HF 20

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 02/06/2017 03:52pm

A bill for an act
relating to taxation; individual income; providing a refundable credit for student
loan payments; proposing coding for new law in Minnesota Statutes, chapter 290.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [290.0682] STUDENT LOAN CREDIT.
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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.
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new text begin (b) "Adjusted gross income" means federal adjusted gross income as defined in section
62 of the Internal Revenue Code. In the case of a married couple filing jointly, "adjusted
gross income" means the adjusted gross income of the taxpayer and spouse.
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new text begin (c) "Earned income" has the meaning given in section 32(c) of the Internal Revenue
Code, except that earned income includes combat pay excluded from federal taxable income
under section 112 of the Internal Revenue Code.
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new text begin (d) "Education profession" means:
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new text begin (1) a full-time job in public education; early childhood education, including licensed or
regulated child care, Head Start, and state-funded prekindergarten; school-based library
sciences; and other school-based services; or
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new text begin (2) a full-time job as a faculty member at a tribal college or university as defined in
section 1059c(b) of the Internal Revenue Code, and other faculty teaching in high-needs
subject areas or areas of shortage, including nurse faculty, foreign language faculty, and
part-time faculty at community colleges, as determined by the United States Secretary of
Education.
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new text begin (e) "Eligible individual" means an individual who has one or more qualified education
loans related to an undergraduate or graduate degree program of the individual at a
postsecondary educational institution.
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new text begin (f) "Eligible loan payments" means the amount the eligible individual paid during the
taxable year to pay principal and interest on qualified education loans.
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new text begin (g) "Postsecondary educational institution" means a postsecondary institution eligible
for state student aid under section 136A.103 or, if the institution is not located in this state,
a 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.
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new text begin (h) "Public service job" means a full-time job in emergency management; government,
excluding time served as a member of Congress; military service; public safety; law
enforcement; public health, including nurses, nurse practitioners, nurses in a clinical setting,
and full-time professionals engaged in health care practitioner occupations and health care
support occupations, as defined by the Bureau of Labor Statistics; social work in a public
child or family service agency; public interest law services including prosecution or public
defense or legal advocacy on behalf of low-income communities at a nonprofit organization;
public service for individuals with disabilities or public service for the elderly; public library
sciences; or at an organization that is described in section 501(c)(3) of the Internal Revenue
Code and exempt from taxation under section 501(a) of the Internal Revenue Code.
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new text begin (i) "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.
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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. The credit equals a percentage of eligible loan payments in excess
of ten percent of adjusted gross income, up to $1,000, as follows:
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new text begin (1) for eligible individuals, 50 percent;
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new text begin (2) for eligible individuals in a public service job, 65 percent; and
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new text begin (3) for eligible individuals in an education profession, 75 percent.
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new text begin (b) The credit must not exceed the eligible individual's earned income for the taxable
year.
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new text begin (c) In the case of a married couple, each spouse is eligible for the credit in this section.
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new text begin (d) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
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new text begin (e) An eligible individual may receive the credit under this section without regard to the
individual's eligibility for the public service loan forgiveness program under United States
Code, title 20, section 1087e(m).
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new text begin Subd. 3. new text end

new text begin Credit refundable. new text end

new text begin If the amount of credit that an individual who is a resident
or part-year resident of Minnesota is eligible to receive under this section exceeds the
individual's tax liability under this chapter, the commissioner shall refund the excess to the
individual. For a nonresident taxpayer, the credit may not exceed the taxpayer's liability for
tax under this chapter.
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new text begin Subd. 4. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds required by this section
is appropriated to the commissioner from the general fund.
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new text begin EFFECTIVE DATE. new text end

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