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HF 1086

as introduced - 88th Legislature (2013 - 2014) Posted on 03/04/2013 01:45pm

KEY: stricken = removed, old language. underscored = added, new language.

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Introduction Pdf Posted on 03/04/2013

Current Version - as introduced

1.1A bill for an act
1.2relating to taxation; individual income; increasing rates;amending Minnesota
1.3Statutes 2012, sections 290.06, subdivisions 2c, 2d; 290.091, subdivisions 1, 2, 6.
1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.5    Section 1. Minnesota Statutes 2012, section 290.06, subdivision 2c, is amended to read:
1.6    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
1.7taxes imposed by this chapter upon married individuals filing joint returns and surviving
1.8spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
1.9applying to their taxable net income the following schedule of rates:
1.10    (1) On the first $25,680, 5.35 $35,480, six percent;
1.11    (2) On all over $25,680 $35,480, but not over $102,030, 7.05 $140,960, eight percent;
1.12    (3) On all over $102,030, 7.85 $140,960, 8.5 percent.
1.13    Married individuals filing separate returns, estates, and trusts must compute their
1.14income tax by applying the above rates to their taxable income, except that the income
1.15brackets will be one-half of the above amounts.
1.16    (b) The income taxes imposed by this chapter upon unmarried individuals must be
1.17computed by applying to taxable net income the following schedule of rates:
1.18    (1) On the first $17,570, 5.35 $24,270, six percent;
1.19    (2) On all over $17,570 $24,270, but not over $57,710, 7.05 $79,730, eight percent;
1.20    (3) On all over $57,710, 7.85 $79,730, 8.5 percent.
1.21    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
1.22as a head of household as defined in section 2(b) of the Internal Revenue Code must be
1.23computed by applying to taxable net income the following schedule of rates:
1.24    (1) On the first $21,630, 5.35 $29,880, six percent;
2.1    (2) On all over $21,630 $29,880, but not over $86,910, 7.05 $120,070, eight percent;
2.2    (3) On all over $86,910, 7.85 $120,070, 8.5 percent.
2.3    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
2.4tax of any individual taxpayer whose taxable net income for the taxable year is less than
2.5an amount determined by the commissioner must be computed in accordance with tables
2.6prepared and issued by the commissioner of revenue based on income brackets of not
2.7more than $100. The amount of tax for each bracket shall be computed at the rates set
2.8forth in this subdivision, provided that the commissioner may disregard a fractional part of
2.9a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
2.10    (e) An individual who is not a Minnesota resident for the entire year must compute
2.11the individual's Minnesota income tax as provided in this subdivision. After the
2.12application of the nonrefundable credits provided in this chapter, the tax liability must
2.13then be multiplied by a fraction in which:
2.14    (1) the numerator is the individual's Minnesota source federal adjusted gross income
2.15as defined in section 62 of the Internal Revenue Code and increased by the additions
2.16required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12),
2.17(13), and (16) to (18), and reduced by the Minnesota assignable portion of the subtraction
2.18for United States government interest under section 290.01, subdivision 19b, clause
2.19(1), and the subtractions under section 290.01, subdivision 19b, clauses (8), (9), (13),
2.20(14), (16), and (17), after applying the allocation and assignability provisions of section
2.21290.081 , clause (a), or 290.17; and
2.22    (2) the denominator is the individual's federal adjusted gross income as defined in
2.23section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
2.24section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to
2.25(18), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1),
2.26(8), (9), (13), (14), (16), and (17).
2.27EFFECTIVE DATE.This section is effective for taxable years beginning after
2.28December 31, 2012.

2.29    Sec. 2. Minnesota Statutes 2012, section 290.06, subdivision 2d, is amended to read:
2.30    Subd. 2d. Inflation adjustment of brackets. (a) For taxable years beginning after
2.31December 31, 2000 2013, the minimum and maximum dollar amounts for each rate
2.32bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
2.33percentage determined under paragraph (b). For the purpose of making the adjustment as
2.34provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
2.35rate brackets as they existed for taxable years beginning after December 31, 1999 2012,
3.1and before January 1, 2001 2014. The rate applicable to any rate bracket must not be
3.2changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
3.3in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
3.4amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.
3.5(b) The commissioner shall adjust the rate brackets and by the percentage determined
3.6pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
3.7section 1(f)(3)(B) the word "1999" "2012" shall be substituted for the word "1992." For
3.82001 2014, the commissioner shall then determine the percent change from the 12 months
3.9ending on August 31, 1999 2012, to the 12 months ending on August 31, 2000 2013, and
3.10in each subsequent year, from the 12 months ending on August 31, 1999 2012, to the 12
3.11months ending on August 31 of the year preceding the taxable year. The determination of
3.12the commissioner pursuant to this subdivision shall not be considered a "rule" and shall
3.13not be subject to the Administrative Procedure Act contained in chapter 14.
3.14No later than December 15 of each year, the commissioner shall announce the
3.15specific percentage that will be used to adjust the tax rate brackets.
3.16EFFECTIVE DATE.This section is effective for taxable years beginning after
3.17December 31, 2012.

3.18    Sec. 3. Minnesota Statutes 2012, section 290.091, subdivision 1, is amended to read:
3.19    Subdivision 1. Imposition of tax. In addition to all other taxes imposed by this
3.20chapter a tax is imposed on individuals, estates, and trusts equal to the excess (if any) of
3.21(a) an amount equal to 6.4 seven percent of alternative minimum taxable income
3.22after subtracting the exemption amount, over
3.23(b) the regular tax for the taxable year.
3.24EFFECTIVE DATE.This section is effective for taxable years beginning after
3.25December 31, 2012.

3.26    Sec. 4. Minnesota Statutes 2012, section 290.091, subdivision 2, is amended to read:
3.27    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
3.28terms have the meanings given:
3.29    (a) "Alternative minimum taxable income" means the sum of the following for
3.30the taxable year:
3.31    (1) the taxpayer's federal alternative minimum taxable income as defined in section
3.3255(b)(2) of the Internal Revenue Code;
4.1    (2) the taxpayer's itemized deductions allowed in computing federal alternative
4.2minimum taxable income, but excluding:
4.3    (i) the charitable contribution deduction under section 170 of the Internal Revenue
4.4Code;
4.5    (ii) the medical expense deduction;
4.6    (iii) the casualty, theft, and disaster loss deduction; and
4.7    (iv) the impairment-related work expenses of a disabled person;
4.8    (3) for depletion allowances computed under section 613A(c) of the Internal
4.9Revenue Code, with respect to each property (as defined in section 614 of the Internal
4.10Revenue Code), to the extent not included in federal alternative minimum taxable income,
4.11the excess of the deduction for depletion allowable under section 611 of the Internal
4.12Revenue Code for the taxable year over the adjusted basis of the property at the end of the
4.13taxable year (determined without regard to the depletion deduction for the taxable year);
4.14    (4) to the extent not included in federal alternative minimum taxable income, the
4.15amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
4.16Internal Revenue Code determined without regard to subparagraph (E);
4.17    (5) to the extent not included in federal alternative minimum taxable income, the
4.18amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
4.19    (6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
4.20to (9), (12), (13), and (16) to (18);
4.21    less the sum of the amounts determined under the following:
4.22    (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
4.23    (2) an overpayment of state income tax as provided by section 290.01, subdivision
4.2419b
, clause (2), to the extent included in federal alternative minimum taxable income;
4.25    (3) the amount of investment interest paid or accrued within the taxable year on
4.26indebtedness to the extent that the amount does not exceed net investment income, as
4.27defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
4.28amounts deducted in computing federal adjusted gross income;
4.29    (4) amounts subtracted from federal taxable income as provided by section 290.01,
4.30subdivision 19b
, clauses (6), (8) to (14), and (16); and
4.31(5) the amount of the net operating loss allowed under section 290.095, subdivision
4.3211
, paragraph (c).
4.33    In the case of an estate or trust, alternative minimum taxable income must be
4.34computed as provided in section 59(c) of the Internal Revenue Code.
4.35    (b) "Investment interest" means investment interest as defined in section 163(d)(3)
4.36of the Internal Revenue Code.
5.1    (c) "Net minimum tax" means the minimum tax imposed by this section.
5.2    (d) "Regular tax" means the tax that would be imposed under this chapter (without
5.3regard to this section and section 290.032), reduced by the sum of the nonrefundable
5.4credits allowed under this chapter.
5.5    (e) "Tentative minimum tax" equals 6.4 seven percent of alternative minimum
5.6taxable income after subtracting the exemption amount determined under subdivision 3.
5.7EFFECTIVE DATE.This section is effective for taxable years beginning after
5.8December 31, 2012.

5.9    Sec. 5. Minnesota Statutes 2012, section 290.091, subdivision 6, is amended to read:
5.10    Subd. 6. Credit for prior years' liability. (a) A credit is allowed against the tax
5.11imposed by this chapter on individuals, trusts, and estates equal to the minimum tax
5.12credit for the taxable year. The minimum tax credit equals the adjusted net minimum
5.13tax for taxable years beginning after December 31, 1988, reduced by the minimum tax
5.14credits allowed in a prior taxable year. The credit may not exceed the excess (if any) for
5.15the taxable year of
5.16(1) the regular tax, over
5.17(2) the greater of (i) the tentative alternative minimum tax, or (ii) zero.
5.18(b) The adjusted net minimum tax for a taxable year equals the lesser of the net
5.19minimum tax or the excess (if any) of
5.20(1) the tentative minimum tax, over
5.21(2) 6.4 seven percent of the sum of
5.22(i) adjusted gross income as defined in section 62 of the Internal Revenue Code,
5.23(ii) interest income as defined in section 290.01, subdivision 19a, clause (1),
5.24(iii) interest on specified private activity bonds, as defined in section 57(a)(5) of the
5.25Internal Revenue Code, to the extent not included under clause (ii),
5.26(iv) depletion as defined in section 57(a)(1), determined without regard to the last
5.27sentence of paragraph (1), of the Internal Revenue Code, less
5.28(v) the deductions allowed in computing alternative minimum taxable income
5.29provided in subdivision 2, paragraph (a), clause (2) of the first series of clauses and clauses
5.30(1), (2), and (3) of the second series of clauses, and
5.31(vi) the exemption amount determined under subdivision 3.
5.32In the case of an individual who is not a Minnesota resident for the entire year,
5.33adjusted net minimum tax must be multiplied by the fraction defined in section 290.06,
5.34subdivision 2c
, paragraph (e). In the case of a trust or estate, adjusted net minimum tax
5.35must be multiplied by the fraction defined under subdivision 4, paragraph (b).
6.1EFFECTIVE DATE.This section is effective for taxable years beginning after
6.2December 31, 2012.

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