HF 1453

as introduced - 91st Legislature (2019 - 2020) Posted on 02/21/2019 02:07pm

A bill for an act
relating to taxation; making technical and clarifying changes to indexing of certain
amounts; amending Minnesota Statutes 2018, sections 270A.03, subdivision 5;
290.0131, subdivisions 12, 13; 290.0132, subdivision 26; 290.06, subdivisions 2c,
2d; 290.067, subdivision 2b; 290.0671, subdivisions 1, 7; 290.0684, subdivision
2; 290.091, subdivision 3; 290.0922, subdivision 1; 290A.03, subdivision 12;
290A.04, subdivision 4; proposing coding for new law in Minnesota Statutes,
chapter 270C.

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

Section 1.

Minnesota Statutes 2018, section 270A.03, subdivision 5, is amended to read:

Subd. 5.

Debt; debtor.

(a) "Debt" means a legal obligation of a natural person to pay a
fixed and certain amount of money, which equals or exceeds $25 and which is due and
payable to a claimant agency. The term includes criminal fines imposed under section 609.10
or 609.125, fines imposed for petty misdemeanors as defined in section 609.02, subdivision
4a, and restitution. A debt may arise under a contractual or statutory obligation, a court
order, or other legal obligation, but need not have been reduced to judgment.

A debt includes any legal obligation of a current recipient of assistance which is based
on overpayment of an assistance grant where that payment is based on a client waiver or
an administrative or judicial finding of an intentional program violation; or where the debt
is owed to a program wherein the debtor is not a client at the time notification is provided
to initiate recovery under this chapter and the debtor is not a current recipient of food support,
transitional child care, or transitional medical assistance.

(b) A debt does not include any legal obligation to pay a claimant agency for medical
care, including hospitalization if the income of the debtor at the time when the medical care
was rendered does not exceed the following amount:

(1) for an unmarried debtor, an income of $12,560 or less;

(2) for a debtor with one dependent, an income of $16,080 or less;

(3) for a debtor with two dependents, an income of $19,020 or less;

(4) for a debtor with three dependents, an income of $21,580 or less;

(5) for a debtor with four dependents, an income of $22,760 or less; and

(6) for a debtor with five or more dependents, an income of $23,730 or less.

For purposes of this paragraph, "debtor" means the individual whose income, together
with the income of the individual's spouse, other than a separated spouse, brings the
individual within the income provisions of this paragraph. For purposes of this paragraph,
a spouse, other than a separated spouse, shall be considered a dependent.

(c) The commissioner shall new text begin annually new text end adjust the deleted text begin income deleted text end amounts in paragraph (b) deleted text begin 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 "2014" shall be substituted for the word
"1992." For 2016, the commissioner shall then determine the percent change from the 12
months ending on August 31, 2014, to the 12 months ending on August 31, 2015, and in
each subsequent year, from the 12 months ending on August 31, 2014, to the 12 months
ending on August 31 of the year preceding the taxable year. The determination of the
commissioner pursuant to this subdivision shall not be considered a "rule" and shall not be
subject to the Administrative Procedure Act contained in chapter 14. The income 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 deleted text end new text begin as provided in section 270C.22 new text end .

(d) Debt also includes an agreement to pay a MinnesotaCare premium, regardless of the
dollar amount of the premium authorized under section 256L.15, subdivision 1a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 2.

new text begin [270C.22] COST OF LIVING ADJUSTMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Adjustment; definition; period; rounding. new text end

new text begin (a) The commissioner shall
annually make a cost of living adjustment to the dollar amounts noted in sections that
reference this section. The commissioner shall adjust the amounts based on the index as
provided in this section. For purposes of this section, "index" means the ....... published by
the Bureau of Labor Statistics and the values of the index used to determine the adjustments
under this section are the latest published values when the Bureau of Labor Statistics
publishes the initial value of the index for August of the year preceding the year to which
the adjustment applies.
new text end

new text begin (b) To determine the dollar amounts for taxable year 2020, calendar year 2020, and for
refunds payable in 2020 under chapter 290A, the commissioner shall determine the
percentage change in the index for the 12-month period ending on August 31, 2018, and
increase each of the unrounded dollar amounts in the sections referencing this section, as
determined by the commissioner under the previously applicable cost of living adjustment
for 2019, by that percentage change. For each subsequent year, the commissioner shall
increase the dollar amount by the percentage change in the index for the 12-month period
ending in August of the year preceding the year.
new text end

new text begin (c) Unless provided otherwise, the commissioner shall round the amounts as adjusted
to the nearest $10 amount. If an amount ends in $5, the amount is rounded up to the nearest
$10 amount.
new text end

new text begin Subd. 2. new text end

new text begin Publication. new text end

new text begin The commissioner shall announce and publish the adjusted dollar
amounts as required by subdivision 1 on the Department of Revenue's website on or before
December 15 of each year.
new text end

new text begin Subd. 3. new text end

new text begin Special provision. new text end

new text begin The determination of the commissioner under this subdivision
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 for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 3.

Minnesota Statutes 2018, section 290.0131, subdivision 12, is amended to read:

Subd. 12.

Disallowed itemized deductions.

(a) The amount of disallowed itemized
deductions is an addition. The amount of disallowed itemized deductions, plus the addition
required under subdivision 3, may not be more than the amount by which the itemized
deductions, as allowed under section 63(d) of the Internal Revenue Code, exceeds the amount
of the standard deduction as defined in section 63(c) of the Internal Revenue Code.

(b) The amount of disallowed itemized deductions is equal to the lesser of:

(1) three percent of the excess of the taxpayer's federal adjusted gross income over the
applicable amount; or

(2) 80 percent of the amount of the itemized deductions otherwise allowable to the
taxpayer under the Internal Revenue Code for the taxable year.

(c) "Applicable amount" means $100,000, or $50,000 for a married individual filing a
separate return. deleted text begin Each dollar amount is increased by an amount equal to: deleted text end new text begin The commissioner
shall annually adjust these amounts as provided in section 270C.22. The amounts as adjusted
must be rounded to the nearest $50 amount. If the amount ends in $25, the amount is rounded
down to the nearest $50 amount. The amount for married individuals filing separate returns
must be one half of the adjusted amount for married individuals filing joint returns.
new text end

deleted text begin (1) that dollar amount, multiplied by
deleted text end

deleted text begin (2) the cost-of-living adjustment determined under section 1(f)(3) of the Internal Revenue
Code for the calendar year in which the taxable year begins, by substituting "calendar year
1990" for "calendar year 1992" in subparagraph (B) of section 1(f)(3).
deleted text end

(d) "Itemized deductions" excludes:

(1) the deduction for medical expenses under section 213 of the Internal Revenue Code;

(2) any deduction for investment interest as defined in section 163(d) of the Internal
Revenue Code; and

(3) the deduction under section 165(a) of the Internal Revenue Code for casualty or theft
losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue Code or
for losses described in section 165(d) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 4.

Minnesota Statutes 2018, section 290.0131, subdivision 13, is amended to read:

Subd. 13.

Disallowed personal exemption amount.

(a) The amount of disallowed
personal exemptions for taxpayers with federal adjusted gross income over the threshold
amount is an addition.

(b) The disallowed personal exemption amount is equal to the number of personal
exemptions allowed under section 151(b) and (c) of the Internal Revenue Code multiplied
by the dollar amount for personal exemptions under section 151(d)(1) and (2) of the Internal
Revenue Code, as adjusted for inflation by section 151(d)(4) of the Internal Revenue Code,
and by the applicable percentage.

(c) For a married individual filing a separate return, "applicable percentage" means two
percentage points for each $1,250, or fraction of that amount, by which the taxpayer's federal
adjusted gross income for the taxable year exceeds the threshold amount. For all other filers,
applicable percentage means two percentage points for each $2,500, or fraction of that
amount, by which the taxpayer's federal adjusted gross income for the taxable year exceeds
the threshold amount. The applicable percentage must not exceed 100 percent.

(d) "Threshold amount" means:

(1) $150,000 for a joint return or a surviving spouse;

(2) $125,000 for a head of a household;

(3) $100,000 for an individual who is not married and who is not a surviving spouse or
head of a household; and

(4) $75,000 for a married individual filing a separate return.

(e) The deleted text begin thresholds must be increased by an amount equal to: deleted text end new text begin commissioner shall annually
adjust the amounts in paragraph (d) as provided in section 270C.22. The amounts as adjusted
must be rounded to the nearest $50 amount. If the amount ends in $25, the amount is rounded
down to the nearest $50 amount. The amount for married individuals filing separate returns
must be one half of the adjusted amount for married individuals filing joint returns.
new text end

deleted text begin (1) the threshold dollar amount, multiplied by
deleted text end

deleted text begin (2) the cost-of-living adjustment determined under section 1(f)(3) of the Internal Revenue
Code for the calendar year in which the taxable year begins, by substituting "calendar year
1990" for "calendar year 1992" in subparagraph (B) of section 1(f)(3).
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 5.

Minnesota Statutes 2018, section 290.0132, subdivision 26, is amended to read:

Subd. 26.

Social Security benefits.

(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).

(b) For married taxpayers filing a joint return and surviving spouses, the maximum
subtraction equals $4,500. The maximum subtraction is reduced by 20 percent of provisional
income over $77,000. In no case is the subtraction less than zero.

(c) For single or head-of-household taxpayers, the maximum subtraction equals $3,500.
The maximum subtraction is reduced by 20 percent of provisional income over $60,200.
In no case is the subtraction less than zero.

(d) For married taxpayers filing separate returns, the maximum subtraction equals $2,250.
The maximum subtraction is reduced by 20 percent of provisional income over $38,500.
In no case is the subtraction less than zero.

(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.

(f) The commissioner shall new text begin annually new text end adjust the deleted text begin maximum subtraction and threshold deleted text end
amounts in paragraphs (b) to (d) deleted text begin 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 maximum subtraction and
threshold amounts 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 deleted text end new text begin as provided in section
270C.22 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 6.

Minnesota Statutes 2018, section 290.06, subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income taxes
imposed by this chapter upon married individuals filing joint returns and surviving spouses
as defined in section 2(a) of the Internal Revenue Code must be computed by applying to
their taxable net income the following schedule of rates:

(1) On the first $35,480, 5.35 percent;

(2) On all over $35,480, but not over $140,960, 7.05 percent;

(3) On all over $140,960, but not over $250,000, 7.85 percent;

(4) On all over $250,000, 9.85 percent.

Married individuals filing separate returns, estates, and trusts must compute their income
tax by applying the above rates to their taxable income, except that the income brackets
will be one-half of the above amounts new text begin after the adjustment required in subdivision 2d new text end .

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $24,270, 5.35 percent;

(2) On all over $24,270, but not over $79,730, 7.05 percent;

(3) On all over $79,730, but not over $150,000, 7.85 percent;

(4) On all over $150,000, 9.85 percent.

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying as
a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $29,880, 5.35 percent;

(2) On all over $29,880, but not over $120,070, 7.05 percent;

(3) On all over $120,070, but not over $200,000, 7.85 percent;

(4) On all over $200,000, 9.85 percent.

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax
of any individual taxpayer whose taxable net income for the taxable year is less than an
amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not more
than $100. The amount of tax for each bracket shall be computed at the rates set forth in
this subdivision, provided that the commissioner may disregard a fractional part of a dollar
unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute the
individual's Minnesota income tax as provided in this subdivision. After the application of
the nonrefundable credits provided in this chapter, the tax liability must then be multiplied
by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income as
defined in section 62 of the Internal Revenue Code and increased by the additions required
under section 290.0131, subdivisions 2 and 6 to 11, and reduced by the Minnesota assignable
portion of the subtraction for United States government interest under section 290.0132,
subdivision 2, and the subtractions under section 290.0132, subdivisions 9, 10, 14, 15, 17,
and 18, after applying the allocation and assignability provisions of section 290.081, clause
(a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in section
62 of the Internal Revenue Code, increased by the amounts specified in section 290.0131,
subdivisions 2 and 6 to 11, and reduced by the amounts specified in section 290.0132,
subdivisions 2, 9, 10, 14, 15, 17, and 18.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 7.

Minnesota Statutes 2018, section 290.06, subdivision 2d, is amended to read:

Subd. 2d.

Inflation adjustment of brackets.

deleted text begin (a) For taxable years beginning after
December 31, 2013, deleted text end new text begin The commissioner shall annually adjust new text end the minimum and maximum
dollar amounts for each rate bracket for which a tax is imposed in subdivision 2c deleted text begin shall be
adjusted for inflation by the percentage determined under paragraph (b). For the purpose
of making the adjustment as provided in this subdivision all of the rate brackets provided
in subdivision 2c shall be the rate brackets as they existed for taxable years beginning after
December 31, 2012, and before January 1, 2014 deleted text end new text begin as provided in section 270C.22 new text end . The rate
applicable to any rate bracket must not be changed. The dollar amounts setting forth the tax
shall be adjusted to reflect the changes in the rate brackets. The rate brackets as adjusted
must be rounded to the nearest $10 amount. If the rate bracket ends in $5, it must be rounded
up to the nearest $10 amount. new text begin The commissioner must determine the rate brackets for married
individuals filing separate returns, estates, and trusts after rounding to the nearest $10
amount.
new text end

deleted text begin (b) The commissioner shall adjust the rate brackets and 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 "2012" 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, 2012, to the 12 months ending on August 31, 2013, and in each subsequent year, from
the 12 months ending on August 31, 2012, to the 12 months ending on August 31 of the
year preceding the taxable year. The determination of the commissioner pursuant to this
subdivision shall not be considered a "rule" and shall not be subject to the Administrative
Procedure Act contained in chapter 14 deleted text end .

deleted text begin No later than December 15 of each year, the commissioner shall announce the specific
percentage that will be used to adjust the tax rate brackets.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 8.

Minnesota Statutes 2018, section 290.067, subdivision 2b, is amended to read:

Subd. 2b.

Inflation adjustment.

The commissioner shall new text begin annually new text end adjust the dollar
amount of the income threshold at which the maximum credit begins to be reduced under
subdivision 1 deleted text begin 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 "2016" shall be 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 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 deleted text end new text begin as provided in section 270C.22 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 9.

Minnesota Statutes 2018, section 290.0671, subdivision 1, 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, except that a taxpayer with no qualifying children who has attained
the age of 21, but not attained age 65 before the close of the taxable year and is otherwise
eligible for a credit under section 32 of the Internal Revenue Code may also receive a credit.

(b) For individuals with no qualifying children, the credit equals 2.10 percent of the first
deleted text begin $6,180 deleted text end new text begin $6,640 new text end of earned income. The credit is reduced by 2.01 percent of earned income
or adjusted gross income, whichever is greater, in excess of deleted text begin $8,130 deleted text end new text begin the phase-out threshold new text end ,
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
deleted text begin $11,120 deleted text end new text begin $11,950 new text end of earned income. The credit is reduced by 6.02 percent of earned income
or adjusted gross income, whichever is greater, in excess of deleted text begin $21,190 deleted text end new text begin the phase-out threshold new text end ,
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 deleted text begin $18,240 deleted text end new text begin $19,600 new text end of earned income. The credit is reduced by 10.82 percent of
earned income or adjusted gross income, whichever is greater, in excess of deleted text begin $25,130 deleted text end new text begin the
phase-out threshold new text end , 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 following clauses are not
considered "earned income not subject to tax under this chapter":

(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12;

(2) the exclusion of combat pay under section 112 of the Internal Revenue Code; and

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

(g) deleted text begin 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. deleted text end new text begin For the purposes
of this section, the phase-out threshold equals:
new text end

new text begin (1) for married taxpayers filing joint returns with no qualifying children, $14,570;
new text end

new text begin (2) for all other taxpayers with no qualifying children, $8,730;
new text end

new text begin (3) for married taxpayers filing joint returns with one qualifying child, $28,610;
new text end

new text begin (4) for all other taxpayers with one qualifying child, $22,770;
new text end

new text begin (5) for married taxpayers filing joint returns with two or more qualifying children,
$32,840; and
new text end

new text begin (6) for all other taxpayers with two or more qualifying children, $27,000.
new text end

(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, 2019.
new text end

Sec. 10.

Minnesota Statutes 2018, section 290.0671, subdivision 7, is amended to read:

Subd. 7.

Inflation adjustment.

The new text begin commissioner shall annually adjust the new text end earned
income amounts used to calculate the credit and the deleted text begin income deleted text end new text begin phase-out new text end thresholds deleted text begin at which
the maximum credit begins to be reduced deleted text end in subdivision 1 deleted text begin must be adjusted for inflation.
The commissioner shall adjust 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 "2013"
shall be substituted for the word "1992." For 2015, the commissioner shall then determine
the percent change from the 12 months ending on August 31, 2013, to the 12 months ending
on August 31, 2014, and in each subsequent year, from the 12 months ending on August
31, 2013, 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
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 under the
Administrative Procedure Act. deleted text end new text begin , as provided in section 270C.22.
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, 2019.
new text end

Sec. 11.

Minnesota Statutes 2018, section 290.0684, subdivision 2, is amended to read:

Subd. 2.

Credit allowed.

(a) An individual who is a resident of Minnesota is allowed a
credit 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. The credit may not exceed the liability for tax under this chapter.

(b) The amount of the credit allowed equals 50 percent of contributions for 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.

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

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

(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;

(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

(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.

(e) The new text begin commissioner shall annually adjust the new text end income thresholds in paragraphs (c) and
(d) deleted text begin 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 deleted text end new text begin as provided in section 270C.22 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 12.

Minnesota Statutes 2018, section 290.091, subdivision 3, is amended to read:

Subd. 3.

Exemption amount.

(a) For purposes of computing the alternative minimum
tax, the exemption amount is deleted text begin , for taxable years beginning after December 31, 2005, deleted text end $60,000
for married couples filing joint returns, $30,000 for married individuals filing separate
returns, estates, and trusts, and $45,000 for unmarried individuals.

(b) The exemption amount determined under this subdivision is subject to the phase out
under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum
taxable income as determined under this section must be substituted in the computation of
the phase out.

(c) deleted text begin For taxable years beginning after December 31, 2006, deleted text end new text begin The commissioner shall
annually adjust new text end the deleted text begin exemption amount under deleted text end new text begin amounts in new text end paragraph (a) deleted text begin must be adjusted for
inflation. The commissioner shall adjust the exemption amount 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 "2005" shall be substituted for the word "1992." For 2007, the
commissioner shall then determine the percent change from the 12 months ending on August
31, 2005, to the 12 months ending on August 31, 2006, and in each subsequent year, from
the 12 months ending on August 31, 2005, to the 12 months ending on August 31 of the
year preceding the taxable year. The exemption amount as adjusted must be rounded to the
nearest $10. If the amount ends in $5, it must be rounded up to the nearest $10 amount. The
determination of the commissioner under this subdivision is not a rule under the
Administrative Procedure Act deleted text end new text begin as provided in section 270C.22 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 13.

Minnesota Statutes 2018, section 290.0922, subdivision 1, is amended to read:

Subdivision 1.

Imposition.

(a) In addition to the tax imposed by this chapter without
regard to this section, the franchise tax imposed on a corporation required to file under
section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation under
section 290.9725 for the taxable year includes a tax equal to the following amounts:

If the sum of the corporation's Minnesota property, payrolls, and sales or receipts is:							the tax equals:
		less than		$	930,000		$	0
	$	930,000	to	$	1,869,999		$	190
	$	1,870,000	to	$	9,339,999		$	560
	$	9,340,000	to	$	18,679,999		$	1,870
	$	18,680,000	to	$	37,359,999		$	3,740
	$	37,360,000	or	more			$	9,340

(b) A tax is imposed for each taxable year on a corporation required to file a return under
section 289A.12, subdivision 3, that is treated as an "S" corporation under section 290.9725
and on a partnership required to file a return under section 289A.12, subdivision 3, other
than a partnership that derives over 80 percent of its income from farming. The tax imposed
under this paragraph is due on or before the due date of the return for the taxpayer due under
section 289A.18, subdivision 1. The commissioner shall prescribe the return to be used for
payment of this tax. The tax under this paragraph is equal to the following amounts:

If the sum of the S corporation's or partnership's Minnesota property, payrolls, and sales or receipts is:							the tax equals:
		less than		$	930,000		$	0
	$	930,000	to	$	1,869,999		$	190
	$	1,870,000	to	$	9,339,999		$	560
	$	9,340,000	to	$	18,679,999		$	1,870
	$	18,680,000	to	$	37,359,999		$	3,740
	$	37,360,000	or	more			$	9,340

(c) The commissioner shall new text begin annually new text end adjust the dollar amounts of both the tax and the
property, payrolls, and sales or receipts thresholds in paragraphs (a) and (b) deleted text begin 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 "2012" must be substituted for the word "1992." For
2014, the commissioner shall determine the percentage change from the 12 months ending
on August 31, 2012, to the 12 months ending on August 31, 2013, and in each subsequent
year, from the 12 months ending on August 31, 2012, to the 12 months ending on August
31 of the year preceding the taxable year. The determination of the commissioner pursuant
to this subdivision is not a "rule" subject to the Administrative Procedure Act contained in
chapter 14 deleted text end new text begin as provided in section 270C.22 new text end . The tax amounts as adjusted must be rounded
to the nearest $10 amount and the threshold amounts must be adjusted to the nearest $10,000
amount. For tax amounts that end in $5, the amount is rounded up to the nearest $10 amount
and for the threshold amounts that end in $5,000, the amount is rounded up to the nearest
$10,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end

Sec. 14.

Minnesota Statutes 2018, section 290A.03, subdivision 12, is amended to read:

Subd. 12.

Gross rent.

(a) "Gross rent" means rental paid for the right of occupancy, at
arm's length, of a homestead, exclusive of charges for any medical services furnished by
the landlord as a part of the rental agreement, whether expressly set out in the rental
agreement or not.

(b) The gross rent of a resident of a nursing home or intermediate care facility is $350
per month. The gross rent of a resident of an adult foster care home is $550 per month.
deleted text begin Beginning for rent paid in 2002, deleted text end The commissioner shall annually adjust deleted text begin for inflation deleted text end the
deleted text begin gross rent deleted text end amounts deleted text begin stated deleted text end in this paragraph new text begin as provided in section 270C.22 new text end . deleted text begin The adjustment
must be made in accordance with section 1(f) of the Internal Revenue Code, except that for
purposes of this paragraph the percentage increase shall be determined from the year ending
on June 30, 2001, to the year ending on June 30 of the year in which the rent is paid. The
commissioner shall round the gross rents to the nearest $10 amount. If the amount ends in
$5, the commissioner shall round it up to the next $10 amount. The determination of the
commissioner under this paragraph is not a rule under the Administrative Procedure Act.
deleted text end

(c) If the landlord and tenant have not dealt with each other at arm's length and the
commissioner determines that the gross rent charged was excessive, the commissioner may
adjust the gross rent to a reasonable amount for purposes of this chapter.

(d) Any amount paid by a claimant residing in property assessed pursuant to section
273.124, subdivision 3, 4, 5, or 6 for occupancy in that property shall be excluded from
gross rent for purposes of this chapter. However, property taxes imputed to the homestead
of the claimant or the dwelling unit occupied by the claimant that qualifies for homestead
treatment pursuant to section 273.124, subdivision 3, 4, 5, or 6 shall be included within the
term "property taxes payable" as defined in subdivision 13, notwithstanding the fact that
ownership is not in the name of the claimant.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments for refunds payable
beginning in 2020.
new text end

Sec. 15.

Minnesota Statutes 2018, section 290A.04, subdivision 4, is amended to read:

Subd. 4.

Inflation adjustment.

(a) deleted text begin Beginning for property tax refunds payable in calendar
year 2002, deleted text end The commissioner shall annually adjust the dollar amounts of the income
thresholds and the maximum refunds under subdivisions 2 and 2a deleted text begin for inflation deleted text end new text begin as provided
in section 270C.22 new text end . deleted text begin The commissioner shall make the inflation adjustments in accordance
with section 1(f) of the Internal Revenue Code, except that for purposes of this subdivision
the percentage increase shall be determined as provided in this subdivision.
deleted text end

deleted text begin (b) In adjusting the dollar amounts of the income thresholds and the maximum refunds
under subdivision 2 for inflation, the percentage increase shall be determined from the year
ending on June 30, 2013, to the year ending on June 30 of the year preceding that in which
the refund is payable.
deleted text end

deleted text begin (c) In adjusting the dollar amounts of the income thresholds and the maximum refunds
under subdivision 2a for inflation, the percentage increase shall be determined from the
year ending on June 30, 2013, to the year ending on June 30 of the year preceding that in
which the refund is payable.
deleted text end

deleted text begin (d) The commissioner shall use the appropriate percentage increase to annually adjust
the income thresholds and maximum refunds under subdivisions 2 and 2a for inflation
without regard to whether or not the income tax brackets are adjusted for inflation in that
year. The commissioner shall round the thresholds and the maximum amounts, as adjusted
to the nearest $10 amount. If the amount ends in $5, the commissioner shall round it up to
the next $10 amount.
deleted text end

deleted text begin (e) deleted text end deleted text begin The commissioner shall annually announce the adjusted refund schedule at the same
time provided under section 290.06. The determination of the commissioner under this
subdivision is not a rule under the Administrative Procedure Act.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for adjustments for refunds payable
beginning in 2020.
new text end

Sec. 16. new text begin REVISOR INSTRUCTION.
new text end

new text begin The commissioner of revenue must promptly notify the revisor of statutes in writing of
the adjusted amounts announced and published by the commissioner under section 2 for
2019 for each of the affected statutory sections. The revisor shall publish the updated 2019
amounts in the 2019 Supplement of Minnesota Statutes.
new text end