferences, compared to the provision that was in effect for the prior federal taxable
year. For purposes of this determination, nonmaterial changes are limited to changes that
are estimated to increase or decrease Minnesota tax revenues by no more than $1,000,000
for the affected eligible federal tax preference item for the taxable year.
new text end

new text begin (d) Within ten days after the commissioner's final determination of qualifying federal
conformity items under this subdivision, the commissioner shall notify the commissioner
of management and budget, in writing, of the amount of the federal tax conformity account
transfer under subdivision 2.
new text end

new text begin Subd. 5. new text end

new text begin Provisions in effect. new text end

new text begin (a) For purposes of determining tax and credits under this
chapter, including the taxes under sections 290.091 and 290.0921, and household income
under chapter 290A, qualifying federal conformity items and bonus depreciation rules under
subdivision 6 apply for the designated taxable year and the provisions of this chapter apply
as if the definition of the Internal Revenue Code under section 290.01, subdivision 31,
included the amendments to the qualifying federal conformity items.
new text end

new text begin (b) For qualifying federal conformity items listed in subdivision 3, clauses (4) to (12),
and bonus depreciation rules for which conformity in the designated taxable year that result
in a revenue increase or decrease in subsequent taxable years, the commissioner shall
administer the subsequent taxable year for the qualifying federal conformity items consistent
with conformity to the items in the designated taxable year and the estimate used to calculate
the transfer amount under subdivision 2.
new text end

new text begin (c) The commissioner shall administer the taxes under this chapter and refunds under
chapter 290A as if Minnesota had conformed to the federal definitions of net income,
adjusted gross income, and tax credits that affect computation of Minnesota tax or refunds
resulting from extension of the qualifying federal conformity items.
new text end

new text begin (d) For purposes of this subdivision and subdivision 6, "designated taxable year" means
a taxable year that begins during a calendar year in which an eligible federal tax preference
is enacted after the legislature adjourned its regular session and is effective for any taxable
year beginning during that calendar year.
new text end

new text begin Subd. 6. new text end

new text begin Bonus depreciation; 80 percent rule applies. new text end

new text begin If, following final adjournment
of a regular session of the legislature, Congress enacts a law that extends application of the
depreciation special allowances under section 168(k) of the Internal Revenue Code to taxable
years beginning during the same calendar year, the allowance must be determined using
the rules under sections 290.0131, subdivision 9, and 290.0133, subdivision 11, for the
designated taxable year; and the rules under sections 290.0132, subdivision 9, and 290.0134,
subdivision 13, for the five tax years immediately following the designated taxable year.
new text end

new text begin Subd. 7. new text end

new text begin Forms preparation. new text end

new text begin If the provisions of subdivisions 3 and 4 apply to a taxable
year, the commissioner shall prepare forms and instructions that reflect the qualifying federal
conformity items and bonus depreciation rules under subdivision 6, if applicable, for the
taxable year consistent with the provisions of this section.
new text end

new text begin Subd. 8. new text end

new text begin Draft legislation. new text end

new text begin For a taxable year for which the commissioner publishes a
list of qualifying federal conformity items under this section, the commissioner shall provide
the chairs and ranking minority members of the legislative committees with jurisdiction
over taxes with draft legislation that would conform Minnesota Statutes to the qualifying
federal conformity items and any other conformity items that the commissioner recommends
be adopted, including application to taxable years beyond those to which this section applies.
The draft legislation is intended to make the statutes consistent with application of the
designated qualifying federal conformity items under this section for the convenience of
members of the public. Failure to pass the draft legislation does not affect computation of
Minnesota tax liability for the affected taxable years under this section.
new text end

new text begin Subd. 9. new text end

new text begin Administrative Procedure Act. new text end

new text begin Designation of qualifying federal conformity
items or any other action of the commissioner under this section is not a rule and is not
subject to the Administrative Procedure Act under chapter 14, including section 14.386.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 17.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 2g. new text end

new text begin First-time home buyer savings account. new text end

new text begin (a) For purposes of this subdivision,
the terms defined in section 462D.02 have the meanings given in that section.
new text end

new text begin (b) In addition to the tax computed under subdivision 2c, an additional amount of tax
applies equal to the additional tax computed for the taxable year for the account holder of
a first-time home buyer account under section 462D.06, subdivision 3.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 18.

Minnesota Statutes 2016, section 290.06, subdivision 22, is amended to read:

Subd. 22.

Credit for taxes paid to another state.

(a) A taxpayer who is liable for taxes
based on net income to another state, as provided in paragraphs (b) through (f), upon income
allocated or apportioned to Minnesota, is entitled to a credit for the tax paid to another state
if the tax is actually paid in the taxable year or a subsequent taxable year. A taxpayer who
is a resident of this state pursuant to section 290.01, subdivision 7, paragraph (b), and who
is subject to income tax as a resident in the state of the individual's domicile is not allowed
this credit unless the state of domicile does not allow a similar credit.

(b) For an individual, estate, or trust, the credit is determined by multiplying the tax
payable under this chapter by the ratio derived by dividing the income subject to tax in the
other state that is also subject to tax in Minnesota while a resident of Minnesota by the
taxpayer's federal adjusted gross income, as defined in section 62 of the Internal Revenue
Code, modified by the addition required by section 290.0131, subdivision 2, and the
subtraction allowed by section 290.0132, subdivision 2, to the extent the income is allocated
or assigned to Minnesota under sections 290.081 and 290.17.

(c) If the taxpayer is an athletic team that apportions all of its income under section
290.17, subdivision 5, the credit is determined by multiplying the tax payable under this
chapter by the ratio derived from dividing the total net income subject to tax in the other
state by the taxpayer's Minnesota taxable income.

(d)new text begin (1)new text end The credit determined under paragraph (b) or (c) shall not exceed the amount of
tax so paid to the other state on the gross income earned within the other state subject to
tax under this chapterdeleted text begin , nor shalldeleted text end new text begin ; and
new text end

new text begin (2)new text end the allowance of the credit new text begin does not new text end reduce the taxes paid under this chapter to an
amount less than what would be assessed if deleted text begin such income amount wasdeleted text end new text begin the gross income
earned within the other state werenew text end excluded from taxable net income.

(e) In the case of the tax assessed on a lump-sum distribution under section 290.032, the
credit allowed under paragraph (a) is the tax assessed by the other state on the lump-sum
distribution that is also subject to tax under section 290.032, and shall not exceed the tax
assessed under section 290.032. To the extent the total lump-sum distribution defined in
section 290.032, subdivision 1, includes lump-sum distributions received in prior years or
is all or in part an annuity contract, the reduction to the tax on the lump-sum distribution
allowed under section 290.032, subdivision 2, includes tax paid to another state that is
properly apportioned to that distribution.

(f) If a Minnesota resident reported an item of income to Minnesota and is assessed tax
in such other state on that same income after the Minnesota statute of limitations has expired,
the taxpayer shall receive a credit for that year under paragraph (a), notwithstanding any
statute of limitations to the contrary. The claim for the credit must be submitted within one
year from the date the taxes were paid to the other state. The taxpayer must submit sufficient
proof to show entitlement to a credit.

(g) For the purposes of this subdivision, a resident shareholder of a corporation treated
as an "S" corporation under section 290.9725, must be considered to have paid a tax imposed
on the shareholder in an amount equal to the shareholder's pro rata share of any net income
tax paid by the S corporation to another state. For the purposes of the preceding sentence,
the term "net income tax" means any tax imposed on or measured by a corporation's net
income.

(h) For the purposes of this subdivision, a resident partner of an entity taxed as a
partnership under the Internal Revenue Code must be considered to have paid a tax imposed
on the partner in an amount equal to the partner's pro rata share of any net income tax paid
by the partnership to another state. For purposes of the preceding sentence, the term "net
income" tax means any tax imposed on or measured by a partnership's net income.

(i) For the purposes of this subdivision, "another state":

(1) includes:

(i) the District of Columbia; and

(ii) a province or territory of Canada; but

(2) excludes Puerto Rico and the several territories organized by Congress.

(j) The limitations on the credit in paragraphs (b), (c), and (d), are imposed on a state
by state basis.

(k) For a tax imposed by a province or territory of Canada, the tax for purposes of this
subdivision is the excess of the tax over the amount of the foreign tax credit allowed under
section 27 of the Internal Revenue Code. In determining the amount of the foreign tax credit
allowed, the net income taxes imposed by Canada on the income are deducted first. Any
remaining amount of the allowable foreign tax credit reduces the provincial or territorial
tax that qualifies for the credit under this subdivision.

new text begin (l)(1) The credit allowed to a qualifying individual under this section for tax paid to a
qualifying state equals the credit calculated under paragraphs (b) and (d), plus the amount
calculated by multiplying:
new text end

new text begin (i) the difference between the preliminary credit and the credit calculated under paragraphs
(b) and (d), by
new text end

new text begin (ii) the ratio derived by dividing the income subject to tax in the qualifying state that
consists of compensation for performance of personal or professional services by the total
amount of income subject to tax in the qualifying state.
new text end

new text begin (2) If the amount of the credit that a qualifying individual is eligible to receive under
clause (1) for tax paid to a qualifying state exceeds the tax due under this chapter before
the application of the credit calculated under clause (1), the commissioner shall refund the
excess to the qualifying individual. An amount sufficient to pay the refunds required by this
subdivision is appropriated to the commissioner from the general fund.
new text end

new text begin (3) For purposes of this paragraph, "preliminary credit" means the credit that a qualifying
individual is eligible to receive under paragraphs (b) and (d) for tax paid to a qualifying
state without regard to the limitation in paragraph (d), clause (2); "qualifying individual"
means a Minnesota resident under section 290.01, subdivision 7, paragraph (a), who received
compensation during the taxable year for the performance of personal or professional services
within a qualifying state; and "qualifying state" means a state with which an agreement
under section 290.081 is not in effect for the taxable year but was in effect for a taxable
year beginning before January 1, 2010.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 19.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 37. new text end

new text begin Beginning farmer incentive credit. new text end

new text begin (a) A beginning farmer incentive credit
is allowed against the tax due under this chapter for the sale or rental of agricultural assets
to a beginning farmer according to section 41B.0391, subdivision 2.
new text end

new text begin (b) The credit may be claimed only after approval and certification by the Rural Finance
Authority according to section 41B.0391.
new text end

new text begin (c) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a beginning farmer incentive credit carryover to
each of the 15 succeeding taxable years. The entire amount of the excess unused credit for
the taxable year is carried first to the earliest of the taxable years to which the credit may
be carried and then to each successive year to which the credit may be carried. The amount
of the unused credit which may be added under this paragraph must not exceed the taxpayer's
liability for tax, less the beginning farmer incentive credit for the taxable year.
new text end

new text begin (d) Credits allowed to a partnership, a limited liability company taxed as a partnership,
an S corporation, or multiple owners of property are passed through to the partners, members,
shareholders, or owners, respectively, pro rata to each based on the partner's, member's,
shareholder's, or owner's share of the entity's assets or as specially allocated in the
organizational documents or any other executed agreement, as of the last day of the taxable
year.
new text end

new text begin (e) For a nonresident or part-year resident, the credit under this section must be allocated
using the percentage calculated in section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin (f) Notwithstanding the approval and certification by the Rural Finance Authority under
section 41B.0391, the commissioner may utilize any audit and examination powers under
chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the
credit and to assess for the amount of any improperly claimed credit.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 20.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 38. new text end

new text begin Beginning farmer management credit. new text end

new text begin (a) A taxpayer who is a beginning
farmer may take a credit against the tax due under this chapter for participation in a financial
management program according to section 41B.0391, subdivision 3.
new text end

new text begin (b) The credit may be claimed only after approval and certification by the Rural Finance
Authority according to section 41B.0391.
new text end

new text begin (c) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a beginning farmer management credit carryover
to each of the three succeeding taxable years. The entire amount of the excess unused credit
for the taxable year is carried first to the earliest of the taxable years to which the credit
may be carried and then to each successive year to which the credit may be carried. The
amount of the unused credit which may be added under this paragraph must not exceed the
taxpayer's liability for tax, less the beginning farmer management credit for the taxable
year.
new text end

new text begin (d) For a part-year resident, the credit under this section must be allocated using the
percentage calculated in section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin (e) Notwithstanding the approval and certification by the Rural Finance Authority under
section 41B.0391, the commissioner may utilize any audit and examination powers under
chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the
credit and to assess for the amount of any improperly claimed credit.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 21.

Minnesota Statutes 2016, section 290.067, subdivision 1, is amended to read:

Subdivision 1.

Amount of credit.

(a) A taxpayer may take as a credit against the tax
due from the taxpayer and a spouse, if any, under this chapter an amount equal to the
dependent care credit for which the taxpayer is eligible pursuant to the provisions of section
21 of the Internal Revenue Code deleted text begin subject to the limitations provided in subdivision 2deleted text end except
that in determining whether the child qualified as a dependent, income received as a
Minnesota family investment program grant or allowance to or on behalf of the child must
not be taken into account in determining whether the child received more than half of the
child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of the Internal
Revenue Code do not apply.

(b) If a child who has not attained the age of six years at the close of the taxable year is
cared for at a licensed family day care home operated by the child's parent, the taxpayer is
deemed to have paid employment-related expenses. If the child is 16 months old or younger
at the close of the taxable year, the amount of expenses deemed to have been paid equals
the maximum limit for one qualified individual under section 21(c) and (d) of the Internal
Revenue Code. If the child is older than 16 months of age but has not attained the age of
six years at the close of the taxable year, the amount of expenses deemed to have been paid
equals the amount the licensee would charge for the care of a child of the same age for the
same number of hours of care.

(1) has a child who has not attained the age of one year at the close of the taxable year;

(2) files a joint tax return for the taxable year; and

(3) does not participate in a dependent care assistance program as defined in section 129
of the Internal Revenue Code, in lieu of the actual employment related expenses paid for
that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of (i)
the combined earned income of the couple or (ii) the amount of the maximum limit for one
qualified individual under section 21(c) and (d) of the Internal Revenue Code will be deemed
to be the employment related expense paid for that child. The earned income limitation of
section 21(d) of the Internal Revenue Code shall not apply to this deemed amount. These
deemed amounts apply regardless of whether any employment-related expenses have been
paid.

(d) If the taxpayer is not required and does not file a federal individual income tax return
for the tax year, no credit is allowed for any amount paid to any person unless:

(1) the name, address, and taxpayer identification number of the person are included on
the return claiming the credit; or

(2) if the person is an organization described in section 501(c)(3) of the Internal Revenue
Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name
and address of the person are included on the return claiming the credit.

In the case of a failure to provide the information required under the preceding sentence,
the preceding sentence does not apply if it is shown that the taxpayer exercised due diligence
in attempting to provide the information required.

(e) In the case of a nonresident, part-year resident, or a person who has earned income
not subject to tax under this chapter including earned income excluded pursuant to section
290.0132, subdivision 10, the credit determined under section 21 of the Internal Revenue
Code must be allocated based on the ratio by which the earned income of the claimant and
the claimant's spouse from Minnesota sources bears to the total earned income of the claimant
and the claimant's spouse.

(f) For residents of Minnesota, the subtractions for military pay under section 290.0132,
subdivisions 11 and 12, are not considered "earned income not subject to tax under this
chapter."

(g) For residents of Minnesota, the exclusion of combat pay under section 112 of the
Internal Revenue Code is not considered "earned income not subject to tax under this
chapter."

new text begin (h) For taxpayers with federal adjusted gross income in excess of $50,000, the credit is
equal to the lesser of the credit otherwise calculated under this subdivision, or the amount
equal to $600 minus five percent of federal adjusted gross income in excess of $50,000 for
taxpayers with one qualified individual, or $1,200 minus five percent of federal adjusted
gross income in excess of $50,000 for taxpayers with two or more qualified individuals,
but in no case is the credit less than zero.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 22.

Minnesota Statutes 2016, section 290.067, subdivision 2b, is amended to read:

Subd. 2b.

Inflation adjustment.

The commissioner shall adjust the dollar amount of
the income threshold at which the maximum credit begins to be reduced under subdivision
deleted text begin 2deleted text end new text begin 1new text end by the percentage determined pursuant to the provisions of section 1(f) of the Internal
Revenue Code, except that in section 1(f)(3)(B) the word deleted text begin "1999"deleted text end new text begin "2016"new text end shall be substituted
for the word "1992." For deleted text begin 2001deleted text end new text begin 2018new text end , the commissioner shall then determine the percent
change from the 12 months ending on August 31, deleted text begin 1999deleted text end new text begin 2016new text end , to the 12 months ending on
August 31, deleted text begin 2000deleted text end new text begin 2017new text end , and in each subsequent year, from the 12 months ending on August
31, deleted text begin 1999deleted text end new text begin 2016new text end , to the 12 months ending on August 31 of the year preceding the taxable
year. The determination of the commissioner pursuant to this subdivision must not be
considered a "rule" and is not subject to the Administrative Procedure Act contained in
chapter 14. The threshold amount as adjusted must be rounded to the nearest $10 amount.
If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

new text begin EFFECTIVE DATE. new text end

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

Sec. 23.

Minnesota Statutes 2016, section 290.0671, subdivision 1, as amended by Laws
2017, chapter 1, section 6, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual who is a resident of Minnesota is
allowed a credit against the tax imposed by this chapter equal to a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Code.

(b) For individuals with no qualifying children, the credit equals 2.10 percent of the first
$6,180 of earned income. The credit is reduced by 2.01 percent of earned income or adjusted
gross income, whichever is greater, in excess of $8,130, but in no case is the credit less than
zero.

(c) For individuals with one qualifying child, the credit equals 9.35 percent of the first
$11,120 of earned income. The credit is reduced by 6.02 percent of earned income or adjusted
gross income, whichever is greater, in excess of $21,190, but in no case is the credit less
than zero.

(d) For individuals with two or more qualifying children, the credit equals 11 percent
of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned
income or adjusted gross income, whichever is greater, in excess of $25,130, but in no case
is the credit less than zero.

(e) For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income not
subject to tax under this chapter, including income excluded under section 290.0132,
subdivision 10, the credit must be allocated based on the ratio of federal adjusted gross
income reduced by the earned income not subject to tax under this chapter over federal
adjusted gross income. For purposes of this paragraph, the new text begin following clauses are not
considered "earned income not subject to tax under this chapter":
new text end

new text begin (1) the new text end subtractions for military pay under section 290.0132, subdivisions 11 and 12deleted text begin ,
are not considered "earned income not subject to tax under this chapter."For the purposes
of this paragraph,deleted text end new text begin ;
new text end

new text begin (2)new text end the exclusion of combat pay under section 112 of the Internal Revenue Code deleted text begin is not
considered "earned income not subject to tax under this chapter."deleted text end new text begin ; and
new text end

new text begin (3) income derived from an Indian reservation by an enrolled member of the reservation
while living on the reservation.
new text end

(g) For tax years beginning after December 31, 2013, the $8,130 in paragraph (b), the
$21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for inflation
under subdivision 7, are each increased by $5,000 for married taxpayers filing joint returns.
For tax years beginning after December 31, 2013, the commissioner shall annually adjust
the $5,000 by the percentage determined pursuant to the provisions of section 1(f) of the
Internal Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted
for the word "1992." For 2014, the commissioner shall then determine the percent change
from the 12 months ending on August 31, 2008, to the 12 months ending on August 31,
2013, and in each subsequent year, from the 12 months ending on August 31, 2008, to the
12 months ending on August 31 of the year preceding the taxable year. The earned income
thresholds as adjusted for inflation must be rounded to the nearest $10. If the amount ends
in $5, the amount is rounded up to the nearest $10. The determination of the commissioner
under this subdivision is not a rule under the Administrative Procedure Act.

(h) The commissioner shall construct tables showing the amount of the credit at various
income levels and make them available to taxpayers. The tables shall follow the schedule
contained in this subdivision, except that the commissioner may graduate the transition
between income brackets.

new text begin EFFECTIVE DATE. new text end

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

Sec. 24.

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

Subdivision 1.

Credit allowed.

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

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

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

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

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

new text begin (5) fees charged for enrollment in a prekindergarten educational program, to the extent
not used to claim the credit under section 290.067.
new text end

For purposes of this section, "qualifying child" has the meaning given in section 32(c)(3)
of the Internal Revenue Codenew text begin , but is limited to children who have attained at least the age
of three during the taxable yearnew text end .

new text begin For purposes of this section, "prekindergarten educational program" means:
new text end

new text begin (1) prekindergarten programs established by a school district under chapter 124D;
new text end

new text begin (2) preschools, nursery schools, and early childhood development programs licensed by
the Department of Human Services and accredited by the National Association for the
Education of Young Children or National Early Childhood Program Accreditation;
new text end

new text begin (3) Montessori programs affiliated with or accredited by the American Montessori
Society or American Montessori International; and
new text end

new text begin (4) child care programs provided by family day care providers holding a current early
childhood development credential approved by the commissioner of human services.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 25.

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

Subd. 2.

Limitations.

(a) For claimants with income not greater than deleted text begin $33,500deleted text end new text begin $42,000new text end ,
the maximum credit allowed for a family is deleted text begin $1,000deleted text end new text begin $1,500new text end multiplied by the number of
qualifying children in new text begin a prekindergarten educational program or in new text end kindergarten through
grade 12 in the family. The maximum credit deleted text begin for families with one qualifying child in
kindergarten through grade 12deleted text end is reduced by $1 for each deleted text begin $4deleted text end new text begin $10new text end of household income over
deleted text begin $33,500, and the maximum credit for families with two or more qualifying children in
kindergarten through grade 12 is reduced by $2 for each $4 of household income over
$33,500deleted text end new text begin $42,000new text end , but in no case is the credit less than zero.

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 26.

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

new text begin Subd. 6. new text end

new text begin Inflation adjustment. new text end

new text begin The credit amount and the income threshold at which
the maximum credit begins to be reduced in subdivision 2 must be adjusted for inflation.
The commissioner shall adjust the credit amount and income threshold by the percentage
determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except
that in section 1(f)(3)(B) the word "2017" shall be substituted for the word "1992." For
2019, the commissioner shall then determine the percent change from the 12 months ending
on August 31, 2017, to the 12 months ending on August 31, 2018, and in each subsequent
year, from the 12 months ending August 31, 2017, to the 12 months ending on August 31
of the year preceding the taxable year. The credit amount and income threshold as adjusted
for inflation must be rounded to the nearest $10 amount. If the amount ends in $5, the amount
is rounded up to the nearest $10 amount. The determination of the commissioner under this
subdivision is not a rule subject to the Administrative Procedure Act in chapter 14, including
section 14.386.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 27.

Minnesota Statutes 2016, section 290.068, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

A corporation, partners in a partnership, or shareholders
in a corporation treated as an "S" corporation under section 290.9725 are allowed a credit
against the tax computed under this chapter for the taxable year equal to:

(a) deleted text begin tendeleted text end new text begin 15new text end percent of the first $2,000,000 of the excess (if any) of

(1) the qualified research expenses for the taxable year, over

(2) the base amount; and

(b) deleted text begin 2.5deleted text end new text begin fivenew text end percent on all of such excess expenses over $2,000,000.

new text begin EFFECTIVE DATE. new text end

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

Sec. 28.

Minnesota Statutes 2016, section 290.068, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of this section, the following terms have the meanings
given.

(a) "Qualified research expenses" means (i) qualified research expenses and basic research
payments as defined in section 41(b) and (e) of the Internal Revenue Code, except it does
not include expenses incurred for qualified research or basic research conducted outside
the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue Code; and
(ii) contributions to a nonprofit corporation established and operated pursuant to the
provisions of chapter 317A for the purpose of promoting the establishment and expansion
of business in this state, provided the contributions are invested by the nonprofit corporation
for the purpose of providing funds for small, technologically innovative enterprises in
Minnesota during the early stages of their development.

(b) "Qualified research" means qualified research as defined in section 41(d) of the
Internal Revenue Code, except that the term does not include qualified research conducted
outside the state of Minnesota.

new text begin (1) for taxpayers not subject to clause (2), thenew text end base amount as defined in section 41(c)
of the Internal Revenue Code, except that the average annual gross receipts must be calculated
using Minnesota sales or receipts under section 290.191 and the definitions contained in
deleted text begin clausesdeleted text end new text begin paragraphsnew text end (a) and (b) deleted text begin shalldeleted text end applydeleted text begin .deleted text end new text begin ; or
new text end

new text begin (2) for a taxpayer with an alternative simplified credit election in place under subdivision
2a for the taxable year, 50 percent of the average qualified research expenses for the three
taxable years preceding the taxable year for which the credit is being determined. In no case
shall the base amount be less than 50 percent of the qualified research expenses for the
taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 29.

Minnesota Statutes 2016, section 290.068, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Alternative simplified credit election. new text end

new text begin (a) A taxpayer qualifying for a credit
under this section may elect on an original return, including all extensions, to calculate its
base amount under subdivision 2, paragraph (c), clause (2), for the taxable year. The taxpayer
must make the election on or before the date the return is due under section 289A.18, with
any extensions allowed under section 289A.19. An election to use the alternative simplified
credit remains in effect for all subsequent years, unless revoked. The taxpayer may revoke
the election by filing a notice on a form prescribed by the commissioner on or before the
due date for the return affected by the revocation, with any extension allowed under section
289A.19. A taxpayer may revoke the election without approval of the commissioner.
new text end

new text begin (b) For a partnership, the election must be made by the partnership on the partnership
return or other form, as required by the commissioner, and applies to all of its partners.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 30.

new text begin [290.0682] STUDENT LOAN CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Adjusted gross income" means federal adjusted gross income as defined in section
62 of the Internal Revenue Code.
new text end

new text begin (c) "Earned income" has the meaning given in section 32(c) of the Internal Revenue
Code.
new text end

new text begin (d) "Eligible individual" means a resident individual with one or more qualified education
loans related to an undergraduate or graduate degree program at a postsecondary educational
institution.
new text end

new text begin (e) "Eligible loan payments" means the amount the eligible individual paid during the
taxable year in principal and interest on qualified education loans.
new text end

new text begin (f) "Postsecondary educational institution" means a public or nonprofit postsecondary
institution eligible for state student aid under section 136A.103 or, if the institution is not
located in this state, a public or nonprofit postsecondary institution participating in the
federal Pell Grant program under title IV of the Higher Education Act of 1965, Public Law
89-329, as amended.
new text end

new text begin (g) "Qualified education loan" has the meaning given in section 221 of the Internal
Revenue Code, but is limited to indebtedness incurred on behalf of the eligible individual.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An eligible individual is allowed a credit against the tax
due under this chapter.
new text end

new text begin (b) The credit for an eligible individual equals the least of:
new text end

new text begin (1) eligible loan payments minus ten percent of an amount equal to adjusted gross income
in excess of $10,000, but in no case less than zero;
new text end

new text begin (2) the earned income for the taxable year of the eligible individual, if any;
new text end

new text begin (3) the sum of:
new text end

new text begin (i) the interest portion of eligible loan payments made during the taxable year; and
new text end

new text begin (ii) ten percent of the original loan amount of all qualified education loans of the eligible
individual; or
new text end

new text begin (4) $500.
new text end

new text begin (c) For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin (d) In the case of a married couple, each spouse is eligible for the credit in this section.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 31.

new text begin [290.0683] SECTION 529 COLLEGE SAVINGS PLAN CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given to them.
new text end

new text begin (b) "Federal adjusted gross income" has the meaning given under section 62(a) of the
Internal Revenue Code.
new text end

new text begin (c) "Qualified higher education expenses" has the meaning given in section 529 of the
Internal Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) A credit is allowed to a resident individual against the tax
imposed by this chapter. The credit is not allowed to an individual who is eligible to be
claimed as a dependent, as defined in sections 151 and 152 of the Internal Revenue Code.
new text end

new text begin (b) The amount of the credit allowed equals 50 percent of the amount contributed in a
taxable year to one or more accounts in plans qualifying under section 529 of the Internal
Revenue Code, reduced by any withdrawals from accounts made during the taxable year.
The maximum credit is $500, subject to the phaseout in paragraphs (c) and (d). In no case
is the credit less than zero.
new text end

new text begin (c) For individual filers, the maximum credit is reduced by two percent of adjusted gross
income in excess of $75,000.
new text end

new text begin (d) For married couples filing a joint return, the maximum credit is phased out as follows:
new text end

new text begin (1) for married couples with adjusted gross income in excess of $75,000, but not more
than $100,000, the maximum credit is reduced by one percent of adjusted gross income in
excess of $75,000;
new text end

new text begin (2) for married couples with adjusted gross income in excess of $100,000, but not more
than $135,000, the maximum credit is $250; and
new text end

new text begin (3) for married couples with adjusted gross income in excess of $135,000, the maximum
credit is $250, reduced by one percent of adjusted gross income in excess of $135,000.
new text end

new text begin (e) The income thresholds in paragraphs (c) and (d) used to calculate the maximum
credit must be adjusted for inflation. The commissioner shall adjust the income thresholds
by the percentage determined under the provisions of section 1(f) of the Internal Revenue
Code, except that in section 1(f)(3)(B) the word "2016" is substituted for the word "1992."
For 2018, the commissioner shall then determine the percent change from the 12 months
ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in each
subsequent year, from the 12 months ending on August 31, 2016, to the 12 months ending
on August 31 of the year preceding the taxable year. The income thresholds as adjusted for
inflation must be rounded to the nearest $10 amount. If the amount ends in $5, the amount
is rounded up to the nearest $10 amount. The determination of the commissioner under this
subdivision is not subject to chapter 14, including section 14.386.
new text end

new text begin Subd. 3. new text end

new text begin Allocation. new text end

new text begin For a part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin Subd. 4. new text end

new text begin Revocation. new text end

new text begin If an individual makes a withdrawal of contributions for a purpose
other than to pay for qualified higher education expenses, then:
new text end

new text begin (1) contributions used to claim the credit are considered to be the first contributions
withdrawn; and
new text end

new text begin (2) the amount of any credit allowed to any individual under this section in a prior tax
year for such contributions must be paid by the individual who makes the withdrawal as
additional income tax for the taxable year in which the individual makes the withdrawal.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 32.

new text begin [290.0684] CREDIT FOR ATTAINING MASTER'S DEGREE IN
TEACHER'S LICENSURE FIELD.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given them.
new text end

new text begin (b) "Master's degree program" means a graduate-level program at an accredited university
leading to a master of arts or science degree in a core content area directly related to a
qualified teacher's licensure field. The master's degree program may not include pedagogy
or a pedagogy component. To be eligible under this credit, a licensed elementary school
teacher must pursue and complete a master's degree program in a core content area in which
the teacher provides direct classroom instruction.
new text end

new text begin (c) "Qualified teacher" means a person who:
new text end

new text begin (1) holds a teaching license issued by the licensing division in the Department of
Education on behalf of the Minnesota Board of Teaching both when the teacher begins the
master's degree program and when the teacher completes the master's degree program;
new text end

new text begin (2) began a master's degree program after June 30, 2017; and
new text end

new text begin (3) completes the master's degree program during the taxable year.
new text end

new text begin (d) "Core content area" means the academic subject of reading, English or language arts,
mathematics, science, foreign languages, civics and government, economics, arts, history,
or geography.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An individual who is a qualified teacher is allowed a credit
against the tax imposed under this chapter. The credit equals the lesser of $2,500 or the
amount the individual paid for tuition, fees, books, and instructional materials necessary to
completing the master's degree program and for which the individual did not receive
reimbursement from an employer or scholarship.
new text end

new text begin (b) For a nonresident or a part-year resident, the credit under this subdivision must be
allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph
(e).
new text end

new text begin (c) A qualified teacher may claim the credit in this section only one time for each master's
degree program completed in a core content area.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 33.

Minnesota Statutes 2016, section 290.0692, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Sunset. new text end

new text begin This section expires at the same time and on the same terms as section
116J.8737, except that the expiration of this section does not affect the commissioner of
revenue's authority to audit or power of examination and assessment for credits claimed
under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 34.

new text begin [290.0693] EQUITY AND OPPORTUNITY IN EDUCATION TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Eligible student" means a student who:
new text end

new text begin (1) resides in Minnesota;
new text end

new text begin (2) is a member of a household that has total annual income during the year prior to
initial receipt of a qualified scholarship or a qualified transportation scholarship, without
consideration of the benefits under this program that does not exceed an amount equal to
two times the income standard used to qualify for a reduced-price meal under the National
School Lunch Program; and
new text end

new text begin (3) meets one of the following criteria:
new text end

new text begin (i) attended a school, as defined in section 120A.22, subdivision 4, in the semester
preceding initial receipt of a qualified scholarship or a qualified transportation scholarship;
new text end

new text begin (ii) is younger than age seven and not enrolled in kindergarten or first grade in the
semester preceding initial receipt of a qualified scholarship or a qualified transportation
scholarship;
new text end

new text begin (iii) previously received a qualified scholarship or a qualified transportation scholarship
under this section; or
new text end

new text begin (iv) lived in Minnesota for less than a year prior to initial receipt of a qualified scholarship
or a qualified transportation scholarship.
new text end

new text begin (c) "Equity and opportunity in education donation" means a donation to a qualified
foundation that awards qualified scholarships, awards qualified transportation scholarships,
makes qualified grants, or is a qualified public school foundation.
new text end

new text begin (d) "Household" means household as used to determine eligibility under the National
School Lunch Program.
new text end

new text begin (e) "National School Lunch Program" means the program in United States Code, title
42, section 1758.
new text end

new text begin (f) "Qualified charter school" means a charter elementary or secondary school in
Minnesota at which at least 30 percent of students qualify for a free or reduced-price meal
under the National School Lunch Program.
new text end

new text begin (g) "Qualified foundation" means a nonprofit organization granted an exemption from
the federal income tax under section 501(c)(3) of the Internal Revenue Code that has been
approved as a qualified foundation by the commissioner of revenue under subdivision 5.
new text end

new text begin (h) "Qualified grant" means a grant from a qualified foundation to a qualified charter
school for use in support of the school's mission of educating students in academics, arts,
or athletics, including transportation.
new text end

new text begin (i) "Qualified public school foundation" means a qualified foundation formed for the
primary purpose of supporting one or more public schools or school districts in Minnesota
at which at least 30 percent of students qualify for a free or reduced-price meal under the
National School Lunch Program.
new text end

new text begin (j) "Qualified scholarship" means a payment from a qualified foundation to or on behalf
of the parent or guardian of an eligible student for payment of tuition for enrollment in
grades kindergarten through 12 at a qualified school. A qualified scholarship must not
exceed an amount greater than 70 percent of the state average general education revenue
under section 126C.10, subdivision 1, per pupil unit.
new text end

new text begin (k) "Qualified school" means a school operated in Minnesota that is a nonpublic
elementary or secondary school in Minnesota wherein a resident may legally fulfill the
state's compulsory attendance laws that is not operated for profit, and that adheres to the
provisions of United States Code, title 42, section 1981, and chapter 363A.
new text end

new text begin (l) "Qualified transportation scholarship" means a payment from a qualified foundation
to or on behalf of a parent or guardian of an eligible student for payment of transportation
to a school, as defined in section 120A.22, subdivision 4. A qualified transportation
scholarship must not exceed an amount greater than 70 percent of the state average general
education revenue under section 126C.10, subdivision 1, per pupil unit.
new text end

new text begin (m) "Total annual income" means the income measure used to determine eligibility
under the National School Lunch Program.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An individual or corporate taxpayer who has been issued
a credit certificate under subdivision 3 is allowed a credit against the tax due under this
chapter equal to 70 percent of the amount of the equity and opportunity donation made
during the taxable year to the qualified foundation, including a qualified public school
foundation, designated on the taxpayer's credit certificate. No credit is allowed if the taxpayer
designates a specific child as the beneficiary of the contribution. No credit is allowed to a
taxpayer for an equity and opportunity in education donation made before the taxpayer was
issued a credit certificate as provided in subdivision 3.
new text end

new text begin (b) The maximum annual credit allowed is:
new text end

new text begin (1) $21,000 for married joint filers for a one-year donation of $30,000;
new text end

new text begin (2) $10,500 for other individual filers for a one-year donation of $15,000; and
new text end

new text begin (3) $105,000 for corporate filers for a one-year donation of $150,000.
new text end

new text begin (c) A taxpayer must provide a copy of the receipt provided by the qualified foundation
when claiming the credit for the donation if requested by the commissioner.
new text end

new text begin (d) The credit is limited to the liability for tax under this chapter, including the tax
imposed by sections 290.0921 and 290.0922.
new text end

new text begin (e) If the amount of the credit under this subdivision for any taxable year exceeds the
limitations under paragraph (d), the excess is a credit carryover to each of the five succeeding
taxable years. The entire amount of the excess unused credit for the taxable year must be
carried first to the earliest of the taxable years to which the credit may be carried. The
amount of the unused credit that may be added under this paragraph may not exceed the
taxpayer's liability for tax, less the credit for the taxable year. No credit may be carried to
a taxable year more than five years after the taxable year in which the credit was earned.
new text end

new text begin Subd. 3. new text end

new text begin Application for credit certificate. new text end

new text begin (a) The commissioner must make applications
for tax credits for 2018 available on the department's Web site by January 1, 2018.
Applications for subsequent years must be made available by January 1 of the taxable year.
new text end

new text begin (b) A taxpayer must apply to the commissioner for an equity and opportunity in education
tax credit certificate. The application must be in the form and manner specified by the
commissioner. The application must designate the qualified foundation to which the taxpayer
intends to make a donation, and if the donation is for the purpose of awarding qualified
scholarships, awarding qualified transportation scholarships, awarding qualified grants, or
making expenditures in support of one or more public schools or school districts. The
commissioner must begin accepting applications for a taxable year on January 1. The
commissioner must issue tax credit certificates under this section on a first-come, first-served
basis until the maximum statewide credit amounts have been reached. The certificates must
list the qualified foundation, or the qualified public school foundation, the taxpayer designated
on the application, and if the donation is to be used for awarding qualified scholarships,
awarding qualified transportation scholarships, awarding qualified grants, or making
expenditures in support of one or more public schools or school districts.
new text end

new text begin (c) The maximum statewide credit amount for tax credits for donations to qualified
foundations for the purpose of awarding qualified scholarships and qualified transportation
scholarships is $33,000,000 per taxable year for taxable years beginning after December
31, 2017.
new text end

new text begin (d) The maximum statewide credit amount for donations to qualified foundations for
the purpose of awarding qualified grants and for donations to qualified public school
foundations is $2,000,000 per taxable year for taxable years beginning after December 31,
2017.
new text end

new text begin (e) Any portion of a taxable year's credits for which a tax credit certificate is not issued
does not cancel and may be carried forward to subsequent taxable years.
new text end

new text begin (f) The commissioner must not issue a tax credit certificate for an amount greater than
the limits in subdivision 2.
new text end

new text begin (g) The commissioner must not issue a credit certificate for an application that designates
a qualified foundation that the commissioner has barred from participation as provided in
subdivision 5.
new text end

new text begin Subd. 4. new text end

new text begin Responsibilities of qualified foundations. new text end

new text begin (a) An entity that is eligible to be
a qualified foundation must apply to the commissioner by September 15 of the year preceding
the year in which it will first receive donations that qualify for a credit under this section.
The application must be in the form and manner prescribed by the commissioner. The
application must:
new text end

new text begin (1) demonstrate to the commissioner that the entity is exempt from the federal income
tax as an organization described in section 501(c)(3) of the Internal Revenue Code;
new text end

new text begin (2) demonstrate the entity's financial accountability by submitting its most recent audited
financial statement prepared by a certified public accountant firm licensed under chapter
326A using the Statements on Auditing Standards issued by the Audit Standards Board of
the American Institute of Certified Public Accountants; and
new text end

new text begin (3) specify if the entity intends to award qualified scholarships, award qualified
transportation scholarships, award qualified grants, or if the entity is a qualified public
school foundation. An entity may award any combination of qualified scholarships, qualified
transportation scholarships, and qualified grants.
new text end

new text begin (b) A qualified foundation must provide to taxpayers who make donations or
commitments to donate a receipt or verification on a form approved by the commissioner.
new text end

new text begin (c) A qualified foundation that awards qualified scholarships or qualified transportation
scholarships must:
new text end

new text begin (1) award qualified scholarships or qualified transportation scholarships to eligible
students;
new text end

new text begin (2) not restrict the availability of scholarships to students of one qualified school;
new text end

new text begin (3) not charge a fee of any kind for a child to be considered for a scholarship; and
new text end

new text begin (4) require a qualified school receiving payment of tuition through a scholarship funded
by contributions qualifying for the tax credit under this section to sign an agreement that it
will not use different admissions standards for a student with a qualified scholarship.
new text end

new text begin (d) A qualified foundation that awards qualified scholarships must, in each year it awards
qualified scholarships to eligible students to enroll in a qualified school, obtain from the
qualified school documentation that the school:
new text end

new text begin (i) complies with all health and safety laws or codes that apply to nonpublic schools;
new text end

new text begin (ii) holds a valid occupancy permit if required by its municipality;
new text end

new text begin (iii) certifies that it adheres to the provisions of chapter 363A and United States Code,
title 42, section 1981; and
new text end

new text begin (iv) provides academic accountability to parents of students in the program by regularly
reporting to the parents on the student's progress.
new text end

new text begin A qualified foundation must make the documentation available to the commissioner on
request.
new text end

new text begin (e) A qualified foundation must, by June 1 of each year following a year in which it
receives donations, provide the following information to the commissioner:
new text end

new text begin (1) financial information that demonstrates the financial viability of the qualified
foundation, if it is to receive donations of $150,000 or more during the year;
new text end

new text begin (2) documentation that it has conducted criminal background checks on all of its
employees and board members and has excluded from employment or governance any
individuals who might reasonably pose a risk to the appropriate use of contributed funds;
new text end

new text begin (3) consistent with paragraph (f), document that it has used amounts received as donations
to provide qualified scholarships, to provide qualified transportation scholarships, to make
qualified grants, or to make expenditures in support of one or more public schools or school
districts, as specified on the tax credit certificates issued for the donations, within one
calendar year of the calendar year in which it received the donation;
new text end

new text begin (4) if the qualified foundation awards qualified scholarships or qualified transportation
scholarships, a list of qualified schools that enrolled eligible students to whom the qualified
foundation awarded qualified scholarships or qualified transportation scholarships;
new text end

new text begin (5) if the qualified foundation makes qualified grants, a list of qualified charter schools
to which the qualified foundation made qualified grants;
new text end

new text begin (6) if the qualified foundation is a qualified public school foundation, a list of expenditures
made in support of the mission of one or more public schools or school districts of educating
students in academics, arts, or athletics, including transportation; and
new text end

new text begin (7) the following information prepared by a certified public accountant regarding
donations received in the previous calendar year:
new text end

new text begin (i) the total number and total dollar amount of donations received from taxpayers;
new text end

new text begin (ii) the dollar amount of donations used for administrative expenses, as allowed by
paragraph (f);
new text end

new text begin (iii) if the qualified foundation awarded qualified scholarships, the total number and
dollar amount of qualified scholarships awarded;
new text end

new text begin (iv) if the qualified foundation awarded qualified transportation scholarships, the total
number and dollar amount of qualified transportation scholarships awarded;
new text end

new text begin (v) if the qualified foundation made qualified grants, the total number and dollar amount
of qualified grants made; and
new text end

new text begin (vi) if the qualified foundation is a qualified public school foundation, the total number
and dollar amount of expenditures made in support of the mission of one or more public
schools or school districts of educating students in academics, arts, or athletics, including
transportation.
new text end

new text begin (f) The foundation may use up to five percent of the amounts received as donations for
reasonable administrative expenses, including but not limited to fund-raising, scholarship
tracking, and reporting requirements.
new text end

new text begin Subd. 5. new text end

new text begin Responsibilities of commissioner. new text end

new text begin (a) The commissioner must make
applications for an entity to be approved as a qualified foundation for a taxable year available
on the department's Web site by August 1 of the year preceding the taxable year. The
commissioner must approve an application that provides the documentation required in
subdivision 4, paragraph (a), within 60 days of receiving the application. The commissioner
must notify a foundation that provides incomplete documentation and the foundation may
resubmit its application within 30 days.
new text end

new text begin (b) By November 15 of each year, the commissioner must post on the department's Web
site the names and addresses of qualified foundations for the next taxable year. For each
qualified foundation, the list must indicate if the foundation intends to award qualified
scholarships, award qualified transportation scholarships, award qualified grants, or is a
qualified public school foundation. The commissioner must regularly update the names and
addresses of any qualified foundations that have been barred from participating in the
program.
new text end

new text begin (c) The commissioner must prescribe a standardized format for a receipt to be issued by
a qualified foundation to a taxpayer to indicate the amount of a donation received and of a
commitment to make a donation.
new text end

new text begin (d) The commissioner must prescribe a standardized format for qualified foundations
to report the information required under subdivision 4, paragraph (e).
new text end

new text begin (e) The commissioner may conduct either a financial review or audit of a qualified
foundation upon finding evidence of fraud or intentional misreporting. If the commissioner
determines that the qualified foundation committed fraud or intentionally misreported
information, the qualified foundation is barred from further program participation.
new text end

new text begin (f) If a qualified foundation fails to submit the documentation required under subdivision
4, paragraph (e), by June 1, the commissioner must notify the qualified foundation by July
1. A qualified foundation that fails to submit the required information by August 1 is barred
from participation for the next taxable year.
new text end

new text begin (g) If a qualified foundation fails to comply with the requirements of subdivision 4,
paragraph (e), the commissioner must by September 1 notify the qualified foundation that
it has until November 1 to document that it has remedied its noncompliance. A qualified
foundation that fails to document that it has remedied its noncompliance by November 1 is
barred from participation for the next taxable year.
new text end

new text begin (h) A qualified foundation barred under paragraph (f) or (g) may become eligible to
participate by submitting the required information in future years.
new text end

new text begin (i) Determinations of the commissioner under this subdivision are not considered rules
and are not subject to the Administrative Procedures Act in chapter 14, including section
14.386.
new text end

new text begin Subd. 6. new text end

new text begin Special education services. new text end

new text begin A student's receipt of a qualified scholarship under
this section does not affect the student's eligibility for instruction and service under section
125A.18 or otherwise affect the student's status under federal special education laws.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment for
donations made and credits allowed in taxable years beginning after December 31, 2017.
new text end

Sec. 35.

Minnesota Statutes 2016, section 290.081, is amended to read:

290.081 INCOME OF NONRESIDENTS, RECIPROCITY.

(a) The compensation received for the performance of personal or professional services
within this state by an individual whose residence, place of abode, and place customarily
returned to at least once a month is in another state, shall be excluded from gross income
to the extent such compensation is subject to an income tax imposed by the state of residence;
provided that such state allows a similar exclusion of compensation received by residents
of Minnesota for services performed therein.

(b) When it is deemed to be in the best interests of the people of this state, the
commissioner may determine that the provisions of paragraph (a) shall not apply. As long
as the provisions of paragraph (a) apply between Minnesota and Wisconsin, the provisions
of paragraph (a) shall apply to any individual who is domiciled in Wisconsin.

(c) For the purposes of paragraph (a), whenever the Wisconsin tax on Minnesota residents
which would have been paid Wisconsin without paragraph (a) exceeds the Minnesota tax
on Wisconsin residents which would have been paid Minnesota without paragraph (a), or
vice versa, then the state with the net revenue loss deleted text begin resulting fromdeleted text end new text begin calculated undernew text end paragraph
deleted text begin (a)deleted text end new text begin (e)new text end shall receive from the other state the amount of such loss. deleted text begin This provision shall be
effective for all years beginning after December 31, 1972. The data used for computing the
loss to either state shall be determined on or before September 30 of the year following the
close of the previous calendar year.
deleted text end

(d)deleted text begin (1) Interest is payable on all amounts calculated under paragraph (c) relating to taxable
years beginning after December 31, 2000. Interest accrues from July 1 of the taxable year.deleted text end new text begin
Payments for amounts calculated under paragraph (c) must equal one-quarter of the estimated
annual amount and must be paid at the midpoint of each quarter, on February 15, May 15,
August 15, and November 15.
new text end

deleted text begin (2)deleted text end new text begin (e)(1)new text end The commissioner of revenue is authorized to enter into agreements with the
state of Wisconsin specifying the reciprocity payment due dates, conditions constituting
delinquency, interest rates, and a method for computing interest due.

deleted text begin (3)deleted text end new text begin (2)new text end For agreements entered into before deleted text begin October 1, 2014deleted text end new text begin August 1, 2018new text end , the annual
compensation required under paragraph (c) must equal at least the net revenue loss minus
deleted text begin $1,000,000deleted text end new text begin up to $3,000,000new text end per fiscal year.

deleted text begin (4) For agreements entered into after September 30, 2014, the annual compensation
required under paragraph (c) must equal the net revenue loss per fiscal year.
deleted text end

deleted text begin (5)deleted text end new text begin (3)new text end For the purposes of deleted text begin clauses (3) and (4)deleted text end new text begin this sectionnew text end , "net revenue loss" means the
difference between the amount of Minnesota income taxes Minnesota forgoes by not taxing
Wisconsin residents on income subject to reciprocity and the credit Minnesota would have
been required to give under section 290.06, subdivision 22, to Minnesota residents working
in Wisconsin had there not been reciprocity.

new text begin (4) All agreements must include provisions:
new text end

new text begin (i) providing for a suspension of the agreement if one party to the agreement does not
pay in full by a time prescribed in the agreement;
new text end

new text begin (ii) setting the interest rate that will be applied, and that interest shall run from the date
the payment is due until the day the payment is made, except that interest from the
reconciliation payments runs from July 1 of the tax year until paid;
new text end

new text begin (iii) stating a time for annual reconciliation must be completed by October 31 of the
year following the tax year, and the time for payment of any amounts to be completed by
no later than December 1 of the year following the tax year;
new text end

new text begin (iv) requiring the parties to jointly conduct updated benchmark studies every five years
beginning tax year 2018;
new text end

new text begin (v) requiring each party to the agreement to require taxpayers who request exemption
from withholding in the state where they work to make an annual application and that a list
of participants will be exchanged annually; and
new text end

new text begin (vi) the sum of the amount of the quarterly payments must be a reasonable estimate of
the revenue loss as defined in item (iii).
new text end

deleted text begin (e)deleted text end new text begin (f) new text end If an agreement cannot be reached as to the amount of the loss, the commissioner
of revenue and the taxing official of the state of Wisconsin shall each appoint a member of
a board of arbitration and these members shall appoint the third member of the board. The
board shall select one of its members as chair. Such board may administer oaths, take
testimony, subpoena witnesses, and require their attendance, require the production of books,
papers and documents, and hold hearings at such places as are deemed necessary. The board
shall then make a determination as to the amount to be paid the other state which
determination shall be final and conclusive.

deleted text begin (f)deleted text end new text begin (g)new text end The commissioner may furnish copies of returns, reports, or other information to
the taxing official of the state of Wisconsin, a member of the board of arbitration, or a
consultant under joint contract with the states of Minnesota and Wisconsin for the purpose
of making a determination as to the amount to be paid the other state under the provisions
of this section. Prior to the release of any information under the provisions of this section,
the person to whom the information is to be released shall sign an agreement which provides
that the person will protect the confidentiality of the returns and information revealed thereby
to the extent that it is protected under the laws of the state of Minnesota.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 36.

Minnesota Statutes 2016, section 290.091, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for the taxable
year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue
Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
to the extent not included in federal alternative minimum taxable income, the excess of the
deduction for depletion allowable under section 611 of the Internal Revenue Code for the
taxable year over the adjusted basis of the property at the end of the taxable year (determined
without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount
of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2; and

(6) the amount of addition required by section 290.0131, subdivisions 9 to 11;

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.0132, subdivision 2;

(2) an overpayment of state income tax as provided by section 290.0132, subdivision 3,
to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as defined
in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
in computing federal adjusted gross income;

(4) amounts subtracted from federal taxable income as provided by section 290.0132,
subdivisions 7, 9 to 15, 17, deleted text begin anddeleted text end 21new text begin , 24 to 26new text end ; and

(5) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c).

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of
the Internal Revenue Code.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
under this chapter.

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

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

Sec. 37.

Minnesota Statutes 2016, section 291.005, subdivision 1, as amended by Laws
2017, chapter 1, section 8, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following terms
used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code,
increased by the value of any property in which the decedent had a qualifying income interest
for life and for which an election was made under section 291.03, subdivision 1d, for
Minnesota estate tax purposes, but was not made for federal estate tax purposes.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986,
as amended through December 16, 2016.

(4) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included in the estate which has its situs outside Minnesota,
and (b) including any property omitted from the federal gross estate which is includable in
the estate, has its situs in Minnesota, and was not disclosed to federal taxing authorities.

(5) "Nonresident decedent" means an individual whose domicile at the time of death
was not in Minnesota.

(6) "Personal representative" means the executor, administrator or other person appointed
by the court to administer and dispose of the property of the decedent. If there is no executor,
administrator or other person appointed, qualified, and acting within this state, then any
person in actual or constructive possession of any property having a situs in this state which
is included in the federal gross estate of the decedent shall be deemed to be a personal
representative to the extent of the property and the Minnesota estate tax due with respect
to the property.

(7) "Resident decedent" means an individual whose domicile at the time of death was
in Minnesota.new text begin The provisions of section 290.01, subdivision 7, paragraphs (c) and (d), apply
to determinations of domicile under this chapter.
new text end

(8) "Situs of property" means, with respect to:

(i) real property, the state or country in which it is located;

(ii) tangible personal property, the state or country in which it was normally kept or
located at the time of the decedent's death or for a gift of tangible personal property within
three years of death, the state or country in which it was normally kept or located when the
gift was executed;

(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
Code, owned by a nonresident decedent and that is normally kept or located in this state
because it is on loan to an organization, qualifying as exempt from taxation under section
501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and

(iv) intangible personal property, the state or country in which the decedent was domiciled
at death or for a gift of intangible personal property within three years of death, the state or
country in which the decedent was domiciled when the gift was executed.

For a nonresident decedent with an ownership interest in a pass-through entity with
assets that include real or tangible personal property, situs of the real or tangible personal
property, including qualified works of art, is determined as if the pass-through entity does
not exist and the real or tangible personal property is personally owned by the decedent. If
the pass-through entity is owned by a person or persons in addition to the decedent, ownership
of the property is attributed to the decedent in proportion to the decedent's capital ownership
share of the pass-through entity.

(9) "Pass-through entity" includes the following:

(i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;

(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;

(iii) a single-member limited liability company or similar entity, regardless of whether
it is taxed as an association or is disregarded for federal income tax purposes under Code
of Federal Regulations, title 26, section 301.7701-3; or

(iv) a trust to the extent the property is includible in the decedent's federal gross estate;
but excludes

(v) an entity whose ownership interest securities are traded on an exchange regulated
by the Securities and Exchange Commission as a national securities exchange under section
6 of the Securities Exchange Act, United States Code, title 15, section 78f.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2016.
new text end

Sec. 38.

Minnesota Statutes 2016, section 291.016, subdivision 3, is amended to read:

Subd. 3.

Subtraction.

The deleted text begin value of qualified small business property under section
291.03, subdivision 9, and the value of qualified farm property under section 291.03,
subdivision 10, or the result of $5,000,000 minus the amount for the year of death listed in
clauses (1) to (5), whichever is less,deleted text end new text begin decedent's applicable federal exclusion amount under
section 2010(c)(2) of the Internal Revenue Codenew text end may be subtracted in computing the
Minnesota taxable estate but must not reduce the Minnesota taxable estate to less than zerodeleted text begin :deleted text end new text begin .
new text end

deleted text begin (1) $1,200,000 for estates of decedents dying in 2014;
deleted text end

deleted text begin (2) $1,400,000 for estates of decedents dying in 2015;
deleted text end

deleted text begin (3) $1,600,000 for estates of decedents dying in 2016;
deleted text end

deleted text begin (4) $1,800,000 for estates of decedents dying in 2017; and
deleted text end

deleted text begin (5) $2,000,000 for estates of decedents dying in 2018 and thereafter.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2016.
new text end

Sec. 39.

Minnesota Statutes 2016, section 291.03, subdivision 1, is amended to read:

Subdivision 1.

Tax amount.

The tax imposed must be computed by applying to the
Minnesota taxable estate the following schedule of rates and then the resulting amount
multiplied by a fraction, not greater than one, the numerator of which is the value of the
Minnesota gross estate plus the value of gifts under section 291.016, subdivision 2, clause
(3), with a Minnesota situs, and the denominator of which is the federal gross estate plus
the value of gifts under section 291.016, subdivision 2, clause (3):

deleted text begin (a) For estates of decedents dying in 2014:
deleted text end

deleted text begin Amount of Minnesota Taxable Estate deleted text end	deleted text begin Rate of Tax deleted text end
deleted text begin Not over $1,200,000 deleted text end	deleted text begin None deleted text end
deleted text begin Over $1,200,000 but not over $1,400,000 deleted text end	deleted text begin nine percent of the excess over $1,200,000 deleted text end
deleted text begin Over $1,400,000 but not over $3,600,000 deleted text end	deleted text begin $18,000 plus ten percent of the excess over $1,400,000 deleted text end
deleted text begin Over $3,600,000 but not over $4,100,000 deleted text end	deleted text begin $238,000 plus 10.4 percent of the excess over $3,600,000 deleted text end
deleted text begin Over $4,100,000 but not over $5,100,000 deleted text end	deleted text begin $290,000 plus 11.2 percent of the excess over $4,100,000 deleted text end
deleted text begin Over $5,100,000 but not over $6,100,000 deleted text end	deleted text begin $402,000 plus 12 percent of the excess over $5,100,000 deleted text end
deleted text begin Over $6,100,000 but not over $7,100,000 deleted text end	deleted text begin $522,000 plus 12.8 percent of the excess over $6,100,000 deleted text end
deleted text begin Over $7,100,000 but not over $8,100,000 deleted text end	deleted text begin $650,000 plus 13.6 percent of the excess over $7,100,000 deleted text end
deleted text begin Over $8,100,000 but not over $9,100,000 deleted text end	deleted text begin $786,000 plus 14.4 percent of the excess over $8,100,000 deleted text end
deleted text begin Over $9,100,000 but not over $10,100,000 deleted text end	deleted text begin $930,000 plus 15.2 percent of the excess over $9,100,000 deleted text end
deleted text begin Over $10,100,000 deleted text end	deleted text begin $1,082,000 plus 16 percent of the excess over $10,100,000 deleted text end

deleted text begin (b) For estates of decedents dying in 2015:
deleted text end

deleted text begin Amount of Minnesota Taxable Estate deleted text end	deleted text begin Rate of Tax deleted text end
deleted text begin Not over $1,400,000 deleted text end	deleted text begin None deleted text end
deleted text begin Over $1,400,000 but not over $3,600,000 deleted text end	deleted text begin ten percent of the excess over $1,400,000 deleted text end
deleted text begin Over $3,600,000 but not over $6,100,000 deleted text end	deleted text begin $220,000 plus 12 percent of the excess over $3,600,000 deleted text end
deleted text begin Over $6,100,000 but not over $7,100,000 deleted text end	deleted text begin $520,000 plus 12.8 percent of the excess over $6,100,000 deleted text end
deleted text begin Over $7,100,000 but not over $8,100,000 deleted text end	deleted text begin $648,000 plus 13.6 percent of the excess over $7,100,000 deleted text end
deleted text begin Over $8,100,000 but not over $9,100,000 deleted text end	deleted text begin $784,000 plus 14.4 percent of the excess over $8,100,000 deleted text end
deleted text begin Over $9,100,000 but not over $10,100,000 deleted text end	deleted text begin $928,000 plus 15.2 percent of the excess over $9,100,000 deleted text end
deleted text begin Over $10,100,000 deleted text end	deleted text begin $1,080,000 plus 16 percent of the excess over $10,100,000 deleted text end

deleted text begin (c) For estates of decedents dying in 2016:
deleted text end

deleted text begin Amount of Minnesota Taxable Estate deleted text end	deleted text begin Rate of Tax deleted text end
deleted text begin Not over $1,600,000 deleted text end	deleted text begin None deleted text end
deleted text begin Over $1,600,000 but not over $2,600,000 deleted text end	deleted text begin ten percent of the excess over $1,600,000 deleted text end
deleted text begin Over $2,600,000 but not over $6,100,000 deleted text end	deleted text begin $100,000 plus 12 percent of the excess over $2,600,000 deleted text end
deleted text begin Over $6,100,000 but not over $7,100,000 deleted text end	deleted text begin $520,000 plus 12.8 percent of the excess over $6,100,000 deleted text end
deleted text begin Over $7,100,000 but not over $8,100,000 deleted text end	deleted text begin $648,000 plus 13.6 percent of the excess over $7,100,000 deleted text end
deleted text begin Over $8,100,000 but not over $9,100,000 deleted text end	deleted text begin $784,000 plus 14.4 percent of the excess over $8,100,000 deleted text end
deleted text begin Over $9,100,000 but not over $10,100,000 deleted text end	deleted text begin $928,000 plus 15.2 percent of the excess over $9,100,000 deleted text end
deleted text begin Over $10,100,000 deleted text end	deleted text begin $1,080,000 plus 16 percent of the excess over $10,100,000 deleted text end

deleted text begin (d)deleted text end For estates of decedents dying in 2017new text begin and thereafternew text end :

deleted text begin Amount of Minnesota Taxable Estate deleted text end	deleted text begin Rate of Tax deleted text end
deleted text begin Not over $1,800,000 deleted text end	deleted text begin None deleted text end
deleted text begin Over $1,800,000 but not over $2,100,000 deleted text end	deleted text begin ten percent of the excess over $1,800,000 deleted text end
deleted text begin Over $2,100,000 but not over $5,100,000 deleted text end	deleted text begin $30,000 plus 12 percent of the excess over $2,100,000 deleted text end
deleted text begin Over $5,100,000 but not over $7,100,000 deleted text end	deleted text begin $390,000 plus 12.8 percent of the excess over $5,100,000 deleted text end
deleted text begin Over $7,100,000 but not over $8,100,000 deleted text end	deleted text begin $646,000 plus 13.6 percent of the excess over $7,100,000 deleted text end
deleted text begin Over $8,100,000 but not over $9,100,000 deleted text end	deleted text begin $782,000 plus 14.4 percent of the excess over $8,100,000 deleted text end
deleted text begin Over $9,100,000 but not over $10,100,000 deleted text end	deleted text begin $926,000 plus 15.2 percent of the excess over $9,100,000 deleted text end
deleted text begin Over $10,100,000 deleted text end	deleted text begin $1,078,000 plus 16 percent of the excess over $10,100,000 deleted text end

deleted text begin (e) For estates of decedents dying in 2018 and thereafter:
deleted text end

Amount of Minnesota Taxable Estate	Rate of Tax
Not over deleted text begin $2,000,000deleted text end new text begin $7,100,000 new text end	deleted text begin None deleted text end new text begin 13 percent new text end
deleted text begin Over $2,000,000 but not over $2,600,000 deleted text end	deleted text begin ten percent of the excess over $2,000,000 deleted text end
deleted text begin Over $2,600,000 but not over $7,100,000 deleted text end	deleted text begin $60,000 plus 13 percent of the excess over $2,600,000 deleted text end
Over $7,100,000 but not over $8,100,000	deleted text begin $645,000deleted text end new text begin $923,000new text end plus 13.6 percent of the excess over $7,100,000
Over $8,100,000 but not over $9,100,000	deleted text begin $781,000deleted text end new text begin $1,059,000new text end plus 14.4 percent of the excess over $8,100,000
Over $9,100,000 but not over $10,100,000	deleted text begin $925,000deleted text end new text begin $1,203,000new text end plus 15.2 percent of the excess over $9,100,000
Over $10,100,000	deleted text begin $1,077,000deleted text end new text begin $1,355,000new text end plus 16 percent of the excess over $10,100,000

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2016.
new text end

Sec. 40.

new text begin [462D.01] CITATION.
new text end

new text begin This chapter may be cited as the "First-Time Home Buyer Savings Account Act."
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 41.

new text begin [462D.02] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this chapter, the following terms have the
meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Account holder. new text end

new text begin "Account holder" means an individual who establishes,
individually or jointly with one or more other individuals, a first-time home buyer savings
account.
new text end

new text begin Subd. 3. new text end

new text begin Allowable closing costs. new text end

new text begin "Allowable closing costs" means a disbursement listed
on a settlement statement for the purchase of a single-family residence in Minnesota by a
qualified beneficiary.
new text end

new text begin Subd. 4. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of revenue.
new text end

new text begin Subd. 5. new text end

new text begin Eligible costs. new text end

new text begin "Eligible costs" means the down payment and allowable closing
costs for the purchase of a single-family residence in Minnesota by a qualified beneficiary.
Eligible costs include paying for the cost of construction of or financing the construction
of a single-family residence.
new text end

new text begin Subd. 6. new text end

new text begin Financial institution. new text end

new text begin "Financial institution" means a bank, bank and trust,
trust company with banking powers, savings bank, savings association, or credit union,
organized under the laws of this state, any other state, or the United States; an industrial
loan and thrift under chapter 53 or the laws of another state and authorized to accept deposits;
or a money market mutual fund registered under the federal Investment Company Act of
1940 and regulated under rule 2a-7, promulgated by the Securities and Exchange Commission
under that act.
new text end

new text begin Subd. 7. new text end

new text begin First-time home buyer. new text end

new text begin "First-time home buyer" means an individual, and if
married, the individual's spouse, who has no present ownership interest in a principal
residence during the three-year period ending on the earlier of:
new text end

new text begin (1) the date of the purchase of the single-family residence funded, in part, with proceeds
from the first-time home buyer savings account; or
new text end

new text begin (2) the close of the taxable year for which a subtraction is claimed under sections
290.0132 and 462D.06.
new text end

new text begin Subd. 8. new text end

new text begin First-time home buyer savings account. new text end

new text begin "First-time home buyer savings
account" or "account" means an account with a financial institution that an account holder
designates as a first-time home buyer savings account, as provided in section 462D.03, to
pay or reimburse eligible costs for the purchase of a single-family residence by a qualified
beneficiary.
new text end

new text begin Subd. 9. new text end

new text begin Internal Revenue Code. new text end

new text begin "Internal Revenue Code" has the meaning given in
section 290.01.
new text end

new text begin Subd. 10. new text end

new text begin Principal residence. new text end

new text begin "Principal residence" has the meaning given in section
121 of the Internal Revenue Code.
new text end

new text begin Subd. 11. new text end

new text begin Qualified beneficiary. new text end

new text begin "Qualified beneficiary" means a first-time home buyer
who is a Minnesota resident and is designated as the qualified beneficiary of a first-time
home buyer savings account by the account holder.
new text end

new text begin Subd. 12. new text end

new text begin Single-family residence. new text end

new text begin "Single-family residence" means a single-family
residence located in this state and owned and occupied by or to be occupied by a qualified
beneficiary as the qualified beneficiary's principal residence, which may include a
manufactured home, trailer, mobile home, condominium unit, townhome, or cooperative.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 42.

new text begin [462D.03] ESTABLISHMENT OF ACCOUNTS.
new text end

new text begin Subdivision 1. new text end

new text begin Accounts established. new text end

new text begin An individual may open an account with a financial
institution and designate the account as a first-time home buyer savings account to be used
to pay or reimburse the designated qualified beneficiary's eligible costs.
new text end

new text begin Subd. 2. new text end

new text begin Designation of qualified beneficiary. new text end

new text begin (a) The account holder must designate
a first-time home buyer as the qualified beneficiary of the account by April 15 of the year
following the taxable year in which the account was established. The account holder may
be the qualified beneficiary. The account holder may change the designated qualified
beneficiary at any time, but no more than one qualified beneficiary may be designated for
an account at any one time. For purposes of the one beneficiary restriction, a married couple
qualifies as one beneficiary. Changing the designated qualified beneficiary of an account
does not affect computation of the ten-year period under section 462D.06, subdivision 2.
new text end

new text begin (b) The commissioner shall establish a process for account holders to notify the state
that permits recording of the account, the account holder or holders, any transfers under
section 462D.04, subdivision 2, and the designated qualified beneficiary for each account.
This may be done upon filing the account holder's income tax return or in any other way
the commissioner determines to be appropriate.
new text end

new text begin Subd. 3. new text end

new text begin Joint account holders. new text end

new text begin An individual may jointly own a first-time home buyer
account with another person if the joint account holders file a married joint income tax
return.
new text end

new text begin Subd. 4. new text end

new text begin Multiple accounts. new text end

new text begin (a) An individual may be the account holder of more than
one first-time home buyer savings account, but must not hold or own multiple accounts that
designate the same qualified beneficiary.
new text end

new text begin (b) An individual may be designated as the qualified beneficiary on more than one
first-time home buyer savings account.
new text end

new text begin Subd. 5. new text end

new text begin Contributions. new text end

new text begin Only cash may be contributed to a first-time home buyer savings
account. Individuals other than the account holder may contribute to an account. No limitation
applies to the amount of contributions that may be made to or retained in a first-time home
buyer savings account.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 43.

new text begin [462D.04] ACCOUNT HOLDER RESPONSIBILITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Expenses; reporting. new text end

new text begin The account holder must:
new text end

new text begin (1) not use funds in a first-time home buyer savings account to pay expenses of
administering the account, except that a service fee may be deducted from the account by
the financial institution in which the account is held; and
new text end

new text begin (2) submit to the commissioner, in the form and manner required by the commissioner:
new text end

new text begin (i) detailed information regarding the first-time home buyer savings account, including
a list of transactions for the account during the taxable year and the Form 1099 issued by
the financial institution for the account for the taxable year; and
new text end

new text begin (ii) upon withdrawal of funds from the account, a detailed account of the eligible costs
for which the account funds were expended and a statement of the amount of funds remaining
in the account, if any.
new text end

new text begin Subd. 2. new text end

new text begin Transfers. new text end

new text begin An account holder may withdraw funds, in whole or part, from a
first-time home buyer savings account and deposit the funds in another first-time home
buyer savings account held by a different financial institution or the same financial institution.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 44.

new text begin [462D.05] FINANCIAL INSTITUTIONS.
new text end

new text begin (a) A financial institution is not required to take any action to ensure compliance with
this chapter, including to:
new text end

new text begin (1) designate an account, designate qualified beneficiaries, or modify the financial
institution's account contracts or systems in any way;
new text end

new text begin (2) track the use of money withdrawn from a first-time home buyer savings account;
new text end

new text begin (3) allocate funds in a first-time home buyer savings account among joint account holders
or multiple qualified beneficiaries; or
new text end

new text begin (4) report any information to the commissioner or any other government that is not
otherwise required by law.
new text end

new text begin (b) A financial institution is not responsible or liable for:
new text end

new text begin (1) determining or ensuring that an account satisfies the requirements of this chapter or
that its funds are used for eligible costs; or
new text end

new text begin (2) reporting or remitting taxes or penalties related to the use of a first-time home buyer
savings account.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 45.

new text begin [462D.06] SUBTRACTION; ADDITION; ADDITIONAL TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Subtraction. new text end

new text begin (a) As provided in section 290.0132, subdivision 24, an
account holder is allowed a subtraction from federal taxable income equal to the sum of:
new text end

new text begin (1) the amount the individual contributed to a first-time home buyer savings account
during the taxable year not to exceed $5,000, or $10,000 for a married couple filing a joint
return; and
new text end

new text begin (2) interest or dividends earned on the first-time home buyer savings account during the
taxable year.
new text end

new text begin (b) The subtraction under paragraph (a) is allowed each year in which a contribution is
made for the ten taxable years including and following the taxable year in which the account
was established. The total subtraction for all taxable years and for all first-time home buyer
accounts established by the individual for a qualified beneficiary is limited to $50,000. No
person other than the account holder who deposits funds in a first-time home buyer savings
account is allowed a subtraction under this section.
new text end

new text begin (c) The subtraction under paragraph (a) is not allowed if the account holder withdraws
amounts from the account within six months of designating the account as a first-time home
buyer savings account.
new text end

new text begin Subd. 2. new text end

new text begin Addition. new text end

new text begin (a) As provided in section 290.0131, subdivision 14, an account
holder must add to federal taxable income the sum of the following amounts:
new text end

new text begin (1) any amount withdrawn from a first-time home buyer savings account during the
taxable year that is withdrawn more than six months after the account is designated as a
first-time home buyer savings account and is used neither to pay eligible costs nor for a
transfer permitted under section 462D.04, subdivision 2; and
new text end

new text begin (2) any amount remaining in the first-time home buyer savings account at the close of
the tenth taxable year after the taxable year in which the account was established.
new text end

new text begin (b) For an account that received a transfer under section 462D.04, subdivision 2, the
ten-year period under paragraph (a), clause (2), ends at the close of the earliest taxable year
that applies to either account under that clause.
new text end

new text begin Subd. 3. new text end

new text begin Additional tax. new text end

new text begin The account holder is liable for an additional tax equal to ten
percent of the addition under subdivision 2 for the taxable year. This amount must be added
to the amount due under section 290.06. The tax under this subdivision does not apply to:
new text end

new text begin (1) a withdrawal because of the account holder's or designated qualified beneficiary's
death or disability;
new text end

new text begin (2) a disbursement of assets of the account under federal bankruptcy law; and
new text end

new text begin (3) a disbursement of assets of the account under chapter 550 or 551.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 46.

Laws 2010, chapter 216, section 12, the effective date, as amended by Laws 2016,
chapter 158, article 1, section 212, is amended to read:

EFFECTIVE DATE.

This section is effective for investments made after July 1, 2010,
for taxable years beginning after December 31, 2009deleted text begin , and before January 1, 2017deleted text end , and only
applies to investments made after the qualified small business receiving the investment has
been certified by the commissioner of employment and economic development.

new text begin EFFECTIVE DATE; REVIVAL AND REENACTMENT. new text end

new text begin This section is effective
retroactively from January 1, 2015, and Laws 2010, chapter 216, section 12, as amended
by Laws 2016, chapter 158, article 1, section 212, is revived and reenacted as of that date.
new text end

Sec. 47. new text begin INCOME TAX RECIPROCITY BENCHMARK STUDY;
APPROPRIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Study. new text end

new text begin (a) The Department of Revenue, in conjunction with the Wisconsin
Department of Revenue, must, provided the conditions of paragraph (d) are satisfied, conduct
a study to determine at least the following:
new text end

new text begin (1) the number of residents of each state who earn income from personal services in the
other state;
new text end

new text begin (2) the total amount of income earned by residents of each state who earn income from
personal services in the other state; and
new text end

new text begin (3) the change in tax revenue in each state if an income tax reciprocity arrangement were
resumed between the two states under which the taxpayers were required to pay income
taxes on the income only in their state of residence.
new text end

new text begin (b) The study must use information obtained from each state's income tax returns for
tax year 2017 and from any other source of information the departments determine is
necessary to complete the study.
new text end

new text begin (c) No later than March 1, 2019, the Department of Revenue must submit a report
containing the results of the study to the governor and to the chairs and ranking minority
members of the legislative committees having jurisdiction over taxes, in compliance with
Minnesota Statutes, sections 3.195 and 3.197.
new text end

new text begin (d) The department shall conduct the study only if the commissioner of revenue receives
notice from the secretary of revenue that the Wisconsin Department of Revenue will fully
participate in the study.
new text end

new text begin Subd. 2. new text end

new text begin Appropriation. new text end

new text begin $300,000 in fiscal year 2018 is appropriated from the general
fund to the commissioner of revenue for the income tax reciprocity benchmark study in
subdivision 1. This is a onetime appropriation and is not added to the agency's base budget.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. The
appropriation in subdivision 2 is only effective if the commissioner of revenue receives
notice as provided in subdivision 1, paragraph (d).
new text end

Sec. 48. new text begin RECAPTURE TAX EXEMPTIONS.
new text end

new text begin The tax under Minnesota Statutes, section 291.03, subdivision 11, does not apply as a
result of any of the following:
new text end

new text begin (1) acquisition of title or possession of the qualified property by a federal, state, or local
government unit, or any other entity with the power of eminent domain for a public purpose,
as defined in Minnesota Statutes, section 117.025, subdivision 11;
new text end

new text begin (2) a portion of qualified farm property consisting of less than one-fifth of the acreage
of the property is reclassified as class 2b property under Minnesota Statutes, section 273.13,
subdivision 23, and the qualified heir has not substantially altered the reclassified property
within the three-year holding period; or
new text end

new text begin (3) a portion of qualified farm property classified as 2a property at the death of the
decedent under Minnesota Statutes, section 273.13, subdivision 23, paragraph (a), consisting
of a residence, garage, and immediately surrounding one acre of land is reclassified as 4bb
property and the qualified heir has not substantially altered the property within the three-year
holding period.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after June 30, 2011, and before January 1, 2017.
new text end

Sec. 49. new text begin ESTATE TAX; 2017 DEATHS; CONSTRUCTION OF CERTAIN TERMS.
new text end

new text begin (a) The provisions of this section apply to a decedent who dies after December 31, 2016,
and before enactment of the increase in the amount of the exclusion from Minnesota estate
taxation in section 38 with respect to a governing instrument or disclaimer instrument that:
new text end

new text begin (1) became irrevocable in 2017; and
new text end

new text begin (2) contains a formula or provision that allocates assets of the estate or trust between
two or more different beneficiaries or classes of beneficiaries (or trusts for the primary
benefit of two or more different beneficiaries or classes of beneficiaries) by reference to
state estate taxes, including without limitation provisions referring to the state "estate tax
exemption," "applicable exemption amount," "applicable credit amount," "applicable
exclusion amount," "marital deduction," "maximum marital deduction," or "unlimited marital
deduction."
new text end

new text begin References to state estate tax in an instrument to which this paragraph applies are deemed
to refer to the estate tax laws in effect on December 31, 2016, as those laws would have
applied to estates of decedents dying in 2017, including any inflation adjustments and
statutory increases that were scheduled to take effect on January 1, 2017, but not including
any subsequent statutory changes that apply retroactively to estates of decedents dying after
December 31, 2016.
new text end

new text begin (b) Paragraph (a) does not apply to:
new text end

new text begin (1) an instrument that manifests an intent that formulas or provisions of the type described
in paragraph (a), clause (2), must be construed to reference the estate tax laws as they existed
after December 31, 2016;
new text end

new text begin (2) an instrument that allocates assets of the estate or trust by formula between two or
more trusts for the primary benefit of the same beneficiary or class of beneficiaries, even
if there are other permissible beneficiaries of one trust and not the other. For example,
paragraph (a) is not intended to apply to a gift in the decedent's will that allocates an amount
equal to the state estate tax exemption to a trust for the primary benefit of the decedent's
surviving spouse, even if that trust also includes the decedent's children as eligible
beneficiaries, and the balance to the decedent's surviving spouse, or to a separate trust for
the sole benefit of the decedent's surviving spouse, because the assets of the estate or trust
are not allocated between two or more different beneficiaries or classes of beneficiaries or
between trusts for the primary benefit of two or more different beneficiaries or classes of
beneficiaries;
new text end

new text begin (3) an instrument that divides the assets of the estate or trust by reference to federal
exemption amounts, and not state estate tax exemption amounts, including the federal estate
tax exemption as well as the federal generation-skipping transfer tax exemption;
new text end

new text begin (4) any provision in an irrevocable trust that grants to a deceased beneficiary a general
power of appointment over a portion of the trust assets that is to be determined by reference
to the largest amount that can be included in the beneficiary's estate for estate tax purposes
without increasing the amount of federal or state estate taxes payable in the deceased
beneficiary's estate; or
new text end

new text begin (5) any discretionary decision by a trustee or other person to grant or expand the scope
of a power of appointment for the purpose of causing a portion of the trust to be included
in the beneficiary's estate for estate tax purposes without increasing the amount of federal
or state estate taxes payable in the deceased beneficiary's estate.
new text end

new text begin (c) The personal representative, trustee, or any interested person under an instrument,
other than a disclaimer instrument, to which paragraph (a) applies may bring a proceeding
to determine whether, based on a preponderance of the evidence, the decedent intended that
a formula or provision described in paragraph (a) be construed with respect to the law as it
existed after December 31, 2016. This proceeding must be commenced by December 31,
2018, and the court may consider extrinsic evidence that contradicts the plain meaning of
the instrument. The court may modify a provision of an instrument that refers to the estate
tax laws as described in paragraph (a) to conform the terms to the decedent's intention or
achieve the decedent's tax objectives in a manner that is not contrary to the decedent's
probable intention. The court may provide that its decision, including any decision to modify
a provision of an instrument, is effective as of the date of the decedent's death.
new text end

new text begin (d) The personal representative, trustee, or disclaimant under a disclaimer instrument to
which paragraph (a) applies may bring a proceeding to construe the disclaimant's intent,
based on a preponderance of the evidence, including extrinsic evidence. The court may
provide that its construction, including any decision to modify a provision of an instrument,
is effective as of the date of the decedent's death.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 50. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2016, sections 136A.129; and 290.06, subdivision 36, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2016, section 290.067, subdivision 2, new text end new text begin is repealed.
new text end

new text begin (c) new text end new text begin Minnesota Statutes 2016, sections 289A.10, subdivision 1a; 289A.12, subdivision
18; 289A.18, subdivision 3a; 289A.20, subdivision 3a; and 291.03, subdivisions 8, 9, 10,
and 11, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective for agreements entered into after June
30, 2017, and for taxable years beginning after December 31, 2017. Paragraph (b) is effective
for taxable years beginning after December 31, 2016. Paragraph (c) is effective retroactively
for estates of decedents dying after December 31, 2016.
new text end

ARTICLE 2

PROPERTY TAX

Section 1.

Minnesota Statutes 2016, section 40A.18, subdivision 2, is amended to read:

Subd. 2.

Allowed commercial and industrial operations.

new text begin (a) new text end Commercial and industrial
operations are not allowed on land within an agricultural preserve except:

(1) small on-farm commercial or industrial operations normally associated with and
important to farming in the agricultural preserve area;

(2) storage use of existing farm buildings that does not disrupt the integrity of the
agricultural preserve; deleted text begin and
deleted text end

(3) small commercial use of existing farm buildings for trades not disruptive to the
integrity of the agricultural preserve such as a carpentry shop, small scale mechanics shop,
and similar activities that a farm operator might conductdeleted text begin .deleted text end new text begin ; and
new text end

new text begin (4) wireless communication installments and related equipment and structure capable
of providing technology potentially beneficial to farming activities. A property owner who
installs wireless communication equipment does not violate a covenant made prior to January
1, 2018, under section 40A.10, subdivision 1.
new text end

new text begin (b) For purposes of paragraph (a), clauses (2) and (3), new text end "existing" deleted text begin in clauses (2) and (3)deleted text end
means existing on August 1, 1989.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2016, section 126C.17, subdivision 9, is amended to read:

Subd. 9.

Referendum revenue.

(a) The revenue authorized by section 126C.10,
subdivision 1, may be increased in the amount approved by the voters of the district at a
referendum called for the purpose. The referendum may be called by the board. The
referendum must be conducted one or two calendar years before the increased levy authority,
if approved, first becomes payable. Only one election to approve an increase may be held
in a calendar year. Unless the referendum is conducted by mail under subdivision 11,
paragraph (a), the referendum must be held on the first Tuesday after the first Monday in
November. The ballot must state the maximum amount of the increased revenue per adjusted
pupil unit. The ballot may state a schedule, determined by the board, of increased revenue
per adjusted pupil unit that differs from year to year over the number of years for which the
increased revenue is authorized or may state that the amount shall increase annually by the
rate of inflation. new text begin The ballot must state the cumulative amount per pupil of any local optional
revenue, board-approved referendum authority, and previous voter-approved referendum
authority, if any, that the board expects to certify for the next school year. new text end For this purpose,
the rate of inflation shall be the annual inflationary increase calculated under subdivision
2, paragraph (b). The ballot may state that existing referendum levy authority is expiring.
In this case, the ballot may also compare the proposed levy authority to the existing expiring
levy authority, and express the proposed increase as the amount, if any, over the expiring
referendum levy authority. The ballot must designate the specific number of years, not to
exceed ten, for which the referendum authorization applies. The ballot, including a ballot
on the question to revoke or reduce the increased revenue amount under paragraph (c), must
abbreviate the term "per adjusted pupil unit" as "per pupil." The notice required under section
275.60 may be modified to read, in cases of renewing existing levies at the same amount
per pupil as in the previous year:

"BY VOTING "YES" ON THIS BALLOT QUESTION, YOU ARE VOTING TO
EXTEND AN EXISTING PROPERTY TAX REFERENDUM THAT IS SCHEDULED
TO EXPIRE."

The ballot may contain a textual portion with the information required in this subdivision
and a question stating substantially the following:

"Shall the increase in the revenue proposed by (petition to) the board of ........., School
District No. .., be approved?"

If approved, an amount equal to the approved revenue per adjusted pupil unit times the
adjusted pupil units for the school year beginning in the year after the levy is certified shall
be authorized for certification for the number of years approved, if applicable, or until
revoked or reduced by the voters of the district at a subsequent referendum.

(b) The board must prepare and deliver by first class mail at least 15 days but no more
than 30 days before the day of the referendum to each taxpayer a notice of the referendum
and the proposed revenue increase. The board need not mail more than one notice to any
taxpayer. For the purpose of giving mailed notice under this subdivision, owners must be
those shown to be owners on the records of the county auditor or, in any county where tax
statements are mailed by the county treasurer, on the records of the county treasurer. Every
property owner whose name does not appear on the records of the county auditor or the
county treasurer is deemed to have waived this mailed notice unless the owner has requested
in writing that the county auditor or county treasurer, as the case may be, include the name
on the records for this purpose. The notice must project the anticipated amount of tax increase
in annual dollars for typical residential homesteads, agricultural homesteads, apartments,
and commercial-industrial property within the school district.

new text begin The notice must state the cumulative and individual amounts per pupil of any local
optional revenue, board-approved referendum authority, and voter-approved referendum
authority, if any, that the board expects to certify for the next school year.
new text end

The notice for a referendum may state that an existing referendum levy is expiring and
project the anticipated amount of increase over the existing referendum levy in the first
year, if any, in annual dollars for typical residential homesteads, agricultural homesteads,
apartments, and commercial-industrial property within the district.

The notice must include the following statement: "Passage of this referendum will result
in an increase in your property taxes." However, in cases of renewing existing levies, the
notice may include the following statement: "Passage of this referendum extends an existing
operating referendum at the same amount per pupil as in the previous year."

(c) A referendum on the question of revoking or reducing the increased revenue amount
authorized pursuant to paragraph (a) may be called by the board. A referendum to revoke
or reduce the revenue amount must state the amount per adjusted pupil unit by which the
authority is to be reduced. Revenue authority approved by the voters of the district pursuant
to paragraph (a) must be available to the school district at least once before it is subject to
a referendum on its revocation or reduction for subsequent years. Only one revocation or
reduction referendum may be held to revoke or reduce referendum revenue for any specific
year and for years thereafter.

(d) The approval of 50 percent plus one of those voting on the question is required to
pass a referendum authorized by this subdivision.

(e) At least 15 days before the day of the referendum, the district must submit a copy of
the notice required under paragraph (b) to the commissioner and to the county auditor of
each county in which the district is located. Within 15 days after the results of the referendum
have been certified by the board, or in the case of a recount, the certification of the results
of the recount by the canvassing board, the district must notify the commissioner of the
results of the referendum.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2017, and applies to any
referendum authorized on or after that date.
new text end

Sec. 3.

Minnesota Statutes 2016, section 270C.9901, is amended to read:

270C.9901 ASSESSOR ACCREDITATIONnew text begin ; WAIVERnew text end .

new text begin Subdivision 1. new text end

new text begin Accreditation. new text end

Every individual who appraises or physically inspects
real property for the purpose of determining its valuation or classification for property tax
purposes must obtain licensure as an accredited Minnesota assessor from the State Board
of Assessors by July 1, deleted text begin 2019deleted text end new text begin 2022new text end , or within deleted text begin fourdeleted text end new text begin fivenew text end years of that person having become
licensed as a certified Minnesota assessor, whichever is later.

new text begin Subd. 2. new text end

new text begin Waiver. new text end

new text begin (a) An individual may apply to the State Board of Assessors for a
waiver from licensure as an accredited Minnesota assessor as required by subdivision 1 if
the individual:
new text end

new text begin (1) was first licensed as a certified Minnesota assessor before July 1, 2004;
new text end

new text begin (2) has had an assessor license since July 1, 2004;
new text end

new text begin (3) has successfully passed a comprehensive examination substantially equivalent to the
requirements by the State Board of Assessors for the accredited Minnesota assessor license
designation before May 1, 2020; and
new text end

new text begin (4) submits an application to the State Board of Assessors no later than July 1, 2022.
new text end

new text begin The examination can only be taken once to fulfill the requirements of the waiver.
new text end

new text begin (b) The commissioner of revenue, in consultation with the State Board of Assessors and
the Minnesota Association of Assessing Officers, must determine the contents of the waiver
application and the comprehensive examination.
new text end

new text begin (c) A county assessor in any jurisdiction assessed by an applicant may submit additional
information to the State Board of Assessors to be considered as part of the waiver review
proceedings.
new text end

new text begin (d) The State Board of Assessors must not grant a waiver unless the applicant has met
the requirements in paragraph (a) and has the ability to perform the duties of assessment
required in each jurisdiction in which the applicant appraises or physically inspects real
property for the purposes of determining its valuation or classification for property tax
purposes.
new text end

new text begin (e) An individual granted a waiver under this subdivision is allowed to continue
assessment duties at the individual's licensure level, provided the individual complies with
the continuing education requirements for the accredited Minnesota assessor designation
as prescribed by the State Board of Assessors.
new text end

new text begin (f) An individual granted a waiver under this section:
new text end

new text begin (1) is not considered to have achieved the designation as an accredited Minnesota assessor
and may not represent himself or herself as an accredited Minnesota assessor; and
new text end

new text begin (2) is not authorized to value income-producing property as defined in section 273.11,
subdivision 13, unless the individual meets the requirements of that section.
new text end

new text begin (g) A waiver granted by the State Board of Assessors under this section remains in effect
unless the individual's licensure is revoked. If the individual's licensure is revoked, the
waiver is void and the individual is subject to the requirements of subdivision 1.
new text end

new text begin (h) A decision of the State Board of Assessors to grant or deny a waiver under this
subdivision is final and is not subject to appeal.
new text end

new text begin (i) Waivers granted under this subdivision expire on June 30, 2032.
new text end

new text begin (j) This subdivision expires July 1, 2032.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2016, section 272.02, subdivision 23, is amended to read:

Subd. 23.

new text begin Secondary liquid new text end agricultural new text begin chemical new text end containment deleted text begin facilitiesdeleted text end .

new text begin Secondary
new text end containment tanks, cache basins, and deleted text begin that portion of the structure needed for the containment
facility used to confine agricultural chemicals as defined in section 18D.01, subdivision 3,
as required by the commissioner of agriculture under chapter 18B or 18C,deleted text end new text begin berms used by
a reseller to contain liquid agricultural chemical spills from primary storage containers and
prevent runoff or leaching of liquid agricultural chemicals as defined in section 18D.01,
subdivision 3,new text end are exempt.new text begin For purposes of this subdivision, "reseller" means a person
licensed by the commissioner of agriculture under section 18B.316 or 18C.415.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2016,
provided that nothing in this section shall cause property that the assessor classified as
exempt for property taxes payable in 2016 or 2017 to lose its exempt status for taxes payable
in those years.
new text end

Sec. 5.

Minnesota Statutes 2016, section 272.02, subdivision 86, is amended to read:

Subd. 86.

Apprenticeship training facilities.

All or a portion of a building used
exclusively for a state-approved apprenticeship program through the Department of Labor
and Industry is exempt if:

(1) it is owned by a nonprofit organization or a nonprofit trust, and operated by a nonprofit
organization or a nonprofit trust;

(2) the program participants receive no compensation; and

(3) it is located:

(i) in the Minneapolis and St. Paul standard metropolitan statistical area as determined
by the 2000 federal census;

(ii) in a city outside the Minneapolis and St. Paul standard metropolitan statistical area
that has a population of 7,400 or greater according to the most recent federal census; or

(iii) in a township that has a population greater than deleted text begin 2,000deleted text end new text begin 1,400 new text end but less than 3,000
determined by the 2000 federal census and the building was previously used by a school
and was exempt for taxes payable in 2010.

Use of the property for advanced skills training of incumbent workers does not disqualify
the property for the exemption under this subdivision. This exemption includes up to five
acres of the land on which the building is located and associated parking areas on that land,
except that if the building meets the requirements of clause (3), item (iii), then the exemption
includes up to ten acres of land on which the building is located and associated parking
areas on that land. If a parking area associated with the facility is used for the purposes of
the facility and for other purposes, a portion of the parking area shall be exempt in proportion
to the square footage of the facility used for purposes of apprenticeship training.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2018.
new text end

Sec. 6.

Minnesota Statutes 2016, section 272.02, is amended by adding a subdivision to
read:

new text begin Subd. 100. new text end

new text begin Electric generation facility; personal property. new text end

new text begin (a) Notwithstanding
subdivision 9, clause (a), attached machinery and other personal property that is part of an
electric generation facility with more than 35 megawatts and less than 40 megawatts of
installed capacity and that meets the requirements of this subdivision is exempt from taxation
and payments in lieu of taxation. The facility must:
new text end

new text begin (1) be designed to utilize natural gas as a primary fuel;
new text end

new text begin (2) be owned and operated by a municipal power agency as defined in section 453.52,
subdivision 8;
new text end

new text begin (3) be located within 800 feet of an existing natural gas pipeline;
new text end

new text begin (4) satisfy a resource deficiency identified in an approved integrated resource plan filed
under section 216B.2422;
new text end

new text begin (5) be located outside the metropolitan area as defined under section 473.121, subdivision
2; and
new text end

new text begin (6) have received, by resolution, the approval of the governing bodies of the city and
county in which it is located for the exemption of personal property provided by this
subdivision.
new text end

new text begin (b) Construction of the facility must have been commenced after January 1, 2015, and
before January 1, 2017. Property eligible for this exemption does not include electric
transmission lines and interconnections or gas pipelines and interconnections appurtenant
to the property or the facility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2018.
new text end

Sec. 7.

Minnesota Statutes 2016, section 272.02, is amended by adding a subdivision to
read:

new text begin Subd. 101. new text end

new text begin Certain property owned by an Indian tribe. new text end

new text begin (a) Property is exempt that:
new text end

new text begin (1) is located in a city of the first class with a population less than 100,000 as of the
2010 federal census;
new text end

new text begin (2) was on January 1, 2016, and is for the current assessment, owned by a federally
recognized Indian tribe, or its instrumentality, that is located within the state of Minnesota;
and
new text end

new text begin (3) is used exclusively as a medical clinic.
new text end

new text begin (b) Property that qualifies for the exemption under this subdivision is limited to no more
than two contiguous parcels and structures that do not exceed, in the aggregate, 30,000
square feet. Property acquired for single-family housing, market-rate apartments, agriculture,
or forestry does not qualify for this exemption. The exemption created by this subdivision
expires with taxes payable in 2028.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2018.
new text end

Sec. 8.

Minnesota Statutes 2016, section 272.0213, is amended to read:

272.0213 LEASED SEASONAL-RECREATIONAL LAND.

(a) deleted text begin A county board may elect, by resolution, todeleted text end new text begin Qualified lands, as defined in this section,
are new text end exempt from taxation, including the tax under section 273.19deleted text begin , qualified landsdeleted text end . "Qualified
lands" for purposes of this section means deleted text begin propertydeleted text end new text begin landnew text end that:

(1) is owned by a county, city, town, or the state;new text begin and
new text end

(2) is rented by the entity for noncommercial seasonal-recreational deleted text begin ordeleted text end new text begin ,new text end noncommercial
seasonal-recreational residential usedeleted text begin ; anddeleted text end new text begin , or class 1c commercial seasonal-recreational
residential use.
new text end

deleted text begin (3) was rented for the purposes specified in clause (2) and was exempt from taxation
for property taxes payable in 2008.
deleted text end

(b) Lands owned by the federal government and rented for noncommercial
seasonal-recreational deleted text begin ordeleted text end new text begin ,new text end noncommercial seasonal-recreational residentialnew text begin , or class 1c
commercial seasonal-recreational residentialnew text end use are exempt from taxation, including the
tax under section 273.19.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes assessed in 2018
and payable in 2019.
new text end

Sec. 9.

Minnesota Statutes 2016, section 272.029, subdivision 2, is amended to read:

Subd. 2.

Definitions.

(a) For the purposes of this section, the term:

(1) "wind energy conversion system" has the meaning given in section 216C.06,
subdivision 19, and also includes a substation that is used and owned by one or more wind
energy conversion facilities;

(2) "large scale wind energy conversion system" means a wind energy conversion system
of more than 12 megawatts, as measured by the nameplate capacity of the system or as
combined with other systems as provided in paragraph (b);

(3) "medium scale wind energy conversion system" means a wind energy conversion
system of over two and not more than 12 megawatts, as measured by the nameplate capacity
of the system or as combined with other systems as provided in paragraph (b); and

(4) "small scale wind energy conversion system" means a wind energy conversion system
of two megawatts and under, as measured by the nameplate capacity of the system or as
combined with other systems as provided in paragraph (b).

(b) For systems installed and contracted for after January 1, 2002, the total size of a
wind energy conversion system under this subdivision shall be determined according to this
paragraph. Unless the systems are interconnected with different distribution systems, the
nameplate capacity of one wind energy conversion system shall be combined with the
nameplate capacity of any other wind energy conversion system that is:

(1) located within five miles of the wind energy conversion system;

(2) constructed within the same calendar year as the wind energy conversion system;
and

(3) under common ownership.

In the case of a dispute, the commissioner of commerce shall determine the total size of
the systemdeleted text begin , and shall draw all reasonable inferences in favor of combining the systemsdeleted text end .

(c) In making a determination under paragraph (b), the commissioner of commerce may
determine that two wind energy conversion systems are under common ownership when
the underlying ownership structure contains deleted text begin similardeleted text end new text begin the same new text end persons or entities, even if the
ownership shares differ between the two systems. Wind energy conversion systems are not
under common ownership solely because the same person or entity provided equity financing
for the systemsnew text begin . Wind energy conversion systems that were determined by the commissioner
of commerce to be eligible for a renewable energy production incentive under section
216C.41 are not under common ownership unless a change in the qualifying owner was
made to an owner of another wind energy conversion system subsequent to the determination
by the commissioner of commercenew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2016, section 272.162, is amended to read:

272.162 RESTRICTIONS ON TRANSFERS OF SPECIFIC PARTS.

Subdivision 1.

Conditions restricting transfer.

When a deed or other instrument
conveying a parcel of land is presented to the county auditor for transfer or division under
sections 272.12, 272.16, and 272.161, the auditor shall not transfer or divide the land or its
net tax capacity in the official records and shall not certify the instrument as provided in
section 272.12, if:

(a) The land conveyed is less than a whole parcel of land as charged in the tax lists;

(b) The part conveyed appears within the area of application of municipal new text begin or countynew text end
subdivision regulations adopted and filed under new text begin section 394.35 or new text end section 462.36, subdivision
1; and

Subd. 2.

Conditions allowing transfer.

new text begin (a) new text end Notwithstanding the provisions of subdivision
1, the county auditor may transfer or divide the land and its net tax capacity and may certify
the instrument if the instrument contains a certification by the clerk of the municipalitynew text begin or
designated county planning officialnew text end :

deleted text begin (a)deleted text end new text begin (1)new text end that the municipality'snew text begin or county'snew text end subdivision regulations do not apply;

deleted text begin (b)deleted text end new text begin (2)new text end that the subdivision has been approved by the governing body of the municipalitynew text begin
or countynew text end ; or

deleted text begin (c)deleted text end new text begin (3)new text end that the restrictions on the division of taxes and filing and recording have been
waived by resolution of the governing body of the municipality new text begin or county new text end in the particular
case because compliance would create an unnecessary hardship and failure to comply would
not interfere with the purpose of the regulations.

new text begin (b) new text end If any of the conditions for certification by the municipalitynew text begin or countynew text end as provided
in this subdivision exist and the municipalitynew text begin or countynew text end does not certify that they exist within
24 hours after the instrument of conveyance has been presented to the clerk of the
municipalitynew text begin or designated county planning officialnew text end , the provisions of subdivision 1 do not
apply.

new text begin (c) new text end If an unexecuted instrument is presented to the municipality new text begin or county new text end and any of
the conditions for certification by the municipality new text begin or county new text end as provided in this subdivision
exist, the unexecuted instrument must be certified by the clerk of the municipalitynew text begin or the
designated county planning officialnew text end .

Subd. 3.

Applicability of restrictions.

new text begin (a) new text end This section does not apply to the exceptions
set forth in section 272.12.

new text begin (b) new text end This section applies only to land within municipalities new text begin or counties new text end which choose to
be governed by its provisions. A municipality new text begin or county new text end may choose to have this section
apply to the property within its boundaries by filing a certified copy of a resolution of its
governing body making that choice with the auditor and recorder of the county in which it
is located.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2016, section 273.124, subdivision 14, is amended to read:

Subd. 14.

Agricultural homesteads; special provisions.

(a) Real estate of less than ten
acres that is the homestead of its owner must be classified as class 2a under section 273.13,
subdivision 23, paragraph (a), if:

(1) the parcel on which the house is located is contiguous on at least two sides to (i)
agricultural land, (ii) land owned or administered by the United States Fish and Wildlife
Service, or (iii) land administered by the Department of Natural Resources on which in lieu
taxes are paid under sections 477A.11 to 477A.14;

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least 20
acres;

(3) the noncontiguous land is located not farther than four townships or cities, or a
combination of townships or cities from the homestead; and

(4) the agricultural use value of the noncontiguous land and farm buildings is equal to
at least 50 percent of the market value of the house, garage, and one acre of land.

Homesteads initially classified as class 2a under the provisions of this paragraph shall
remain classified as class 2a, irrespective of subsequent changes in the use of adjoining
properties, as long as the homestead remains under the same ownership, the owner owns a
noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use
value qualifies under clause (4). Homestead classification under this paragraph is limited
to property that qualified under this paragraph for the 1998 assessment.

(b)(i) Agricultural property shall be classified as the owner's homestead, to the same
extent as other agricultural homestead property, if all of the following criteria are met:

(1) the agricultural property consists of at least 40 acres including undivided government
lots and correctional 40's;

(2) the owner, the owner's spouse, or a grandchild, child, sibling, or parent of the owner
or of the owner's spouse, is actively farming the agricultural property, either on the person's
own behalf as an individual or on behalf of a partnership operating a family farm, family
farm corporation, joint family farm venture, or limited liability company of which the person
is a partner, shareholder, or member;

(3) both the owner of the agricultural property and the person who is actively farming
the agricultural property under clause (2), are Minnesota residents;

(4) neither the owner nor the spouse of the owner claims another agricultural homestead
in Minnesota; and

(5) neither the owner nor the person actively farming the agricultural property lives
farther than four townships or cities, or a combination of four townships or cities, from the
agricultural property, except that if the owner or the owner's spouse is required to live in
employer-provided housing, the owner or owner's spouse, whichever is actively farming
the agricultural property, may live more than four townships or cities, or combination of
four townships or cities from the agricultural property.

The relationship under this paragraph may be either by blood or marriage.

(ii) deleted text begin Agricultural property held by a trustee under a trust is eligible for agricultural
homestead classification under this paragraph if the qualifications in clause (i) are met,
except that "owner" means the grantor of the trust.
deleted text end

deleted text begin (iii)deleted text end Property containing the residence of an owner who owns qualified property under
clause (i) shall be classified as part of the owner's agricultural homestead, if that property
is also used for noncommercial storage or drying of agricultural crops.

deleted text begin (iv)deleted text end new text begin (iii)new text end As used in this paragraph, "agricultural property" means class 2a property and
any class 2b property that is contiguous to and under the same ownership as the class 2a
property.

(c) Noncontiguous land shall be included as part of a homestead under section 273.13,
subdivision 23, paragraph (a), only if the homestead is classified as class 2a and the detached
land is located in the same township or city, or not farther than four townships or cities or
combination thereof from the homestead. Any taxpayer of these noncontiguous lands must
notify the county assessor that the noncontiguous land is part of the taxpayer's homestead,
and, if the homestead is located in another county, the taxpayer must also notify the assessor
of the other county.

(d) Agricultural land used for purposes of a homestead and actively farmed by a person
holding a vested remainder interest in it must be classified as a homestead under section
273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a, any other
dwellings on the land used for purposes of a homestead by persons holding vested remainder
interests who are actively engaged in farming the property, and up to one acre of the land
surrounding each homestead and reasonably necessary for the use of the dwelling as a home,
must also be assessed class 2a.

(e) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain classified as
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of the April 1997 floods;

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, or
Wilkin;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 1997 assessment year and continue to be used for
agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 30 miles
of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 1997 floods,
and the owner furnishes the assessor any information deemed necessary by the assessor in
verifying the change in dwelling. Further notifications to the assessor are not required if the
property continues to meet all the requirements in this paragraph and any dwellings on the
agricultural land remain uninhabited.

(f) Agricultural land and buildings that were class 2a homestead property under section
273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain classified
agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural
homestead as a result of damage caused by a March 29, 1998, tornado;

(2) the property is located in the county of Blue Earth, Brown, Cottonwood, LeSueur,
Nicollet, Nobles, or Rice;

(3) the agricultural land and buildings remain under the same ownership for the current
assessment year as existed for the 1998 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of

HF 4

Bill Text Versions

Current Version - 4th Engrossment

ARTICLE 1

INDIVIDUAL INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

Section 1.

new text begin [41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS. new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin Subd. 2. new text end

new text begin Tax credit for owners of agricultural assets. new text end

new text begin Subd. 3. new text end

new text begin Beginning farmer management tax credit. new text end

new text begin Subd. 4. new text end

new text begin Authority duties. new text end

new text begin Subd. 5. new text end

new text begin Appeals of authority determinations. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 2.

Subd. 5.

Credit allowed.

new text begin EFFECTIVE DATE. new text end

Sec. 3.

Subd. 12.

Sunset.

new text begin EFFECTIVE DATE. new text end

Sec. 4.

Subdivision 1.

Return required.

new text begin EFFECTIVE DATE. new text end

Sec. 5.

Subd. 7.

Resident.

new text begin EFFECTIVE DATE. new text end

Sec. 6.

Subd. 10.

Section 179 expensing.

new text begin EFFECTIVE DATE. new text end

Sec. 7.

new text begin Subd. 14. new text end

new text begin First-time home buyer savings account. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 8.

new text begin Subd. 15. new text end

new text begin Equity and opportunity donations to qualified foundations. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 9.

Subd. 4.

Education expenses.

new text begin EFFECTIVE DATE. new text end

Sec. 10.

new text begin Subd. 23. new text end

new text begin Contributions to 529 plan. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 11.

new text begin Subd. 24. new text end

new text begin Discharge of indebtedness; education loans. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 12.

new text begin Subd. 25. new text end

new text begin First-time home buyer savings account. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 13.

new text begin Subd. 26. new text end

new text begin Social Security benefits. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 14.

Subd. 12.

Section 179 expensing.

new text begin EFFECTIVE DATE. new text end

Sec. 15.

new text begin Subd. 15. new text end

new text begin Equity and opportunity donations to qualified foundations. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 16.

new text begin [290.016] CONFORMITY TO FEDERAL TAX EXTENDERS BY ADMINISTRATIVE ACTION. new text end

new text begin Subdivision 1. new text end

new text begin Legislative purpose. new text end

new text begin Subd. 2. new text end

new text begin Federal tax conformity account established; transfer. new text end

new text begin [41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS.
new text end

new text begin [290.016] CONFORMITY TO FEDERAL TAX EXTENDERS BY
ADMINISTRATIVE ACTION.
new text end

new text begin [290.0682] STUDENT LOAN CREDIT.
new text end