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Minnesota Legislature

Office of the Revisor of Statutes

HF 1620

as introduced - 91st Legislature (2019 - 2020) Posted on 03/13/2019 04:52pm

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

Current Version - as introduced

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A bill for an act
relating to taxation; individual income; modifying the working family credit
calculation; amending Minnesota Statutes 2018, section 290.0671, subdivisions
1, 7.

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

Section 1.

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 deleted text begin2.10deleted text endnew text begin 4.0new text end percent of the
first deleted text begin$6,180deleted text endnew text begin $7,500new text end of earned income. The credit is reduced by deleted text begin2.01deleted text endnew text begin 3.3new text end percent of earned
income or adjusted gross income, whichever is greater, in excess of deleted text begin$8,130deleted text endnew text begin $11,500new 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 $11,120deleted text endnew text begin $11,950new 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$21,190deleted text endnew text begin $22,770new 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$18,240deleted text endnew text begin $19,600new 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$25,130deleted text endnew text begin $27,000new 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) For tax years beginning after December 31, 2013, the deleted text begin$8,130deleted text endnew text begin $11,500new text end in paragraph
(b), the deleted text begin$21,190deleted text endnew text begin $22,770new text end in paragraph (c), and the deleted text begin$25,130deleted text endnew text begin $27,000new text end 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, 2018.
new text end

Sec. 2.

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


Subd. 7.

Inflation adjustment.

The earned income amounts used to calculate the credit
and the income thresholds at which the maximum credit begins to be reduced in subdivision
1 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 deleted text begin"2013"deleted text endnew text begin "2018"new text end shall be substituted for the word "1992." For deleted text begin2015deleted text endnew text begin 2020new text end,
the commissioner shall then determine the percent change from the 12 months ending on
August 31, deleted text begin2013deleted text endnew text begin 2018new text end, to the 12 months ending on August 31, deleted text begin2014deleted text endnew text begin 2019new text end, and in each
subsequent year, from the 12 months ending on August 31, deleted text begin2013deleted text endnew text begin 2018new text end, 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.

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