HF 1479

1st Committee Engrossment - 86th Legislature (2009 - 2010) Posted on 03/19/2013 07:28pm

1.1A bill for an act

1.2relating to taxation; individual income; providing a refundable credit for payment
1.3of principal and interest on student loans; appropriating money;proposing coding
1.4for new law in Minnesota Statutes, chapter 290.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6    Section 1. [290.0678] EDUCATION OPPORTUNITY CREDIT.
1.7    Subdivision 1. Definitions. (a) For purposes of this section, the following terms
1.8have the meanings given.
1.9(b) "Eligible individual" means an individual who:
1.10(1) is a Minnesota resident who graduated from a postsecondary educational
1.11institution located in Minnesota or from a public postsecondary educational institution
1.12located in a state with which a tuition reciprocity agreement under section 136A.08 was in
1.13effect when the individual graduated; and
1.14(2) has a household income under $75,000. For purposes of this section, "household
1.15income" means income as described in section 290.067, subdivision 2a.
1.16(c) "Eligible employer" means an employer of an eligible individual who undertakes
1.17partial or full payment of the eligible individual's qualified education loan.
1.18(d) "Qualified education loan" has the meaning given in section 221 of the Internal
1.19Revenue Code, but is limited to indebtedness incurred on behalf of the taxpayer or
1.20taxpayer's spouse.
1.21(e) "Postsecondary educational institution" means a two- or four-year postsecondary
1.22educational institution that meets the definition of "eligible educational institution"
1.23provided in section 221(d)(2)(B) of the Internal Revenue Code.
2.1(f) "Maximum qualifying amount" is the allowance for tuition and fees most recently
2.2set in law as required under section 136A.121, subdivision 6. For an eligible individual
2.3who graduated from a two-year postsecondary educational institution, the maximum
2.4qualifying amount equals the allowance for tuition and fees specified for a two-year
2.5institution, and for an eligible individual who graduated from a four-year postsecondary
2.6educational institution, the maximum qualifying amount equals the allowance for tuition
2.7and fees specified for a four-year institution.
2.8    Subd. 2. Credit allowed. (a) An eligible individual or an eligible employer is
2.9allowed a credit against the tax due under this chapter.
2.10(b) The credit amount for an eligible individual equals the lesser of:
2.11(1) the amount the individual paid during the taxable year to pay principal and
2.12interest on qualified education loans; or
2.13(2) the maximum qualifying amount.
2.14(c) An eligible employer may only claim the credit based on qualified education
2.15loan payments made on behalf of the eligible individual in months in which the eligible
2.16individual did not make payments. The credit amount for an eligible employer equals
2.17the least of:
2.18(1) the amount the eligible employer paid during the taxable year to pay principal
2.19and interest on qualified education loans of an eligible individual;
2.20(2) the maximum qualifying amount; or
2.21(3) the amount the eligible individual would have been able to claim had the eligible
2.22individual made the payments in place of the employer.
2.23    Subd. 3. Credit refundable. If the amount of credit which a taxpayer is eligible
2.24to receive under this section exceeds the taxpayer's tax liability under this chapter, the
2.25commissioner shall refund the excess to the taxpayer.
2.26    Subd. 4. Appropriation. An amount sufficient to pay the refunds required by this
2.27section is appropriated to the commissioner from the general fund.
2.28EFFECTIVE DATE.This section is effective for taxable years beginning after
2.29December 31, 2008.