1st Engrossment - 91st Legislature (2019 - 2020) Posted on 04/12/2019 08:43am
A bill for an act
relating to financing and operation of state and local government; providing
conformity and nonconformity to certain federal tax law changes; modifying
individual income and corporate franchise taxes, estate taxes, sales and use taxes,
special and excise taxes, property taxes, local government aids, provisions related
to local taxes, tax increment financing, and public finance, and other miscellaneous
taxes and tax provisions; modifying indexing provisions; changing the starting
point for state individual income tax calculation from federal taxable income to
federal adjusted gross income; providing for various individual and corporate
additions and subtractions to income; modifying certain allowances and adjustments
to income; modifying individual income tax brackets; modifying certain income
tax credits; modifying and allowing certain construction exemptions and other
sales and purchases from sales and use taxes; modifying rates and definitions for
certain tobacco and cigarette taxes; modifying rates and deposits for solid waste
taxes; modifying provisions relating to property tax records and information;
modifying certain property tax timelines; establishing property tax exemptions;
allowing tax deferral for elderly living facilities; modifying homestead provisions;
modifying state general levy; modifying local government and county aid;
modifying approval requirements for certain local sales taxes; modifying and
authorizing certain local sales taxes; authorizing Metropolitan Council bonds;
requiring reports; appropriating money; amending Minnesota Statutes 2018, sections
6.495, subdivision 3; 37.31, subdivision 1; 38.27, by adding a subdivision;
103E.611, subdivision 2; 116J.8737, subdivisions 1, 2, 3, 4, 5, 6, 12; 123B.595,
subdivision 5; 138.053; 144E.42, subdivision 2; 161.14, by adding a subdivision;
162.145, subdivision 3; 197.603, subdivision 2; 270A.03, subdivision 5; 270B.08,
subdivision 2; 270C.21; 270C.445, subdivision 6; 270C.85, subdivision 2; 270C.89,
subdivisions 1, 2; 270C.91; 272.02, subdivisions 27, 49, 81, by adding subdivisions;
272.115, subdivision 1; 273.032; 273.061, subdivision 9; 273.0755; 273.113,
subdivision 3; 273.119, subdivision 2; 273.1231, subdivision 3; 273.124,
subdivisions 3a, 13, 14, 21, by adding a subdivision; 273.1245, subdivision 2;
273.13, subdivisions 22, 23, 34, 35; 273.136, subdivision 2; 273.1384, subdivisions
2, 3; 273.1385, subdivision 4; 273.1387, subdivisions 2, 3; 273.18; 274.14; 274.16;
275.025, subdivision 1; 282.01, subdivision 6; 287.21, subdivision 1; 289A.08,
subdivisions 1, 6, 7, by adding a subdivision; 289A.10, subdivision 1; 289A.11,
by adding a subdivision; 289A.20, subdivision 4, by adding a subdivision; 289A.25,
subdivision 1; 289A.31, subdivisions 1, 2; 289A.37, subdivisions 2, 6; 289A.38,
subdivisions 7, 10; 289A.42; 289A.60, subdivisions 15, 24, 29; 290.01, subdivisions
4a, 29a, 31, by adding subdivisions; 290.0131, subdivisions 1, 3, by adding
subdivisions; 290.0132, subdivisions 1, 7, 19, 20, 26, by adding subdivisions;
290.0133, subdivision 6; 290.0134, by adding subdivisions; 290.0137; 290.032,
subdivision 2; 290.05, subdivisions 1, 3; 290.06, subdivisions 2c, 2d, 2h; 290.067,
subdivision 2b; 290.0671, subdivisions 1, 7; 290.0672, subdivision 2; 290.0675,
subdivision 1; 290.0677, subdivision 1a; 290.0682, subdivisions 1, 2; 290.0684,
subdivision 2; 290.0685, subdivision 1, by adding a subdivision; 290.0802,
subdivisions 2, 3; 290.091, subdivisions 2, 3; 290.0921, subdivisions 2, 3; 290.0922,
subdivision 1; 290.095, subdivision 2; 290.17, subdivision 4, by adding
subdivisions; 290.191, subdivision 5; 290.21, subdivision 4, by adding a
subdivision; 290.31, subdivision 1; 290.92, subdivisions 1, 28; 290A.03,
subdivisions 3, 4, 8, 12, 13; 290A.04, subdivisions 2, 2a, 4; 290A.05; 290A.08;
290A.09; 290A.19; 290B.04, subdivision 1; 290B.09, subdivision 1; 291.016,
subdivision 3; 295.50, subdivisions 3, 4, 9b, 14, 15, by adding subdivisions; 295.53,
subdivision 1; 295.57, subdivision 5; 295.582, subdivision 1; 295.75, subdivision
4; 296A.03, subdivision 3; 296A.13; 297A.61, subdivision 18; 297A.66,
subdivisions 1, 2, 3; 297A.67, subdivisions 6, 12, by adding a subdivision; 297A.68,
subdivisions 17, 25, 29, 42, 44, by adding a subdivision; 297A.70, subdivisions
3, 4, 10, 16, 20, by adding subdivisions; 297A.71, subdivisions 22, 45, 50, by
adding subdivisions; 297A.75, subdivisions 1, 2; 297A.77, by adding a subdivision;
297A.83, subdivision 1; 297A.84; 297A.85; 297A.99, subdivisions 1, 2, 3, by
adding a subdivision; 297A.993, subdivision 1; 297B.01, subdivisions 14, 16;
297B.03; 297F.01, subdivisions 19, 23, by adding a subdivision; 297F.05, by
adding a subdivision; 297F.08, subdivisions 8, 9; 297F.09, subdivision 10; 297F.17,
subdivision 6; 297G.07, subdivision 1; 297G.09, subdivision 9; 297G.16,
subdivision 7; 297H.02, subdivision 2; 297H.03, subdivision 2; 297H.04,
subdivision 2; 297H.05; 297H.13, subdivision 2; 297I.20, subdivision 3; 298.018,
subdivision 1, by adding a subdivision; 298.225, subdivision 1; 298.28, subdivision
3; 298.282, subdivision 1; 353G.01, subdivision 9; 353G.05, subdivision 2;
353G.08, subdivisions 1, 1a; 353G.17, subdivision 2; 356.20, subdivision 4a;
356.219, subdivision 8; 423A.02, subdivisions 1b, 3; 423A.022, subdivisions 2,
4; 424A.016, subdivisions 2, 4; 424A.02, subdivisions 1, 3a, 10; 424A.03,
subdivision 2; 424A.05, subdivisions 2, 3, by adding a subdivision; 424A.07;
424A.091, subdivision 3; 424A.092, subdivisions 3, 4; 424A.093, subdivision 5;
424B.09; 462D.03, subdivision 2; 469.169, by adding a subdivision; 469.171,
subdivision 4; 469.177, subdivision 1; 469.316, subdivision 1; 469.319, subdivision
4; 471.831; 473.39, subdivision 6, by adding a subdivision; 473H.08, subdivisions
1, 4, by adding a subdivision; 475.521, subdivision 1; 477A.011, subdivision 45;
477A.013, subdivision 13; 477A.03, subdivisions 2a, 2b; Minnesota Statutes 2019
Supplement, sections 289A.02, subdivision 7; 289A.12, subdivision 14; 289A.35;
290.01, subdivision 19; 290.0131, subdivision 10; 290.0132, subdivision 21;
290.0133, subdivision 12; 290.0672, subdivision 1; 290.0684, subdivision 1;
290.091, subdivision 2; 290.17, subdivision 2; 290A.03, subdivision 15; 291.005,
subdivision 1; 462D.06, subdivisions 1, 2; Laws 1980, chapter 511, section 1,
subdivision 1; Laws 1986, chapter 396, section 5, as amended; Laws 1986, chapter
462, section 31, as amended; Laws 1994, chapter 587, article 9, section 11; Laws
1998, chapter 389, article 8, section 45, subdivisions 1, 3, as amended, 4, 5; Laws
2008, chapter 366, article 5, sections 26, as amended; 33, as amended; Laws 2009,
chapter 88, article 2, section 46, subdivisions 1, as amended, 2, 3, as amended, 4,
5; Laws 2011, First Special Session chapter 7, article 4, section 10, subdivision 3;
Laws 2014, chapter 308, article 6, section 8, subdivisions 1, as amended, 3; Laws
2017, First Special Session chapter 1, article 3, sections 26; 32; article 8, section
3; article 10, section 4; proposing coding for new law in Minnesota Statutes,
chapters 16A; 270C; 272; 273; 289A; 290; 290A; 297H; 297I; 424A; proposing
coding for new law as Minnesota Statutes, chapters 477B; 477C; repealing
Minnesota Statutes 2018, sections 37.31, subdivision 8; 69.011, subdivisions 1,
2, 2b, 2c, 3, 4; 69.021, subdivisions 1, 2, 3, 4, 5, 7, 7a, 8, 9, 10, 11; 69.022; 69.031,
subdivisions 1, 3, 5; 69.041; 69.051, subdivisions 1, 1a, 1b, 2, 3, 4; 69.33; 69.80;
270C.131; 275.29; 289A.38, subdivisions 7, 8, 9; 290.0131, subdivisions 7, 11,
12, 13; 290.0132, subdivision 8; 290.0133, subdivisions 13, 14; 290.10, subdivision
2; 296A.03, subdivision 5; 296A.04, subdivision 2; 296A.05, subdivision 2;
297A.66, subdivision 4b; 297F.08, subdivision 5; 297I.25, subdivision 2; Minnesota
Rules, part 8125.0410, subpart 1.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Minnesota Statutes 2018, section 270A.03, subdivision 5, is amended to read:
(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 shallnew text begin annuallynew text end adjust the deleted text begin incomedeleted 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 amountdeleted text end new text begin as provided in section 270C.22. The statutory year
is taxable year 2019new 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
This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end
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(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 Chained Consumer
Price Index for All Urban Consumers published by the Bureau of Labor Statistics. 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.
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(b) For the purposes of this section, "statutory year" means the year preceding the first
year for which dollar amounts are to be adjusted for inflation under sections that reference
this section. For adjustments under chapter 290A, "statutory year" means the year in which
refunds are payable preceding the first year for which amounts in chapter 290A are indexed
under this section.
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(c) To determine the dollar amounts for taxable year 2020, the commissioner shall
determine the percentage change in the index for the 12-month period ending on August
31, 2019, and increase each of the unrounded dollar amounts in the sections referencing
this section by that percentage change. For each subsequent taxable year, the commissioner
shall increase the dollar amounts by the percentage change in the index from August 31 of
the year preceding the statutory year to August 31 of the year preceding the taxable year.
new text end
new text begin
(d) To determine the dollar amounts for refunds payable in 2021 under chapter 290A,
the commissioner shall determine the percentage change in the index for the 12-month
period ending on August 31, 2020, and increase each of the unrounded dollar amounts in
the sections referencing this section by that percentage change. For each subsequent year,
the commissioner shall increase the dollar amounts by the percentage change in the index
from August 31 of the year preceding the statutory year to August 31 of the year preceding
the year in which refunds are payable.
new text end
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(e) Unless otherwise provided, 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.
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The commissioner shall announce and publish the adjusted dollar
amounts required by subdivision 1 on the Department of Revenue's website on or before
December 15 of each year.
new text end
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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
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This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019, calendar years beginning after December 31,
2019, and for refunds based on rent paid in 2019 and property taxes payable in 2020.
new text end
Minnesota Statutes 2018, section 289A.02, subdivision 7, is amended to read:
Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin December
16, 2016deleted text end new text begin December 31, 2018new text end .
new text begin
This section is effective the day following final enactment except
the changes incorporated by federal changes are effective retroactively at the same time the
changes became effective for federal purposes.
new text end
Minnesota Statutes 2018, section 289A.08, subdivision 1, is amended to read:
(a) A taxpayer must file a return for each taxable
year the taxpayer is required to file a return under section 6012 of the Internal Revenue
Codenew text begin or meets the requirements under paragraph (d) to file a returnnew text end , except that:
(1) an individual who is not a Minnesota resident for any part of the year is not required
to file a Minnesota income tax return if the individual's gross income derived from Minnesota
sources as determined under sections 290.081, paragraph (a), and 290.17, is less than the
filing requirements for a single individual who is a full year resident of Minnesota; deleted text begin and
deleted text end
(2) an individual who is a Minnesota resident is not required to file a Minnesota income
tax return if the individual's gross income derived from Minnesota sources as determined
under section 290.17, less the subtractions allowed under section 290.0132, subdivisions
12 and 15, is less than the filing requirements for a single individual who is a full-year
resident of Minnesota.
(b) The decedent's final income tax return, and other income tax returns for prior years
where the decedent had gross income in excess of the minimum amount at which an
individual is required to file and did not file, must be filed by the decedent's personal
representative, if any. If there is no personal representative, the return or returns must be
filed by the transferees, as defined in section 270C.58, subdivision 3, who receive property
of the decedent.
(c) The term "gross income," as it is used in this section, has the same meaning given it
in section 290.01, subdivision 20.
new text begin
(d) The commissioner of revenue must annually determine the gross income levels at
which individuals are required to file a return for each taxable year based on the amounts
that may be subtracted under section 290.0132, subdivision 19.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 289A.08, subdivision 7, is amended to read:
(a) The commissioner may allow a partnership with nonresident partners to
file a composite return and to pay the tax on behalf of nonresident partners who have no
other Minnesota source income. This composite return must include the names, addresses,
Social Security numbers, income allocation, and tax liability for the nonresident partners
electing to be covered by the composite return.
(b) The computation of a partner's tax liability must be determined by multiplying the
income allocated to that partner by the highest rate used to determine the tax liability for
individuals under section 290.06, subdivision 2c. Nonbusiness deductions, standard
deductions, or personal exemptions are not allowed.
(c) The partnership must submit a request to use this composite return filing method for
nonresident partners. The requesting partnership must file a composite return in the form
prescribed by the commissioner of revenue. The filing of a composite return is considered
a request to use the composite return filing method.
(d) The electing partner must not have any Minnesota source income other than the
income from the partnership and other electing partnerships. If it is determined that the
electing partner has other Minnesota source income, the inclusion of the income and tax
liability for that partner under this provision will not constitute a return to satisfy the
requirements of subdivision 1. The tax paid for the individual as part of the composite return
is allowed as a payment of the tax by the individual on the date on which the composite
return payment was made. If the electing nonresident partner has no other Minnesota source
income, filing of the composite return is a return for purposes of subdivision 1.
(e) This subdivision does not negate the requirement that an individual pay estimated
tax if the individual's liability would exceed the requirements set forth in section 289A.25.
The individual's liability to pay estimated tax is, however, satisfied when the partnership
pays composite estimated tax in the manner prescribed in section 289A.25.
(f) If an electing partner's share of the partnership's gross income from Minnesota sources
is less than the filing requirements for a nonresident under this subdivision, the tax liability
is zero. However, a statement showing the partner's share of gross income must be included
as part of the composite return.
(g) The election provided in this subdivision is only available to a partner who has no
other Minnesota source income and who is either (1) a full-year nonresident individual or
(2) a trust or estate that does not claim a deduction under either section 651 or 661 of the
Internal Revenue Code.
(h) A corporation defined in section 290.9725 and its nonresident shareholders may
make an election under this paragraph. The provisions covering the partnership apply to
the corporation and the provisions applying to the partner apply to the shareholder.
(i) Estates and trusts distributing current income only and the nonresident individual
beneficiaries of the estates or trusts may make an election under this paragraph. The
provisions covering the partnership apply to the estate or trust. The provisions applying to
the partner apply to the beneficiary.
(j) For the purposes of this subdivision, "income" means the partner's share of federal
adjusted gross income from the partnership modified by the additions provided in section
290.0131, subdivisions 8 to deleted text begin 11deleted text end new text begin 10 and 16new text end , and the subtractions provided in: (1) section
290.0132, subdivision 9, to the extent the amount is assignable or allocable to Minnesota
under section 290.17; and (2) section 290.0132, subdivision 14. The subtraction allowed
under section 290.0132, subdivision 9, is only allowed on the composite tax computation
to the extent the electing partner would have been allowed the subtraction.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 289A.12, subdivision 14, is amended to read:
(a) A regulated
investment company paying $10 or more in exempt-interest dividends to an individual who
is a resident of Minnesota, or any person receiving $10 or more of exempt interest or
exempt-interest dividends and paying as nominee to an individual who is a resident of
Minnesota, must make a return indicating the amount of the exempt interest or
exempt-interest dividends, the name, address, and Social Security number of the recipient,
and any other information that the commissioner specifies. The return must be provided to
the recipient by February 15 of the year following the year of the payment. The return
provided to the recipient must include a clear statement, in the form prescribed by the
commissioner, that the exempt interest or exempt-interest dividends must be included in
the computation of Minnesota taxable income. By June 1 of each year, the payer must file
a copy of the return with the commissioner.
(b) For purposes of this subdivision, the following definitions apply.
(1) "Exempt-interest dividends" mean exempt-interest dividends as defined in section
852(b)(5) of the Internal Revenue Code, but does not include the portion of exempt-interest
dividends that are not required to be added to federal deleted text begin taxabledeleted text end new text begin adjusted grossnew text end income under
section 290.0131, subdivision 2, paragraph (b).
(2) "Regulated investment company" means regulated investment company as defined
in section 851(a) of the Internal Revenue Code or a fund of the regulated investment company
as defined in section 851(g) of the Internal Revenue Code.
(3) "Exempt interest" means income on obligations of any state other than Minnesota,
or a political or governmental subdivision, municipality, or governmental agency or
instrumentality of any state other than Minnesota, and exempt from federal income taxes
under the Internal Revenue Code or any other federal statute.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 289A.20, is amended by adding a subdivision to
read:
new text begin
(a) A
taxpayer subject to tax under section 290.06, subdivision 1, may elect to pay the net tax
liability on the deferred foreign income in installments in the same percentages of the net
tax liability for each taxable year as provided in section 965(h)(1) of the Internal Revenue
Code. Payment of an installment for a taxable year is due on the due date, determined without
regard to any extensions of time for filing the return, for the tax return for that taxable year.
new text end
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(b) If an acceleration of payment applies for federal income tax purposes under section
965(h)(3) of the Internal Revenue Code, the unpaid portion of the remaining installments
due under chapter 290 must be paid on the same date as the federal tax is due. Assessment
of deficiencies must be prorated as provided under section 965(h)(4) of the Internal Revenue
Code.
new text end
new text begin
(c) For purposes of determining date and time limits under sections 270C.62, 270C.63,
270C.67, and 270C.68, the date on which an installment is due under paragraph (a), including
any acceleration under paragraph (b), must be treated as the assessment date, due date, or
other date from which the time limit must be determined for that payment.
new text end
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(d) For purposes of this subdivision, "net tax liability" means the excess of:
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(1) the tax liability, determined under chapter 290, for the taxable year in which the
deferred foreign income was includable in federal taxable income; over
new text end
new text begin
(2) the tax liability, determined under chapter 290, for that taxable year computed after
excluding the deferred foreign income under section 965 of the Internal Revenue Code.
new text end
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(e) If a taxpayer has not made the first installment payment under paragraph (a), the
taxpayer must pay the first installment payment at the same time and due date as the second
installment payment. For purposes of paragraph (c), payments under this paragraph are
deemed to be due at the same time the second installment is due.
new text end
new text begin
This section is effective retroactively at the same time as the
changes in Public Law 115-97 relating to deferred foreign income were effective for federal
purposes.
new text end
Minnesota Statutes 2018, section 289A.35, is amended to read:
(a) The commissioner may audit and adjust the taxpayer's computation of new text begin federal adjusted
gross income, new text end federal taxable income, items of federal tax preferences, or federal credit
amounts to make them conform with the provisions of chapter 290 or section 298.01. If a
return has been filed, the commissioner shall enter the liability reported on the return and
may make any audit or investigation that is considered necessary.
(b) Upon petition by a taxpayer, and when the commissioner determines that it is in the
best interest of the state, the commissioner may allow S corporations and partnerships to
receive orders of assessment issued under section 270C.33, subdivision 4, on behalf of their
owners, and to pay liabilities shown on such orders. In such cases, the owners' liability must
be calculated using the method provided in section 289A.08, subdivision 7, paragraph (b).
(c) A taxpayer may petition the commissioner for the use of the method described in
paragraph (b) after the taxpayer is notified that an audit has been initiated and before an
order of assessment has been issued.
(d) A determination of the commissioner under paragraph (b) to grant or deny the petition
of a taxpayer cannot be appealed to the Tax Court or any other court.
(e) The commissioner may audit and adjust the taxpayer's computation of tax under
chapter 291. In the case of a return filed pursuant to section 289A.10, the commissioner
shall notify the estate no later than nine months after the filing date, as provided by section
289A.38, subdivision 2, whether the return is under examination or the return has been
processed as filed.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:
new text begin
The determination of marital status is made
by section 7703 of the Internal Revenue Code.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:
new text begin
The term "surviving spouse" means an individual who is
a surviving spouse under section 2(a) of the Internal Revenue Code for the taxable year.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.01, subdivision 19, is amended to read:
new text begin (a) For a trust or estate taxable under section 290.03, and a
corporation taxable under section 290.02, new text end the term "net income" means the federal taxable
income, as defined in section 63 of the Internal Revenue Code of 1986, as amended through
the date named in this subdivision, incorporating the federal effective dates of changes to
the Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in sections 290.0131 to 290.0136.
new text begin
(b) For an individual, the term "net income" means federal adjusted gross income with
the modifications provided in sections 290.0131, 290.0132, and 290.0135 to 290.0137.
new text end
new text begin (c) new text end In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:
(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;
(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue
Code must be applied by allowing a deduction for capital gain dividends and exempt-interest
dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code;
and
(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.
new text begin (d) new text end The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
new text begin (e) new text end The net income of a designated settlement fund as defined in section 468B(d) of the
Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal
Revenue Code.
new text begin (f) new text end The Internal Revenue Code of 1986, as amended through deleted text begin December 16, 2016deleted text end new text begin
December 31, 2018new text end , shall be in effect for taxable years beginning after December 31, 1996.
new text begin (g) new text end Except as otherwise provided, references to the Internal Revenue Code in this
subdivision and sections 290.0131 to 290.0136 mean the code in effect for purposes of
determining net income for the applicable year.
new text begin
(a) The amendments to paragraphs (a) and (b) are effective for
taxable years beginning after December 31, 2018.
new text end
new text begin
(b) The amendment to paragraph (f) is effective the day following final enactment, except
the changes incorporated by federal changes are effective retroactively at the same time as
the changes became effective for federal purposes, but are subject to the application of
Minnesota Statutes, section 290.993.
new text end
Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:
new text begin
"Deferred foreign income" means the income of
a domestic corporation that is included in net income under section 965 of the Internal
Revenue Code, exclusive of the deduction allowed under section 965(c) of the Internal
Revenue Code.
new text end
new text begin
This section is effective retroactively at the same time as the
changes in Public Law 115-97 relating to deferred foreign income were effective for federal
purposes.
new text end
Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:
new text begin
The terms "adjusted
gross income" and "federal adjusted gross income" mean adjusted gross income, as defined
in section 62 of the Internal Revenue Code, as amended through the date named in
subdivision 19, incorporating the federal effective date of changes to the Internal Revenue
Code and any elections made by the taxpayer under the Internal Revenue Code in determining
federal adjusted gross income for federal income tax purposes.
new text end
new text begin
This section is effective the day following final enactment.
new text end
Minnesota Statutes 2018, section 290.01, subdivision 29a, is amended to read:
"State itemized deleted text begin deductiondeleted text end new text begin deductionsnew text end " means
deleted text begin federal itemized deductions, as defined in section 63(d) of the Internal Revenue Code,
disregarding any limitation under section 68 of the Internal Revenue Code, and reduced by
the amount of the addition required under section 290.0131, subdivision 13deleted text end new text begin the itemized
deductions for individual income tax allowed under section 290.0122, subdivision 1, reduced
by the limit under subdivision 10new text end .
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.01, subdivision 31, is amended to read:
Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin December
16, 2016deleted text end new text begin December 31, 2018new text end . Internal Revenue Code also includes any uncodified provision
in federal law that relates to provisions of the Internal Revenue Code that are incorporated
into Minnesota law.
new text begin
This section is effective the day following final enactment, except
the changes incorporated by the federal changes are effective retroactively at the same time
as the changes became effective for federal purposes, but are subject to the application of
Minnesota Statutes, section 290.993.
new text end
new text begin
(a) A taxpayer's dependent exemption equals:
new text end
new text begin
(1) the exemption amount multiplied by the number of individuals who are dependents,
as defined in section 152 of the Internal Revenue Code, of the taxpayer for the taxable year;
minus
new text end
new text begin
(2) the disallowed exemption amount under subdivision 2, but the remainder may not
be less than zero.
new text end
new text begin
(b) The exemption amount equals $4,250.
new text end
new text begin
(a) The disallowed exemption amount equals
the exemption amount allowed under subdivision 1 multiplied by the applicable percentage.
new text end
new text begin
(b) 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.
new text end
new text begin
(c) "Threshold amount" means:
new text end
new text begin
(1) $291,950 for a joint return or a surviving spouse;
new text end
new text begin
(2) $243,300 for a head of a household;
new text end
new text begin
(3) $194,650 for an individual who is not married and who is not a surviving spouse or
head of a household; and
new text end
new text begin
(4) half the amount for a joint return for a married individual filing a separate return.
new text end
new text begin
For taxable years beginning after December 31, 2019,
the commissioner must adjust for inflation the exemption amount in subdivision 1, paragraph
(a), clause (1), and the threshold amounts in subdivision 2, as provided in section 270C.22.
The statutory year is taxable year 2019. The amounts as adjusted must be rounded down to
the nearest $50 amount. If the amount ends in $25, the amount is rounded down to the
nearest $50 amount. The threshold amount for married individuals filing separate returns
must be one-half of the adjusted amount for married individuals filing joint returns.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
new text begin
A taxpayer's itemized deductions equal the sum
of the amounts allowed as a deduction under this section, reduced by the amount calculated
under subdivision 2.
new text end
new text begin
(a) The itemized deductions of a
taxpayer with adjusted gross income in excess of the applicable amount are reduced by the
lesser of:
new text end
new text begin
(1) three percent of the excess of the taxpayer's federal adjusted gross income over the
applicable amount; or
new text end
new text begin
(2) 80 percent of the amount of the taxpayer's itemized deductions.
new text end
new text begin
(b) "Applicable amount" means $194,650, or $97,325 for a married individual filing a
separate return.
new text end
new text begin
(c) For the purposes of this subdivision, "itemized deductions" means the itemized
deductions otherwise allowable to the taxpayer under subdivision 1, except itemized
deductions excludes:
new text end
new text begin
(1) the portion of the deduction for interest under subdivision 5 that represents investment
interest;
new text end
new text begin
(2) the deduction for medical expenses under subdivision 6; and
new text end
new text begin
(3) the deduction for losses under subdivision 8.
new text end
new text begin
(d) For taxable years beginning after December 31, 2019, the commissioner must adjust
for inflation the applicable amounts under paragraph (b) as provided in section 270C.22.
The statutory year is taxable year 2019. The amounts as adjusted must be rounded down to
the nearest $50 amount. If the amount ends in $25, the amount is rounded down to the
nearest $50 amount. The threshold amount for married individuals filing separate returns
must be one-half of the adjusted amount for married individuals filing joint returns.
new text end
new text begin
(a) A taxpayer is allowed a deduction for taxes paid. The deduction
equals the sum of the following amounts for the taxable year:
new text end
new text begin
(1) state and local personal property taxes, and state, local, and foreign real property
taxes, in a total amount for both types not to exceed $10,000, or $5,000 for a married couple
filing separate returns;
new text end
new text begin
(2) foreign income, war profits, and excess profits taxes to the extent not reduced by the
federal foreign tax credit; and
new text end
new text begin
(3) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit, and to the extent not deducted
under clause (2).
new text end
new text begin
(b) For purposes of this subdivision, the following terms have the meanings given them:
new text end
new text begin
(1) "carryover of subnational foreign taxes" equals the carryover allowed under section
904(c) of the Internal Revenue Code minus national level foreign taxes to the extent they
exceed the federal foreign tax credit;
new text end
new text begin
(2) "federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code; and
new text end
new text begin
(3) "foreign, income, war profits, and excess profits taxes" and "state and local real and
personal property taxes" have the meanings given in section 164 of the Internal Revenue
Code.
new text end
new text begin
(a) A taxpayer is allowed a deduction for charitable
contributions. The deduction equals the amount of the charitable contribution deduction
allowable to the taxpayer under section 170 of the Internal Revenue Code, except that the
provisions of section 170(b)(1)(G) apply regardless of the taxable year.
new text end
new text begin
(b) For taxable years beginning after December 31, 2017, the determination of carryover
amounts must be made by applying the rules under section 170 of the Internal Revenue
Code based on the charitable contribution deductions claimed and allowable under this
section.
new text end
new text begin
A taxpayer is allowed a deduction for interest. The deduction equals
the amount allowed to the taxpayer as interest paid or accrued during the taxable year under
section 163 of the Internal Revenue Code with the following exceptions:
new text end
new text begin
(1) qualified residence interest excludes home equity interest;
new text end
new text begin
(2) acquisition indebtedness must not exceed $750,000, or $375,000 for a married
separate return, for indebtedness incurred on or after December 16, 2017; and
new text end
new text begin
(3) mortgage insurance premiums treated as interest under section 163(h)(3)(E) are not
interest for the purposes of this subdivision.
new text end
new text begin
The definitions of terms under section 163 of the Internal Revenue Code apply for purposes
of this subdivision.
new text end
new text begin
A taxpayer is allowed a deduction for medical expenses.
The deduction equals the amount allowed under section 213 of the Internal Revenue Code,
except that the threshold percentage of adjusted gross income in paragraph (a) is ten percent
regardless of the federal percentage for the taxable year.
new text end
new text begin
A taxpayer is allowed a deduction for
unreimbursed employee expenses. The deduction equals the amount of the taxpayer's trade
or business expenses incurred as an employee and allowed under section 162 of the Internal
Revenue Code in excess of two percent of the taxpayer's adjusted gross income, disregarding
the suspension of the deduction in section 67, paragraph (g), of the Internal Revenue Code.
new text end
new text begin
A taxpayer is allowed a deduction for losses. The deduction equals the
amount allowed under sections 165(d) and 165(h) of the Internal Revenue Code, disregarding
the limitation on personal casualty losses in paragraph (h)(5).
new text end
new text begin
A taxpayer is allowed a miscellaneous deduction.
The deduction equals the sum of the following amounts for the taxable year:
new text end
new text begin
(1) impairment-related work expenses allowed under section 67(d) of the Internal Revenue
Code;
new text end
new text begin
(2) the deduction for estate tax under section 691(c) of the Internal Revenue Code;
new text end
new text begin
(3) any deduction allowable in connection with personal property used in a short sale
as described under section 67(b)(8);
new text end
new text begin
(4) the deduction under section 1341 of the Internal Revenue Code;
new text end
new text begin
(5) the deduction under section 72(b)(3) of the Internal Revenue Code;
new text end
new text begin
(6) the deduction under section 171 of the Internal Revenue Code; and
new text end
new text begin
(7) the deduction under section 216 of the Internal Revenue Code.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
new text begin
A taxpayer's standard deduction equals:
new text end
new text begin
(1) for a married joint filer or a surviving spouse, $24,400;
new text end
new text begin
(2) for a head of household filer, $18,350; or
new text end
new text begin
(3) for any other filer, $12,200; plus
new text end
new text begin
(4) the additional amount for the taxpayer under subdivision 2.
new text end
new text begin
A taxpayer's standard deduction amount is reduced in accordance with subdivision 5.
new text end
new text begin
(a) The additional amount
equals the sum of the following amounts:
new text end
new text begin
(1) $1,300 if the taxpayer has attained age 65 before the close of the taxable year or
$1,650 for such a taxpayer who is not married or a surviving spouse;
new text end
new text begin
(2) $1,300 for the spouse of the taxpayer if the spouse has attained the age of 65 before
the close of the taxable year and qualifies for an exemption under section 151(b) of the
Internal Revenue Code;
new text end
new text begin
(3) $1,300 if the taxpayer is blind at the close of the taxable year or $1,650 for such a
taxpayer who is not married or a surviving spouse; and
new text end
new text begin
(4) $1,300 for the spouse of the taxpayer if the spouse is blind as of the close of the
taxable year and qualifies for an exemption under section 151(b) of the Internal Revenue
Code.
new text end
new text begin
(b) The commissioner must disregard section 151(d)(5) of the Internal Revenue Code
when determining if the taxpayer's spouse is eligible for an exemption under paragraph (a).
new text end
new text begin
For an individual who is a dependent, as defined in
section 152 of the Internal Revenue Code, of another taxpayer for a taxable year beginning
in the calendar year in which the individual's taxable year begins, the standard deduction
for that individual is limited to the greater of:
new text end
new text begin
(1) $500; or
new text end
new text begin
(2) the sum of $250 and that individual's earned income, as defined in section 32(c) of
the Internal Revenue Code.
new text end
new text begin
The standard deduction is zero for (1) a married
individual filing a separate return if either spouse itemizes deductions, and (2) an individual
making a return for a period of less than twelve months on account of changes in the annual
accounting period.
new text end
new text begin
(a) The standard deduction of a taxpayer with adjusted
gross income in excess of the applicable amount is reduced by the lesser of:
new text end
new text begin
(1) three percent of the excess of the taxpayer's federal adjusted gross income over the
applicable amount; or
new text end
new text begin
(2) 80 percent of the standard deduction otherwise allowable under this section.
new text end
new text begin
(b) "Applicable amount" means $194,650, or $97,325 for a married individual filing a
separate return.
new text end
new text begin
For taxable years beginning after December 31, 2019,
the commissioner must adjust for inflation the standard deduction amounts in subdivision
1, the additional amounts in subdivision 2, and the applicable amounts in subdivision 5 as
provided in section 270C.22. The statutory year is taxable year 2019. The amounts as
adjusted must be rounded down to the nearest $50 amount. The standard deduction amount
for married individuals filing separate returns is one-half of the adjusted amount for married
individuals filing joint returns.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0131, subdivision 1, is amended to read:
(a) For the purposes of this section, "addition" means
an amount that must be added to federal taxable income new text begin for a trust or an estate or federal
adjusted gross income for an individual new text end in computing net income for the taxable year to
which the amounts relate.
(b) The additions in this section apply to individuals, estates, and trusts.
(c) Unless specifically indicated or unless the context clearly indicates otherwise, only
amounts that were deducted or excluded in computing federal taxable income new text begin for a trust or
an estate or federal adjusted gross income for individuals new text end are an addition under this section.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0131, subdivision 3, is amended to read:
deleted text begin (a)deleted text end new text begin For trusts
and estates,new text end the amount of income, sales and use, motor vehicle sales, or excise taxes paid
or accrued within the taxable year under this chapter and the amount of taxes based on net
income, sales and use, motor vehicle sales, or excise taxes paid to any other state or to any
province or territory of Canada is an addition to the extent deducted under section 63(d) of
the Internal Revenue Code.
deleted text begin
(b) The addition under paragraph (a) may not be more than the amount by which the
state itemized deduction exceeds the amount of the standard deduction as defined in section
63(c) of the Internal Revenue Code. For the purpose of this subdivision, income, sales and
use, motor vehicle sales, or excise taxes are the last itemized deductions disallowed under
subdivision 12.
deleted text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0131, subdivision 10, is amended to read:
new text begin For property placed in service in taxable years
beginning before January 1, 2018, new text end 80 percent of the amount by which the deduction allowed
under the dollar limits of section 179 of the Internal Revenue Code exceeds the deduction
allowable by section 179 of the Internal Revenue Code, as amended through December 31,
2003, is an addition.
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2017.
new text end
Minnesota Statutes 2018, section 290.0131, is amended by adding a subdivision
to read:
new text begin
The lesser of the following amounts is an addition:
new text end
new text begin
(1) the total distributions for the taxable year from a qualified plan under section 529 of
the Internal Revenue Code, owned by the taxpayer, that are expended for qualified higher
education expenses under section 529(c)(7) of the Internal Revenue Code (expenses for
tuition for elementary or secondary public, private, or religious school); or
new text end
new text begin
(2) the total amount required to be reported to the taxpayer by any trustee of a qualified
tuition plan under section 529 of the Internal Revenue Code as earnings on Internal Revenue
Service Form 1099Q for the taxable year.
new text end
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2017.
new text end
Minnesota Statutes 2018, section 290.0131, is amended by adding a subdivision
to read:
new text begin
For trusts and estates, the amount deducted under
section 199A of the Internal Revenue Code in computing the trust or estate's federal taxable
income is an addition.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0131, is amended by adding a subdivision
to read:
new text begin
(a) For taxable years beginning after December 31,
2025, the amount of a disallowed excess business loss under section 461(l) of the Internal
Revenue Code is an addition, notwithstanding the limit on the limitation in section 461(l)(1)
of the Internal Revenue Code to taxable years beginning before January 1, 2026.
new text end
new text begin
(b) A net operating loss carryover is allowed in an amount equal to the amount allowed
under section 461(l)(2) of the Internal Revenue Code, but only to the extent that the amount
of losses allowed under section 172 of the Internal Revenue Code plus the amount of the
carryover allowed under this subdivision does not exceed the limitation on the net operating
loss deduction under section 172(a) of the Internal Revenue Code for any taxable year.
new text end
new text begin
This section is effective the day following final enactment.
new text end
Minnesota Statutes 2018, section 290.0131, is amended by adding a subdivision
to read:
new text begin
(a) For taxable years beginning after December 31, 2025,
the amount of moving expenses deducted from adjusted gross income under section 217 of
the Internal Revenue Code is an addition.
new text end
new text begin
(b) For taxable years beginning after December 31, 2025, the amount of moving expenses
excluded from gross income under section 132(a)(6) of the Internal Revenue Code is an
addition, except in the case of a member of the Armed Forces of the United States on active
duty who moves pursuant to a military order and incident to a permanent change of station.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2025.
new text end
Minnesota Statutes 2018, section 290.0132, subdivision 1, is amended to read:
(a) For the purposes of this section, "subtraction"
means an amount that shall be subtracted from federal taxable income new text begin for a trust or an estate
or federal adjusted gross income for an individual new text end in computing net income for the taxable
year to which the amounts relate.
(b) The subtractions in this section apply to individuals, estates, and trusts.
(c) Unless specifically indicated or unless the context clearly indicates otherwise, no
amount deducted, subtracted, or otherwise excluded in computing federal taxable income
new text begin for a trust or an estate or federal adjusted gross income for an individual new text end is a subtraction
under this section.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0132, subdivision 7, is amended to read:
deleted text begin To the extent
not deducted or not deductible under section 408(d)(8)(E) of the Internal Revenue Code in
determining federal taxable income bydeleted text end new text begin Fornew text end an individual who does not itemize deductions
deleted text begin for federal income tax purposesdeleted text end new text begin under section 290.0132, subdivision 19,new text end for the taxable
year, an amount equal to 50 percent of the excess of charitable contributions over $500
allowable as a deduction for the taxable year under section deleted text begin 170(a) of the Internal Revenue
Codedeleted text end new text begin 290.0122, subdivision 4,new text end is a subtraction.new text begin The subtraction under this subdivision must
not include a distribution that is excluded from federal adjusted gross income and that is
not deductible under section 408(d)(8)(E) of the Internal Revenue Code.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0132, subdivision 18, is amended to read:
new text begin (a) new text end The amount of the net operating loss allowed under
section 290.095, subdivision 11, paragraph (c), is a subtraction.
new text begin
(b) The amount of the net operating loss carryover allowed under section 290.0131,
subdivision 17, is a subtraction.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2025.
new text end
Minnesota Statutes 2018, section 290.0132, subdivision 19, is amended to read:
new text begin
(a) The standard deduction
amount allowed under section 290.0123, subdivision 1, is a subtraction.
new text end
new text begin (b) A taxpayer may elect to claim a subtraction equal to new text end the amount of deleted text begin the limitation ondeleted text end
itemized deductions new text begin calculated new text end under section deleted text begin 68(b) of the Internal Revenue Code is a
subtractiondeleted text end new text begin 290.0122, subdivision 1, in lieu of the subtraction for the standard deduction in
paragraph (a)new text end .
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0132, subdivision 20, is amended to read:
deleted text begin
The amount of the phaseout of
personal exemptions under section 151(d) of the Internal Revenue Code is a subtraction.
deleted text end
new text begin
The dependent exemption amount under section 290.0121 is a subtraction.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0132, subdivision 21, is amended to read:
To the extent included in federal
deleted text begin taxabledeleted text end new text begin adjusted grossnew text end income, compensation received from a pension or other retirement
pay from the federal government for service in the military, as computed under United
States Code, title 10, sections 1401 to 1414, 1447 to 1455, and 12733, is a subtraction. The
subtraction is limited to individuals who do not claim the credit under section 290.0677.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:
new text begin
For a nonresident individual the
amount of deferred foreign income as defined in section 290.01, subdivision 19, is a
subtraction.
new text end
new text begin
This section is effective retroactively at the same time as the
changes in Public Law 115-97 relating to deferred foreign income were effective for federal
purposes.
new text end
Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:
new text begin
The amount of global intangible
low-taxed income included in gross income under section 951A of the Internal Revenue
Code is a subtraction.
new text end
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2017.
new text end
Minnesota Statutes 2018, section 290.0133, subdivision 6, is amended to read:
new text begin (a) new text end The amount of any special deductions under sections
241 to 247new text begin , 250,new text end and 965new text begin , except paragraph (h) of section 965,new text end of the Internal Revenue Code
is an addition.
new text begin
(b) The addition under this subdivision is reduced by the amount of the deduction under
section 245A of the Internal Revenue Code for an amount included in federal taxable income
in a prior taxable year under section 965 of the Internal Revenue Code.
new text end
new text begin
This section is effective retroactively at the same time as the
changes in Public Law 115-97, relating to deferred foreign income and global intangible
low-taxed income, were effective for federal purposes.
new text end
Minnesota Statutes 2018, section 290.0133, subdivision 12, is amended to read:
new text begin For property placed in service in taxable years
beginning before January 1, 2018, new text end 80 percent of the amount by which the deduction allowed
under the dollar limits of section 179 of the Internal Revenue Code exceeds the deduction
allowable by section 179 of the Internal Revenue Code, as amended through December 31,
2003, is an addition.
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2017.
new text end
Minnesota Statutes 2018, section 290.0134, is amended by adding a subdivision
to read:
new text begin
The amount of global intangible
low-taxed income included in gross income under section 951A of the Internal Revenue
Code is a subtraction.
new text end
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2017.
new text end
Minnesota Statutes 2018, section 290.032, subdivision 2, is amended to read:
The amount of tax imposed by subdivision 1 shall be computed
in the same way as the tax imposed under section 402(d) of the Internal Revenue Code of
1986, as amended through December 31, 1995, except that the initial separate tax shall be
an amount equal to five times the tax which would be imposed by section 290.06, subdivision
2c, if the recipient was an unmarried individual, and the taxable net income was an amount
equal to one-fifth of the excess of
(i) the total taxable amount of the lump-sum distribution for the year, over
(ii) the minimum distribution allowance, and except that references in section 402(d) of
the Internal Revenue Code of 1986, as amended through December 31, 1995, to paragraph
(1)(A) thereof shall instead be references to subdivision 1, and the excess, if any, of the
subtraction base amount over deleted text begin federaldeleted text end taxablenew text begin netnew text end income for a qualified individual as provided
under section 290.0802, subdivision 2.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.05, subdivision 3, is amended to read:
(a) An organization exempt from taxation
under subdivision 2 shall, nevertheless, be subject to tax under this chapter to the extent
provided in the following provisions of the Internal Revenue Code:
(1) section 527 (dealing with political organizations);
(2) section 528 (dealing with certain homeowners associations);
(3) sections 511 to 515 (dealing with unrelated business income);
(4) section 521 (dealing with farmers' cooperatives); and
(5) section 6033(e)(2) (dealing with lobbying expense); but notwithstanding this
subdivision, shall be considered an organization exempt from income tax for the purposes
of any law which refers to organizations exempt from income taxes.
(b) The tax shall be imposed on the taxable income of political organizations or
homeowner associations or the unrelated business taxable income, as defined in section 512
of the Internal Revenue Code, of organizations defined in section 511 of the Internal Revenue
Code, provided that the tax is not imposed on:
(1) advertising revenues from a newspaper published by an organization described in
section 501(c)(4) of the Internal Revenue Code; deleted text begin or
deleted text end
(2) revenues from lawful gambling authorized under chapter 349 that are expended for
purposes that qualify for the deduction for charitable contributions under section 170 of the
Internal Revenue Code, disregarding the limitation under section 170(b)(2), but only to the
extent the contributions are not deductible in computing federal taxable incomenew text begin ; or
new text end
new text begin (3) amounts included in unrelated business taxable income under section 512(a)(7) of
the Internal Revenue Codenew text end .
The tax shall be at the corporate rates. The tax shall only be imposed on income and
deductions assignable to this state under sections 290.17 to 290.20. To the extent deducted
in computing federal taxable income, the deductions contained in section 290.21 shall not
be allowed in computing Minnesota taxable net income.
(c) The tax shall be imposed on organizations subject to federal tax under section
6033(e)(2) of the Internal Revenue Code, in an amount equal to the corporate tax rate
multiplied by the amount of lobbying expenses taxed under section 6033(e)(2) which are
attributable to lobbying the Minnesota state government.
new text begin
(d) In calculating unrelated business taxable income under section 512 of the Internal
Revenue Code, the amount of any net operating loss deduction claimed under section 172
of the Internal Revenue Code is an addition. Taxpayers making an addition under this
paragraph may deduct a net operating loss for the taxable year in the same manner as a
corporation under section 290.095, in a form and manner prescribed by the commissioner,
and may calculate the loss without the application of the limitation provided for under
section 512(a)(6) of the Internal Revenue Code.
new text end
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2017.
new text end
Minnesota Statutes 2018, section 290.06, subdivision 2d, is amended to read:
deleted text begin (a) For taxable years beginning after
December 31, 2013,deleted text end new text begin The commissioner shall annually adjustnew 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, 2014deleted text end new text begin as provided in section 270C.22. The statutory
year is taxable year 2019new 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.
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 14deleted 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
This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end
Minnesota Statutes 2018, section 290.06, subdivision 2h, is amended to read:
(a) For the purposes of this subdivision:
(1) the definitions under section 290.0684 apply;
(2) "account owner" means an individual who owns one or more qualified accounts;
(3) "credit ratio" means the ratio of (i) two times the total amount of credits that an
account owner claimed under section 290.0684 for contributions to the account owner's
qualified accounts to (ii) the total contributions in all taxable years to the account owner's
qualified accounts; deleted text begin and
deleted text end
(4)new text begin "qualified higher education expenses" has the meaning given in section 529(e)(3) of
the Internal Revenue Code, except section 529(c)(7) does not apply; and
new text end
new text begin (5)new text end "subtraction ratio" means the ratio of (i) the total amount of subtractions that an
account owner claimed under section 290.0132, subdivision 23, for contributions to the
account owner's qualified accounts to (ii) the total contributions in all taxable years to the
account owner's qualified accounts.
(b) If a distribution from a qualified account is used for a purpose other than to pay for
qualified higher education expenses, the account owner must pay an additional tax equal
to:
(1) 50 percent of the product of the credit ratio and the amount of the distribution; plus
(2) ten percent of the product of the subtraction ratio and the amount of the distribution.
(c) The additional tax under this subdivision does not apply to any portion of a distribution
that is subject to the additional tax under section 529(c)(6) of the Internal Revenue Code.
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2017.
new text end
Minnesota Statutes 2018, section 290.067, subdivision 2b, is amended to read:
The commissioner shallnew text begin annuallynew 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 amountdeleted text end new text begin as provided in section 270C.22. The statutory year
is taxable year 2019new text end .
new text begin
This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end
Minnesota Statutes 2018, section 290.0671, subdivision 7, is amended to read:
Thenew text begin commissioner shall annually adjust thenew text end earned
income amounts used to calculate the credit and the deleted text begin incomedeleted text end new text begin phase-outnew text end thresholds deleted text begin at which
the maximum credit begins to be reduceddeleted 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 Actdeleted text end new text begin as provided in section 270C.22. The statutory year is taxable
year 2019new text end .
new text begin
This section is effective for adjustments for taxable years
beginning after December 31, 2019.
new text end
Minnesota Statutes 2018, section 290.0672, subdivision 1, is amended to read:
(a) For purposes of this section, the following terms have
the meanings given.
(b) "Long-term care insurance" means a policy that:
(1) qualifies for a deduction under section 213 of the Internal Revenue Code, disregarding
the adjusted gross income test; or meets the requirements given in section 62A.46; or provides
similar coverage issued under the laws of another jurisdiction; and
(2) has a lifetime long-term care benefit limit of not less than $100,000; and
(3) has been offered in compliance with the inflation protection requirements of section
62S.23.
(c) "Qualified beneficiary" means the taxpayer or the taxpayer's spouse.
(d) "Premiums deducted in determining deleted text begin federal taxabledeleted text end new text begin netnew text end income" means the lesser of
(1) long-term care insurance premiums that qualify as deductions under section 213 of the
Internal Revenue Code; and (2) the total amount deductible for medical care under deleted text begin section
213 of the Internal Revenue Codedeleted text end new text begin section 290.0122, subdivision 6, if the taxpayer itemizes
deductions for the tax yearnew text end .
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0672, subdivision 2, is amended to read:
A taxpayer is allowed a credit against the tax imposed by this chapter
for long-term care insurance policy premiums paid during the tax year. The credit for each
policy equals 25 percent of premiums paid to the extent not deducted in determining deleted text begin federal
taxabledeleted text end new text begin netnew text end income. A taxpayer may claim a credit for only one policy for each qualified
beneficiary. A maximum of $100 applies to each qualified beneficiary. The maximum total
credit allowed per year is $200 for married couples filing joint returns and $100 for all other
filers. For a nonresident or part-year resident, the credit determined under this section must
be allocated based on the percentage calculated under section 290.06, subdivision 2c,
paragraph (e).
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0675, subdivision 1, is amended to read:
(a) For purposes of this section the following terms have
the meanings given.
(b) "Earned income" means the sum of the following, to the extent included in Minnesota
taxable income:
(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
(2) income received from a retirement pension, profit-sharing, stock bonus, or annuity
plan; and
(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue Code.
(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
(d) "Earned income of lesser-earning spouse" means the earned income of the spouse
with the lesser amount of earned income as defined in paragraph (b) for the taxable year
minus the sum of (i) the amount for one exemption under section deleted text begin 151(d) of the Internal
Revenue Codedeleted text end new text begin 290.0121, subdivision 1, paragraph (b), new text end and (ii) one-half the amount of the
standard deduction under section deleted text begin 63(c)(2)(A) and (4) of the Internal Revenue Codedeleted text end new text begin 290.0123new text end .
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0681, subdivision 1, is amended to read:
(a) For purposes of this section, the following terms have
the meanings given.
(b) "Account" means the historic credit administration account in the special revenue
fund.
(c) "Office" means the State Historic Preservation Office of the Department of
Administration.
(d) "Project" means rehabilitation of a certified historic structure, as defined in section
47(c)(3)(A) of the Internal Revenue Code, that is located in Minnesota and is allowed a
federal credit.
(e) "Federal credit" means the credit allowed under section 47(a)(2) of the Internal
Revenue Codenew text begin , except that the amount allowed is deemed to be allocated in the taxable year
that the project is placed in servicenew text end .
(f) "Placed in service" has the meaning used in section 47 of the Internal Revenue Code.
(g) "Qualified rehabilitation expenditures" has the meaning given in section 47 of the
Internal Revenue Code.
new text begin
This section is effective for applications for allocation certificates
submitted after December 31, 2018.
new text end
Minnesota Statutes 2018, section 290.0681, subdivision 2, is amended to read:
(a) A credit is allowed
against the tax imposed under this chapter equal to not more than 100 percent of the credit
allowed under section deleted text begin 47(a)(2)deleted text end new text begin 47(a) new text end of the Internal Revenue Code for a project. new text begin The credit
is payable in full in the taxable year the project is placed in service. new text end To qualify for the credit:
(1) the project must receive Part 3 certification and be placed in service during the taxable
year; and
(2) the taxpayer must be allowed the federal credit and be issued a credit certificate for
the taxable year as provided in subdivision 4.
(b) The commissioner of administration may pay a grant in lieu of the credit. The grant
equals 90 percent of the credit that would be allowed for the project.new text begin The grant is payable
in full in the taxable year the project is placed in service.
new text end
(c) In lieu of the credit under paragraph (a), an insurance company may claim a credit
against the insurance premiums tax imposed under chapter 297I.
new text begin
This section is effective for applications for allocation certificates
submitted after December 31, 2018.
new text end
Minnesota Statutes 2018, section 290.0684, subdivision 1, is amended to read:
(a) For purposes of this section, the following terms have
the meanings given them.
(b) "Contribution" means the amount contributed to one or more qualified accounts
except that the amount:
(1) is reduced by any withdrawals or distributions, other than transfers or rollovers to
another qualified account, from a qualified account during the taxable year; and
(2) excludes the amount of any transfers or rollovers from a qualified account made
during the taxable year.
(c) "Federal adjusted gross income" has the meaning given under section 62(a) of the
Internal Revenue Code.
(d) "Qualified account" means an account qualifying under section 529 of the Internal
Revenue Code.
deleted text begin
(e) "Qualified higher education expenses" has the meaning given in section 529 of the
Internal Revenue Code.
deleted text end
new text begin
This section is effective the day following final enactment.
new text end
Minnesota Statutes 2018, section 290.0684, subdivision 2, is amended to read:
(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) Thenew text begin commissioner shall annually adjust thenew 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 14.386deleted text end new text begin as provided in section 270C.22. The statutory year is taxable year
2019new text end .
new text begin
This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end
Minnesota Statutes 2018, section 290.0802, subdivision 2, is amended to read:
(a) A qualified individual is allowed a subtraction from federal
deleted text begin taxabledeleted text end new text begin adjusted grossnew text end income of the individual's subtraction base amount. The excess of
the subtraction base amount over the taxable net income computed without regard to the
subtraction for the elderly or disabled under section 290.0132, subdivision 5, may be used
to reduce the amount of a lump sum distribution subject to tax under section 290.032.
(b)(1) The initial subtraction base amount equals
(i) $12,000 for a married taxpayer filing a joint return if a spouse is a qualified individual,
(ii) $9,600 for a single taxpayer, and
(iii) $6,000 for a married taxpayer filing a separate federal return.
(2) The qualified individual's initial subtraction base amount, then, must be reduced by
the sum of nontaxable retirement and disability benefits and one-half of the amount of
adjusted gross income in excess of the following thresholds:
(i) $18,000 for a married taxpayer filing a joint return if both spouses are qualified
individuals,
(ii) $14,500 for a single taxpayer or for a married couple filing a joint return if only one
spouse is a qualified individual, and
(iii) $9,000 for a married taxpayer filing a separate federal return.
(3) In the case of a qualified individual who is under the age of 65, the maximum amount
of the subtraction base may not exceed the taxpayer's disability income.
(4) The resulting amount is the subtraction base amount.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.091, subdivision 2, is amended to read:
For purposes of the tax imposed by this section, the following
terms have the meanings given.
(a) "Alternative minimum taxable income" means the sum of the following for the taxable
year:
(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;
(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
taxable income, but excluding:
(i) the charitable contribution deduction under section 170 of the Internal Revenue Code;
(ii) the medical expense deduction;
(iii) the casualty, theft, and disaster loss deduction; and
(iv) the impairment-related work expenses of a disabled person;
(3) for depletion allowances computed under section 613A(c) of the Internal Revenue
Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
to the extent not included in federal alternative minimum taxable income, the excess of the
deduction for depletion allowable under section 611 of the Internal Revenue Code for the
taxable year over the adjusted basis of the property at the end of the taxable year (determined
without regard to the depletion deduction for the taxable year);
(4) to the extent not included in federal alternative minimum taxable income, the amount
of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
Code determined without regard to subparagraph (E);
(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2; deleted text begin and
deleted text end
(6) the amount of addition required by section 290.0131, subdivisions 9 deleted text begin to 11;deleted text end new text begin , 10, and
16; and
new text end
new text begin
(7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
not included in the addition required under clause (6);
new text end
less the sum of the amounts determined under the following:
(i) interest income as defined in section 290.0132, subdivision 2;
(ii) an overpayment of state income tax as provided by section 290.0132, subdivision
3, to the extent included in federal alternative minimum taxable income;
(iii) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as defined
in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
in computing federal adjusted gross income;
(iv) amounts subtracted from federal taxable income as provided by section 290.0132,
subdivisions 7, 9 to 15, 17, 21, 24, and 26new text begin to 29new text end ; deleted text begin and
deleted text end
(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c)new text begin ; and
new text end
new text begin (vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
subdivision 7new text end .
In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Codenew text begin , except alternative minimum
taxable income must be increased by the addition in section 290.0131, subdivision 16new text end .
(b) "Investment interest" means investment interest as defined in section 163(d)(3) of
the Internal Revenue Code.
(c) "Net minimum tax" means the minimum tax imposed by this section.
(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
under this chapter.
(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.091, subdivision 3, is amended to read:
(a) For purposes of computing the alternative minimum
tax, the exemption amount isdeleted 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 deleted text begin 55(d)(3)deleted text end new text begin 55(d)(2)new text end 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 outnew text begin , and section 55(d)(4) of the Internal Revenue Code does not
applynew text end .
(c) deleted text begin For taxable years beginning after December 31, 2006,deleted text end new text begin The commissioner shall
annually adjustnew text end the deleted text begin exemption amount underdeleted text end new text begin amounts innew 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 Actdeleted text end new text begin as provided in section 270C.22. The statutory year is taxable
year 2019new text end .
new text begin
(a) The amendment to paragraph (b) is effective the day following
final enactment.
new text end
new text begin
(b) The amendment to paragraph (c) is effective for taxable years beginning after
December 31, 2019.
new text end
Minnesota Statutes 2018, section 290.0921, subdivision 2, is amended to read:
(a) For purposes of this section, the following terms have the
meanings given them.
(b) "Alternative minimum taxable net income" is alternative minimum taxable income,
(1) less the exemption amount, and
(2) apportioned or allocated to Minnesota under section 290.17, 290.191, or 290.20.
(c) The "exemption amount" is $40,000, reduced, but not below zero, by 25 percent of
the excess of alternative minimum taxable income over $150,000.
(d) "Minnesota alternative minimum taxable income" is alternative minimum taxable
net income, less the deductions for alternative tax net operating loss under subdivision 4;
and dividends received under subdivision 6. The sum of the deductions under this paragraph
may not exceed 90 percent of alternative minimum taxable net income. This limitation does
not apply to:
(1) a deduction for dividends paid to or received from a corporation which is subject to
tax under section 290.36 and which is a member of an affiliated group of corporations as
defined by the Internal Revenue Code; or
(2) a deduction for dividends received from a property and casualty insurer as defined
under section 60A.60, subdivision 8, which is a member of an affiliated group of corporations
as defined by the Internal Revenue Code and either: (i) the dividend is eliminated in
consolidation under Treasury Regulation 1.1502-14(a), as amended through December 31,
1989; or (ii) the dividend is deducted under an election under section 243(b) of the Internal
Revenue Code.
new text begin
(e) "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
through December 16, 2016.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0922, subdivision 1, is amended to read:
(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 14deleted text end new text begin as provided in section 270C.22. The statutory year is taxable year 2019new 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
This section is effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end
Minnesota Statutes 2018, section 290.095, subdivision 2, is amended to read:
(a) The term "net operating loss" as used in this section
shall mean a net operating loss as defined in section 172(c) of the Internal Revenue Code,
with the modifications specified in subdivision 4. The deductions provided in section 290.21
cannot be used in the determination of a net operating loss.
(b) The term "net operating loss deduction" as used in this section means the aggregate
of the net operating loss carryovers to the taxable year, computed in accordance with
subdivision 3. The provisions of section 172(b) of the Internal Revenue Code relating to
the carryback of net operating losses, do not apply.
new text begin
(c) The amount of net operating loss deduction under this section must not exceed 80
percent of taxable net income in a single taxable year.
new text end
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2017.
new text end
Minnesota Statutes 2018, section 290.17, subdivision 2, is amended to read:
The income of a
taxpayer subject to the allocation rules that is not derived from the conduct of a trade or
business must be assigned in accordance with paragraphs (a) to (f):
(a)(1) Subject to paragraphs (a)(2) and (a)(3), income from wages as defined in section
3401(a) deleted text begin anddeleted text end new text begin ,new text end (f)new text begin , and (i)new text end of the Internal Revenue Code is assigned to this state if, and to the
extent that, the work of the employee is performed within it; all other income from such
sources is treated as income from sources without this state.
Severance pay shall be considered income from labor or personal or professional services.
(2) In the case of an individual who is a nonresident of Minnesota and who is an athlete
or entertainer, income from compensation for labor or personal services performed within
this state shall be determined in the following manner:
(i) the amount of income to be assigned to Minnesota for an individual who is a
nonresident salaried athletic team employee shall be determined by using a fraction in which
the denominator contains the total number of days in which the individual is under a duty
to perform for the employer, and the numerator is the total number of those days spent in
Minnesota. For purposes of this paragraph, off-season training activities, unless conducted
at the team's facilities as part of a team imposed program, are not included in the total number
of duty days. Bonuses earned as a result of play during the regular season or for participation
in championship, play-off, or all-star games must be allocated under the formula. Signing
bonuses are not subject to allocation under the formula if they are not conditional on playing
any games for the team, are payable separately from any other compensation, and are
nonrefundable; and
(ii) the amount of income to be assigned to Minnesota for an individual who is a
nonresident, and who is an athlete or entertainer not listed in item (i), for that person's athletic
or entertainment performance in Minnesota shall be determined by assigning to this state
all income from performances or athletic contests in this state.
(3) For purposes of this section, amounts received by a nonresident as "retirement income"
as defined in section (b)(1) of the State Income Taxation of Pension Income Act, Public
Law 104-95, are not considered income derived from carrying on a trade or business or
from wages or other compensation for work an employee performed in Minnesota, and are
not taxable under this chapter.
(b) Income or gains from tangible property located in this state that is not employed in
the business of the recipient of the income or gains must be assigned to this state.
(c) Income or gains from intangible personal property not employed in the business of
the recipient of the income or gains must be assigned to this state if the recipient of the
income or gains is a resident of this state or is a resident trust or estate.
Gain on the sale of a partnership interest is allocable to this state in the ratio of the
original cost of partnership tangible property in this state to the original cost of partnership
tangible property everywhere, determined at the time of the sale. If more than 50 percent
of the value of the partnership's assets consists of intangibles, gain or loss from the sale of
the partnership interest is allocated to this state in accordance with the sales factor of the
partnership for its first full tax period immediately preceding the tax period of the partnership
during which the partnership interest was sold.
Gain on the sale of an interest in a single member limited liability company that is
disregarded for federal income tax purposes is allocable to this state as if the single member
limited liability company did not exist and the assets of the limited liability company are
personally owned by the sole member.
Gain on the sale of goodwill or income from a covenant not to compete that is connected
with a business operating all or partially in Minnesota is allocated to this state to the extent
that the income from the business in the year preceding the year of sale was allocable to
Minnesota under subdivision 3.
When an employer pays an employee for a covenant not to compete, the income allocated
to this state is in the ratio of the employee's service in Minnesota in the calendar year
preceding leaving the employment of the employer over the total services performed by the
employee for the employer in that year.
(d) Income from winnings on a bet made by an individual while in Minnesota is assigned
to this state. In this paragraph, "bet" has the meaning given in section 609.75, subdivision
2, as limited by section 609.75, subdivision 3, clauses (1), (2), and (3).
(e) All items of gross income not covered in paragraphs (a) to (d) and not part of the
taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.
(f) For the purposes of this section, working as an employee shall not be considered to
be conducting a trade or business.
new text begin
This section is effective for wages paid after December 31, 2018.
new text end
Minnesota Statutes 2018, section 290.17, is amended by adding a subdivision to
read:
new text begin
(a) For purposes of applying subdivision
4, a controlled foreign corporation as defined in section 957 of the Internal Revenue Code
is deemed to be a domestic corporation if:
new text end
new text begin
(1) a United States shareholder of a controlled foreign corporation is required for the
taxable year to include in gross income the shareholder's global intangible low-taxed income
under section 951A of the Internal Revenue Code; and
new text end
new text begin
(2) the commissioner determines that the controlled foreign corporation is a member of
a unitary group.
new text end
new text begin
The determination made by the commissioner under clause (2) is prima facie correct
and valid and the taxpayer subject to this determination has the burden of establishing the
determination's incorrectness or invalidity in any related action or proceeding.
new text end
new text begin
(b) For purposes of imposing a tax under this chapter, the federal taxable income of a
controlled foreign corporation deemed to be a domestic corporation under this subdivision
must be computed as follows:
new text end
new text begin
(1) a profit and loss statement must be prepared in the currency in which the books of
account of the controlled foreign corporation are regularly maintained;
new text end
new text begin
(2) except as determined by the commissioner, adjustments must be made to the profit
and loss statement to conform the statement to the accounting principles generally accepted
in the United States for the preparation of those statements;
new text end
new text begin
(3) adjustments must be made to the profit and loss statement to conform it to the tax
accounting standards required by the commissioner;
new text end
new text begin
(4) unless otherwise authorized by the commissioner, the profit and loss statement of
each member of the combined group, and the apportionment factors related to the combined
group, whether domestic or foreign, must be converted into the currency in which the parent
company maintains its books and records; and
new text end
new text begin
(5) income apportioned to this state must be expressed in United States dollars.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.17, is amended by adding a subdivision to
read:
new text begin
(a) Taxpayer members of a unitary group, one or more
members of which are subject to the requirements of subdivision 4a, paragraph (a), for the
taxable year may elect to determine each of their apportioned shares of the net business
income or loss of the combined group under a worldwide election. Under such an election,
taxpayer members must take into account the entire income and apportionment factors of
each member of the unitary group, regardless of the place where a member is incorporated
or formed. Corporations or other entities incorporated or formed outside of the United States
are subject to the requirements of subdivision 4a, paragraph (b), in reporting their income.
new text end
new text begin
(b) A worldwide election is effective only if made on a timely filed, original return for
the tax year by each member of the unitary group subject to tax under this chapter.
new text end
new text begin
(c) A worldwide election is binding for and applies to the taxable year it is made and
for the ten following taxable years.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.17, is amended by adding a subdivision to
read:
new text begin
(a) The election under subdivision 4b, paragraph
(a), may be withdrawn:
new text end
new text begin
(1) after expiration of the ten-year period in subdivision 4b, paragraph (c), provided that
the withdrawal is made in writing within one year of the expiration of the election; or
new text end
new text begin
(2) prior to the expiration of the ten-year period, if the taxpayer members:
new text end
new text begin
(i) file a written withdrawal request with the commissioner of revenue;
new text end
new text begin
(ii) would experience an extraordinary hardship due to unforeseen changes in this state's
tax statutes, laws, or policies; and
new text end
new text begin
(iii) receive written permission from the commissioner approving the withdrawal, which
the commissioner may grant.
new text end
new text begin
(b) A withdrawal made under paragraph (a) is binding for ten years. If no withdrawal
is properly made under paragraph (a), clause (1), the worldwide election is binding for an
additional ten taxable years. If the commissioner grants written permission to withdraw
under paragraph (a), clause (2), the commissioner must impose any requirement deemed
necessary to prevent evasion of tax or to clearly reflect income for the election period before
or after withdrawal.
new text end
new text begin
(c) Notwithstanding the requirement binding withdrawal for ten years under paragraph
(b), the election may be reinstituted if the taxpayer members:
new text end
new text begin
(1) file a written reinstitution request with the commissioner of revenue;
new text end
new text begin
(2) would experience an extraordinary hardship due to unforeseen changes in this state's
tax statutes, laws, or policies; and
new text end
new text begin
(3) receive written permission from the commissioner approving the reinstitution, which
the commissioner may grant.
new text end
new text begin
(d) A reinstitution under paragraph (c) is binding for a period of ten years. The withdrawal
provisions of paragraph (a) apply to a reinstitution under paragraph (c), and the provisions
of paragraph (c) apply to a reinstitution following a subsequent withdrawal.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.21, is amended by adding a subdivision to
read:
new text begin
The net income of a domestic corporation
that is included pursuant to sections 951 and 965 of the Internal Revenue Code is dividend
income.
new text end
new text begin
This section is effective retroactively at the same time as the
changes in Public Law 115-97 relating to deferred foreign income were effective for federal
purposes.
new text end
Minnesota Statutes 2018, section 290.34, is amended by adding a subdivision to
read:
new text begin
To be consistent with the
federal treatment of the interest expense limitation under section 163(j) of the Internal
Revenue Code for an affiliated group that includes an insurance company taxable under
chapter 297I and exempt from taxation under section 290.05, subdivision 1, clause (c), the
rules under this subdivision apply. In that case, the interest expense limitation under section
163(j) of the Internal Revenue Code must be computed for the corporation subject to tax
under this chapter using the adjusted taxable income of the insurance companies that are
part of the affiliated group and taxed under chapter 297I. For purposes of this subdivision,
"affiliated group" means the corporations included in the federal consolidated return for the
taxable year.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2017.
new text end
Minnesota Statutes 2018, section 290.34, is amended by adding a subdivision to
read:
new text begin
Section 163(j) of the Internal Revenue Code shall be applied to affiliated
corporations permitted or required to file a combined report under section 290.17, subdivision
4, consistent with the application of section 163(j) to a consolidated group of corporations
for federal income tax purposes.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2017.
new text end
Minnesota Statutes 2018, section 290.92, subdivision 1, is amended to read:
(1) Wages. For purposes of this section, the term "wages"
means the same as that term is defined in section 3401(a) deleted text begin anddeleted text end new text begin ,new text end (f)new text begin , and (i)new text end of the Internal
Revenue Code.
(2) Payroll period. For purposes of this section the term "payroll period" means a period
for which a payment of wages is ordinarily made to the employee by the employee's
employer, and the term "miscellaneous payroll period" means a payroll period other than a
daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual payroll
period.
(3) Employee. For purposes of this section the term "employee" means any resident
individual performing services for an employer, either within or without, or both within and
without the state of Minnesota, and every nonresident individual performing services within
the state of Minnesota, the performance of which services constitute, establish, and determine
the relationship between the parties as that of employer and employee. As used in the
preceding sentence, the term "employee" includes an officer of a corporation, and an officer,
employee, or elected official of the United States, a state, or any political subdivision thereof,
or the District of Columbia, or any agency or instrumentality of any one or more of the
foregoing.
(4) Employer. For purposes of this section the term "employer" means any person,
including individuals, fiduciaries, estates, trusts, partnerships, limited liability companies,
and corporations transacting business in or deriving any income from sources within the
state of Minnesota for whom an individual performs or performed any service, of whatever
nature, as the employee of such person, except that if the person for whom the individual
performs or performed the services does not have control of the payment of the wages for
such services, the term "employer," except for purposes of paragraph (1), means the person
having control of the payment of such wages. As used in the preceding sentence, the term
"employer" includes any corporation, individual, estate, trust, or organization which is
exempt from taxation under section 290.05 and further includes, but is not limited to, officers
of corporations who have control, either individually or jointly with another or others, of
the payment of the wages.
(5) Number of withholding exemptions claimed. For purposes of this section, the term
"number of withholding exemptions claimed" means the number of withholding exemptions
claimed in a withholding exemption certificate in effect under subdivision 5, except that if
no such certificate is in effect, the number of withholding exemptions claimed shall be
considered to be zero.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.92, subdivision 5, is amended to read:
(1) Entitlement. An employee receiving wages shall on any day
be entitled to claim withholding exemptions in a number not to exceed the number of
withholding exemptions that the employee claims and that are allowable pursuant to section
3402(f)(1), (m), and (n) of the Internal Revenue Code for federal withholding purposesnew text begin ,
except:
new text end
new text begin
(i) the standard deduction amount for the purposes of section 3402(f)(1)(E) of the Internal
Revenue Code shall be the amount calculated under section 290.0123, subdivision 1; and
new text end
new text begin (ii) the exemption amount for the purposes of section 3402(f)(1)(A) of the Internal
Revenue Code shall be the amount calculated under section 290.0121, subdivision 1new text end .
(2) Withholding exemption certificate. The provisions concerning exemption certificates
contained in section 3402(f)(2) and (3) of the Internal Revenue Code shall apply.
(3) Form of certificate. Withholding exemption certificates shall be in such form and
contain such information as the commissioner may by rule prescribe.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
new text begin
(a) For an individual income taxpayer subject to tax under section 290.06, subdivision
2c, or a partnership that elects to file a composite return under section 289A.08, subdivision
7, for taxable years beginning after December 31, 2017, and before January 1, 2019, the
following special rules apply:
new text end
new text begin
(1) an individual income taxpayer may: (i) take the standard deduction; or (ii) make an
election under section 63(e) of the Internal Revenue Code to itemize, for Minnesota individual
income tax purposes, regardless of the choice made on their federal return; and
new text end
new text begin
(2) there is an adjustment to tax equal to the difference between the tax calculated under
this chapter using the Internal Revenue Code as amended through December 16, 2016, and
the tax calculated under this chapter using the Internal Revenue Code amended through
December 31, 2018, before the application of credits. The end result must be zero additional
tax due or refund.
new text end
new text begin
(b) The adjustment in paragraph (a), clause (2), does not apply to any changes due to
sections 11012, 13101, 13201, 13202, 13203, 13204, 13205, 13207, 13301, 13302, 13303,
13313, 13502, 13503, 13801, 14101, 14102, 14103, 14202, 14211 through 14215, and
14501 of Public Law 115-97; and section 40411 of Public Law 115-123.
new text end
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2017, and before January 1, 2019.
new text end
Minnesota Statutes 2018, section 290A.03, subdivision 3, is amended to read:
(a) "Income" means the sum of the following:
(1) federal adjusted gross income as defined in the Internal Revenue Code; and
(2) the sum of the following amounts to the extent not included in clause (1):
(i) all nontaxable income;
(ii) the amount of a passive activity loss that is not disallowed as a result of section 469,
paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss
carryover allowed under section 469(b) of the Internal Revenue Code;
(iii) an amount equal to the total of any discharge of qualified farm indebtedness of a
solvent individual excluded from gross income under section 108(g) of the Internal Revenue
Code;
(iv) cash public assistance and relief;
(v) any pension or annuity (including railroad retirement benefits, all payments received
under the federal Social Security Act, Supplemental Security Income, and veterans benefits),
which was not exclusively funded by the claimant or spouse, or which was funded exclusively
by the claimant or spouse and which funding payments were excluded from federal adjusted
gross income in the years when the payments were made;
(vi) interest received from the federal or a state government or any instrumentality or
political subdivision thereof;
(vii) workers' compensation;
(viii) nontaxable strike benefits;
(ix) the gross amounts of payments received in the nature of disability income or sick
pay as a result of accident, sickness, or other disability, whether funded through insurance
or otherwise;
(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
1986, as amended through December 31, 1995;
(xi) contributions made by the claimant to an individual retirement account, including
a qualified voluntary employee contribution; simplified employee pension plan;
self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of
the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal
Revenue Code, to the extent the sum of amounts exceeds the retirement base amount for
the claimant and spouse;
(xii) to the extent not included in federal adjusted gross income, distributions received
by the claimant or spouse from a traditional or Roth style retirement account or plan;
(xiii) nontaxable scholarship or fellowship grants;
(xiv) deleted text begin the amount of deduction allowed under section 199 of the Internal Revenue Codedeleted text end new text begin
alimony received to the extent not included in the recipient's incomenew text end ;
(xv) the amount of deduction allowed under section 220 or 223 of the Internal Revenue
Code;
(xvi) the amount deducted for tuition expenses under section 222 of the Internal Revenue
Code; and
(xvii) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code.
In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" shall mean federal adjusted gross income reflected in
the fiscal year ending in the calendar year. Federal adjusted gross income shall not be reduced
by the amount of a net operating loss carryback or carryforward or a capital loss carryback
or carryforward allowed for the year.
(b) "Income" does not include:
(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
(2) amounts of any pension or annuity which was exclusively funded by the claimant
or spouse and which funding payments were not excluded from federal adjusted gross
income in the years when the payments were made;
(3) to the extent included in federal adjusted gross income, amounts contributed by the
claimant or spouse to a traditional or Roth style retirement account or plan, but not to exceed
the retirement base amount reduced by the amount of contributions excluded from federal
adjusted gross income, but not less than zero;
(4) surplus food or other relief in kind supplied by a governmental agency;
(5) relief granted under this chapter;
(6) child support payments received under a temporary or final decree of dissolution or
legal separation; deleted text begin or
deleted text end
(7) restitution payments received by eligible individuals and excludable interest as
defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 2001,
Public Law 107-16deleted text begin .deleted text end new text begin ; or
new text end
new text begin
(8) alimony paid.
new text end
(c) The sum of the following amounts may be subtracted from income:
(1) for the claimant's first dependent, the exemption amount multiplied by 1.4;
(2) for the claimant's second dependent, the exemption amount multiplied by 1.3;
(3) for the claimant's third dependent, the exemption amount multiplied by 1.2;
(4) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;
(5) for the claimant's fifth dependent, the exemption amount; and
(6) if the claimant or claimant's spouse was disabled or attained the age of 65 on or
before December 31 of the year for which the taxes were levied or rent paid, the exemption
amount.
(d) For purposes of this subdivision, thenew text begin following terms have the meanings given:
new text end
new text begin (1) new text end "exemption amount" means the exemption amount under section deleted text begin 151(d) of the Internal
Revenue Codedeleted text end new text begin 290.0121, subdivision 1, paragraph (b),new text end for the taxable year for which the
income is reported;
new text begin (2)new text end "retirement base amount" means the deductible amount for the taxable year for the
claimant and spouse under section 219(b)(5)(A) of the Internal Revenue Code, adjusted for
inflation as provided in section 219(b)(5)(C) of the Internal Revenue Code, without regard
to whether the claimant or spouse claimed a deduction; and
new text begin (3)new text end "traditional or Roth style retirement account or plan" means retirement plans under
sections 401, 403, 408, 408A, and 457 of the Internal Revenue Code.
new text begin
This section is effective beginning with refunds based on property
taxes payable in 2020 and rent paid in 2019.
new text end
Minnesota Statutes 2018, section 290A.03, subdivision 12, is amended to read:
(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 inflationdeleted text end the
deleted text begin gross rentdeleted text end amounts deleted text begin stateddeleted text end in this paragraphdeleted 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 Actdeleted text end new text begin as provided in section
270C.22. The statutory year is 2020new 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
This section is effective for adjustments beginning with refunds
based on rent paid in 2019.
new text end
Minnesota Statutes 2018, section 290A.03, subdivision 15, is amended to read:
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through deleted text begin December 16, 2016deleted text end new text begin December 31, 2018new text end .
new text begin
This section is effective beginning with refunds based on property
taxes payable in 2020 and rent paid in 2019.
new text end
Minnesota Statutes 2018, section 290A.04, subdivision 4, is amended to read:
deleted text begin (a) 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. 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 subdivisiondeleted text end new text begin as provided in section 270C.22. The
statutory year is 2020new 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
This section is effective for adjustments for refunds based on
rent paid in 2020 and property taxes payable in 2021.
new text end
Minnesota Statutes 2018, section 291.005, subdivision 1, is amended to read:
Unless the context otherwise clearly requires, the following terms
used in this chapter shall have the following meanings:
(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.
(2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code,
increased by the value of any property in which the decedent had a qualifying income interest
for life and for which an election was made under section 291.03, subdivision 1d, for
Minnesota estate tax purposes, but was not made for federal estate tax purposes.
(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986,
as amended through deleted text begin December 16, 2016deleted text end new text begin December 31, 2018new text end .
(4) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included in the estate which has its situs outside Minnesota,
and (b) including any property omitted from the federal gross estate which is includable in
the estate, has its situs in Minnesota, and was not disclosed to federal taxing authorities.
(5) "Nonresident decedent" means an individual whose domicile at the time of death
was not in Minnesota.
(6) "Personal representative" means the executor, administrator or other person appointed
by the court to administer and dispose of the property of the decedent. If there is no executor,
administrator or other person appointed, qualified, and acting within this state, then any
person in actual or constructive possession of any property having a situs in this state which
is included in the federal gross estate of the decedent shall be deemed to be a personal
representative to the extent of the property and the Minnesota estate tax due with respect
to the property.
(7) "Resident decedent" means an individual whose domicile at the time of death was
in Minnesota. The provisions of section 290.01, subdivision 7, paragraphs (c) and (d), apply
to determinations of domicile under this chapter.
(8) "Situs of property" means, with respect to:
(i) real property, the state or country in which it is located;
(ii) tangible personal property, the state or country in which it was normally kept or
located at the time of the decedent's death or for a gift of tangible personal property within
three years of death, the state or country in which it was normally kept or located when the
gift was executed;
(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
Code, owned by a nonresident decedent and that is normally kept or located in this state
because it is on loan to an organization, qualifying as exempt from taxation under section
501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and
(iv) intangible personal property, the state or country in which the decedent was domiciled
at death or for a gift of intangible personal property within three years of death, the state or
country in which the decedent was domiciled when the gift was executed.
For a nonresident decedent with an ownership interest in a pass-through entity with
assets that include real or tangible personal property, situs of the real or tangible personal
property, including qualified works of art, is determined as if the pass-through entity does
not exist and the real or tangible personal property is personally owned by the decedent. If
the pass-through entity is owned by a person or persons in addition to the decedent, ownership
of the property is attributed to the decedent in proportion to the decedent's capital ownership
share of the pass-through entity.
(9) "Pass-through entity" includes the following:
(i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;
(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
(iii) a single-member limited liability company or similar entity, regardless of whether
it is taxed as an association or is disregarded for federal income tax purposes under Code
of Federal Regulations, title 26, section 301.7701-3; or
(iv) a trust to the extent the property is deleted text begin includibledeleted text end new text begin includablenew text end in the decedent's federal
gross estate; but excludes
(v) an entity whose ownership interest securities are traded on an exchange regulated
by the Securities and Exchange Commission as a national securities exchange under section
6 of the Securities Exchange Act, United States Code, title 15, section 78f.
new text begin
This section is effective the day following final enactment except
the changes incorporated by federal changes are effective retroactively at the same time the
changes became effective for federal purposes.
new text end
Minnesota Statutes 2018, section 297A.68, subdivision 25, is amended to read:
(a) The sale of tangible personal
property primarily used in a trade or business is exempt if the sale is not made in the normal
course of business of selling that kind of property and if one of the following conditions is
satisfied:
(1) the sale occurs in a transaction subject to or described in section 118, 331, 332, 336,
337, 338, 351, 355, 368, 721, 731, 1031, or 1033 of the Internal Revenue Codenew text begin , as amended
through December 16, 2016new text end ;
(2) the sale is between members of a controlled group as defined in section 1563(a) of
the Internal Revenue Code;
(3) the sale is a sale of farm machinery;
(4) the sale is a farm auction sale;
(5) the sale is a sale of substantially all of the assets of a trade or business; or
(6) the total amount of gross receipts from the sale of trade or business property made
during the calendar month of the sale and the preceding 11 calendar months does not exceed
$1,000.
The use, storage, distribution, or consumption of tangible personal property acquired as
a result of a sale exempt under this subdivision is also exempt.
(b) For purposes of this subdivision, the following terms have the meanings given.
(1) A "farm auction" is a public auction conducted by a licensed auctioneer if substantially
all of the property sold consists of property used in the trade or business of farming and
property not used primarily in a trade or business.
(2) "Trade or business" includes the assets of a separate division, branch, or identifiable
segment of a trade or business if, before the sale, the income and expenses attributable to
the separate division, branch, or identifiable segment could be separately ascertained from
the books of account or record (the lease or rental of an identifiable segment does not qualify
for the exemption).
(3) A "sale of substantially all of the assets of a trade or business" must occur as a single
transaction or a series of related transactions within the 12-month period beginning on the
date of the first sale of assets intended to qualify for the exemption provided in paragraph
(a), clause (5).
new text begin
This section is effective retroactively for sales and purchases
made after December 31, 2017.
new text end
Minnesota Statutes 2018, section 297B.03, is amended to read:
There is specifically exempted from the provisions of this chapter and from computation
of the amount of tax imposed by it the following:
(1) purchase or use, including use under a lease purchase agreement or installment sales
contract made pursuant to section 465.71, of any motor vehicle by the United States and its
agencies and instrumentalities and by any person described in and subject to the conditions
provided in section 297A.67, subdivision 11;
(2) purchase or use of any motor vehicle by any person who was a resident of another
state or country at the time of the purchase and who subsequently becomes a resident of
Minnesota, provided the purchase occurred more than 60 days prior to the date such person
began residing in the state of Minnesota and the motor vehicle was registered in the person's
name in the other state or country;
(3) purchase or use of any motor vehicle by any person making a valid election to be
taxed under the provisions of section 297A.90;
(4) purchase or use of any motor vehicle previously registered in the state of Minnesota
when such transfer constitutes a transfer within the meaning of section 118, 331, 332, 336,
337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal Revenue Codenew text begin ,
as amended through December 16, 2016new text end ;
(5) purchase or use of any vehicle owned by a resident of another state and leased to a
Minnesota-based private or for-hire carrier for regular use in the transportation of persons
or property in interstate commerce provided the vehicle is titled in the state of the owner or
secured party, and that state does not impose a sales tax or sales tax on motor vehicles used
in interstate commerce;
(6) purchase or use of a motor vehicle by a private nonprofit or public educational
institution for use as an instructional aid in automotive training programs operated by the
institution. "Automotive training programs" includes motor vehicle body and mechanical
repair courses but does not include driver education programs;
(7) purchase of a motor vehicle by an ambulance service licensed under section 144E.10
when that vehicle is equipped and specifically intended for emergency response or for
providing ambulance service;
(8) purchase of a motor vehicle by or for a public library, as defined in section 134.001,
subdivision 2, as a bookmobile or library delivery vehicle;
(9) purchase of a ready-mixed concrete truck;
(10) purchase or use of a motor vehicle by a town for use exclusively for road
maintenance, including snowplows and dump trucks, but not including automobiles, vans,
or pickup trucks;
(11) purchase or use of a motor vehicle by a corporation, society, association, foundation,
or institution organized and operated exclusively for charitable, religious, or educational
purposes, except a public school, university, or library, but only if the vehicle is:
(i) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
passenger automobile, as defined in section 168.002, if the automobile is designed and used
for carrying more than nine persons including the driver; and
(ii) intended to be used primarily to transport tangible personal property or individuals,
other than employees, to whom the organization provides service in performing its charitable,
religious, or educational purpose;
(12) purchase of a motor vehicle for use by a transit provider exclusively to provide
transit service is exempt if the transit provider is either (i) receiving financial assistance or
reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29,
473.388, or 473.405;
(13) purchase or use of a motor vehicle by a qualified business, as defined in section
469.310, located in a job opportunity building zone, if the motor vehicle is principally
garaged in the job opportunity building zone and is primarily used as part of or in direct
support of the person's operations carried on in the job opportunity building zone. The
exemption under this clause applies to sales, if the purchase was made and delivery received
during the duration of the job opportunity building zone. The exemption under this clause
also applies to any local sales and use tax;
(14) purchase of a leased vehicle by the lessee who was a participant in a lease-to-own
program from a charitable organization that is:
(i) described in section 501(c)(3) of the Internal Revenue Code; and
(ii) licensed as a motor vehicle lessor under section 168.27, subdivision 4; and
(15) purchase of a motor vehicle used exclusively as a mobile medical unit for the
provision of medical or dental services by a federally qualified health center, as defined
under title 19 of the Social Security Act, as amended by Section 4161 of the Omnibus Budget
Reconciliation Act of 1990.
new text begin
This section is effective retroactively for sales and purchases
made after December 31, 2017.
new text end
Minnesota Statutes 2018, section 462D.06, subdivision 1, is amended to read:
(a) As provided in section 290.0132, subdivision 25, an
account holder is allowed a subtraction from deleted text begin thedeleted text end federal deleted text begin taxabledeleted text end new text begin adjusted grossnew text end income equal
to interest or dividends earned on the first-time home buyer savings account during the
taxable year.
(b) The subtraction under paragraph (a) is allowed each year for the taxable years
including and following the taxable year in which the account was established. No person
other than the account holder is allowed a subtraction under this section.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 462D.06, subdivision 2, is amended to read:
(a) As provided in section 290.0131, subdivision 14, an account
holder must add to federal deleted text begin taxabledeleted text end new text begin adjusted grossnew text end income the following amounts:
(1) the amount in excess of the total contributions for all taxable years that is withdrawn
and used for other than eligible costs, or for a transfer permitted under section 462D.04,
subdivision 2; and
(2) the amount remaining in the first-time home buyer savings account at the close of
the tenth taxable year that exceeds the total contributions to the account for all taxable years.
(b) For an account that received a transfer under section 462D.04, subdivision 2, the
ten-year period under paragraph (a), clause (2), ends at the close of the earliest taxable year
that applies to either account under that clause.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 469.316, subdivision 1, is amended to read:
An individual, estate, or trust operating a trade or business
in a job opportunity building zone, and an individual, estate, or trust making a qualifying
investment in a qualified business operating in a job opportunity building zone qualifies for
the exemptions from taxes imposed under chapter 290, as provided in this section. The
exemptions provided under this section apply only to the extent that the income otherwise
would be taxable under chapter 290. Subtractions under this section from new text begin federal adjusted
gross income, new text end federal taxable income, alternative minimum taxable income, or any other
base subject to tax are limited to the amount that otherwise would be included in the tax
base absent the exemption under this section. This section applies only to taxable years
beginning during the duration of the job opportunity building zone.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
new text begin
Notwithstanding any law to the contrary or other provision of this article, sections 40202
and 40203 of Public Law 115-123 shall not apply for the purpose of calculating net income
under section 290.01, subdivision 6, for taxable years beginning after December 31, 2016,
and before January 1, 2018.
new text end
new text begin
The commissioner of revenue must promptly notify the revisor of statutes in writing of
the adjusted statutory year amounts for each of the statutory sections that are indexed for
inflation under section 270C.22. The revisor shall publish the updated statutory amounts in
the 2019 Supplement of Minnesota Statutes.
new text end
new text begin
Minnesota Statutes 2018, sections 290.0131, subdivisions 7, 11, 12, and 13; 290.0132,
subdivision 8; 290.0133, subdivisions 13 and 14; and 290.10, subdivision 2,
new text end
new text begin
are repealed.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 116J.8737, subdivision 1, is amended to read:
(a) For the purposes of this section, the following terms have
the meanings given.
(b) "Qualified small business" means a business that has been certified by the
commissioner under subdivision 2.
(c) "Qualified investor" means an investor who has been certified by the commissioner
under subdivision 3.
(d) "Qualified fund" means a pooled angel investment network fund that has been certified
by the commissioner under subdivision 4.
(e) "Qualified investment" means a cash investment in a qualified small business of a
minimum of:
(1) $10,000 in a calendar year by a qualified investor; deleted text begin or
deleted text end
new text begin
(2) $7,500 in a calendar year by a qualified investor in qualified greater Minnesota
businesses or minority- or women-owned businesses in Minnesota; or
new text end
deleted text begin (2)deleted text end new text begin (3)new text end $30,000 in a calendar year by a qualified fund.
A qualified investment must be made in exchange for common stock, a partnership or
membership interest, preferred stock, debt with mandatory conversion to equity, or an
equivalent ownership interest as determined by the commissioner.
(f) "Family" means a family member within the meaning of the Internal Revenue Code,
section 267(c)(4).
(g) "Pass-through entity" means a corporation that for the applicable taxable year is
treated as an S corporation or a general partnership, limited partnership, limited liability
partnership, trust, or limited liability company and which for the applicable taxable year is
not taxed as a corporation under chapter 290.
(h) "Intern" means a student of an accredited institution of higher education, or a former
student who has graduated in the past six months from an accredited institution of higher
education, who is employed by a qualified small business in a nonpermanent position for
a duration of nine months or less that provides training and experience in the primary
business activity of the business.
(i) "Liquidation event" means a conversion of qualified investment for cash, cash and
other consideration, or any other form of equity or debt interest.
(j) "Qualified greater Minnesota business" means a qualified small business that is also
certified by the commissioner as a qualified greater Minnesota business under subdivision
2, paragraph (h).
(k) "Minority group member" means a United States citizen who is Asian, Pacific
Islander, Black, Hispanic, or Native American.
(l) "Minority-owned business" means a business for which one or more minority group
members:
(1) own at least 50 percent of the business, or, in the case of a publicly owned business,
own at least 51 percent of the stock; and
(2) manage the business and control the daily business operations.
(m) "Women" means persons of the female gender.
(n) "Women-owned business" means a business for which one or more women:
(1) own at least 50 percent of the business, or, in the case of a publicly owned business,
own at least 51 percent of the stock; and
(2) manage the business and control the daily business operations.
(o) "Officer" means a person elected or appointed by the board of directors to manage
the daily operations of the qualified small business.
(p) "Principal" means a person having authority to act on behalf of the qualified small
business.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 116J.8737, subdivision 2, is amended to read:
(a) Businesses may apply to the
commissioner for certification as a qualified small business or qualified greater Minnesota
small business for a calendar year. The application must be in the form and be made under
the procedures specified by the commissioner, accompanied by an application fee of $150.
Application fees are deposited in the small business investment tax credit administration
account in the special revenue fund. deleted text begin The application for certification for 2010 must be made
available on the department's website by August 1, 2010.deleted text end Applications for deleted text begin subsequent years'deleted text end
certification must be made available on the department's website by November 1 of the
preceding year.
(b) Within 30 days of receiving an application for certification under this subdivision,
the commissioner must either certify the business as satisfying the conditions required of a
qualified small business or qualified greater Minnesota small business, request additional
information from the business, or reject the application for certification. If the commissioner
requests additional information from the business, the commissioner must either certify the
business or reject the application within 30 days of receiving the additional information. If
the commissioner neither certifies the business nor rejects the application within 30 days
of receiving the original application or within 30 days of receiving the additional information
requested, whichever is later, then the application is deemed rejected, and the commissioner
must refund the $150 application fee. A business that applies for certification and is rejected
may reapply.
(c) To receive certification as a qualified small business, a business must satisfy all of
the following conditions:
(1) the business has its headquarters in Minnesota;
(2) at least: (i) 51 percent of the business's employees are employed in Minnesota; (ii)
51 percent of the business's total payroll is paid or incurred in the state; and (iii) 51 percent
of the total value of all contractual agreements to which the business is a party in connection
with its primary business activity is for services performed under contract in Minnesota,
unless the business obtains a waiver under paragraph (i);
(3) the business is engaged in, or is committed to engage in, innovation in Minnesota in
one of the following as its primary business activity:
(i) using proprietary technology to add value to a product, process, or service in a qualified
high-technology field;
(ii) researching or developing a proprietary product, process, or service in a qualified
high-technology field;
(iii) researching or developing a proprietary product, process, or service in the fields of
agriculture, tourism, forestry, mining, manufacturing, or transportation; or
(iv) researching, developing, or producing a new proprietary technology for use in the
fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;
(4) other than the activities specifically listed in clause (3), the business is not engaged
in real estate development, insurance, banking, lending, lobbying, political consulting,
information technology consulting, wholesale or retail trade, leisure, hospitality,
transportation, construction, ethanol production from corn, or professional services provided
by attorneys, accountants, business consultants, physicians, or health care consultants;
(5) the business has fewer than 25 employees;
(6) the business must pay its employees annual wages of at least 175 percent of the
federal poverty guideline for the year for a family of four and must pay its interns annual
wages of at least 175 percent of the federal minimum wage used for federally covered
employers, except that this requirement must be reduced proportionately for employees and
interns who work less than full-time, and does not apply to an executive, officer, or member
of the board of the business, or to any employee who owns, controls, or holds power to vote
more than 20 percent of the outstanding securities of the business;
(7) the business has (i) not been in operation for more than ten years, or (ii) not been in
operation for more than 20 years if the business is engaged in the research, development,
or production of medical devices or pharmaceuticals for which United States Food and Drug
Administration approval is required for use in the treatment or diagnosis of a disease or
condition;
(8) the business has not previously received private equity investments of more than
$4,000,000;
(9) the business is not an entity disqualified under section 80A.50, paragraph (b), clause
(3); and
(10) the business has not issued securities that are traded on a public exchange.
(d) In applying the limit under paragraph (c), clause (5), the employees in all members
of the unitary business, as defined in section 290.17, subdivision 4, must be included.
(e) In order for a qualified investment in a business to be eligible for tax credits:
(1) the business must have applied for and received certification for the calendar year
in which the investment was made prior to the date on which the qualified investment was
made;
(2) the business must not have issued securities that are traded on a public exchange;
(3) the business must not issue securities that are traded on a public exchange within
180 days after the date on which the qualified investment was made; and
(4) the business must not have a liquidation event within 180 days after the date on
which the qualified investment was made.
(f) The commissioner must maintain a list of qualified small businesses and qualified
greater Minnesota businesses certified under this subdivision for the calendar year and make
the list accessible to the public on the department's website.
(g) For purposes of this subdivision, the following terms have the meanings given:
(1) "qualified high-technology field" includes aerospace, agricultural processing,
renewable energy, energy efficiency and conservation, environmental engineering, food
technology, cellulosic ethanol, information technology, materials science technology,
nanotechnology, telecommunications, biotechnology, medical device products,
pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar fields;
(2) "proprietary technology" means the technical innovations that are unique and legally
owned or licensed by a business and includes, without limitation, those innovations that are
patented, patent pending, a subject of trade secrets, or copyrighted; and
(3) "greater Minnesota" means the area of Minnesota located outside of the metropolitan
area as defined in section 473.121, subdivision 2.
(h) To receive certification as a qualified greater Minnesota business, a business must
satisfy all of the requirements of paragraph (c) and must satisfy the following conditions:
(1) the business has its headquarters in greater Minnesota; and
(2) at least: (i) 51 percent of the business's employees are employed in greater Minnesota;
(ii) 51 percent of the business's total payroll is paid or incurred in greater Minnesota; and
(iii) 51 percent of the total value of all contractual agreements to which the business is a
party in connection with its primary business activity is for services performed under contract
in greater Minnesota, unless the business obtains a waiver under paragraph (i).
(i) The commissioner must exempt a business from the requirement under paragraph
(c), clause (2), item (iii), if the business certifies to the commissioner that the services
required under a contract in connection with the primary business activity cannot be
performed in Minnesota if the business otherwise qualifies as a qualified small business, or
in greater Minnesota if the business otherwise qualifies as a qualified greater Minnesota
business. The business must submit the certification required under this paragraph every
six months from the month the exemption was granted. The exemption allowed under this
paragraph must be submitted in a form and manner prescribed by the commissioner.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 116J.8737, subdivision 3, is amended to read:
(a) Investors may apply to the
commissioner for certification as a qualified investor for a taxable year. The application
must be in the form and be made under the procedures specified by the commissioner,
accompanied by an application fee of $350. Application fees are deposited in the small
business investment tax credit administration account in the special revenue fund. deleted text begin The
application for certification for 2010 must be made available on the department's website
by August 1, 2010.deleted text end Applications for deleted text begin subsequent years'deleted text end certification must be made available
on the department's website by November 1 of the preceding year.
(b) Within 30 days of receiving an application for certification under this subdivision,
the commissioner must either certify the investor as satisfying the conditions required of a
qualified investor, request additional information from the investor, or reject the application
for certification. If the commissioner requests additional information from the investor, the
commissioner must either certify the investor or reject the application within 30 days of
receiving the additional information. If the commissioner neither certifies the investor nor
rejects the application within 30 days of receiving the original application or within 30 days
of receiving the additional information requested, whichever is later, then the application
is deemed rejected, and the commissioner must refund the $350 application fee. An investor
who applies for certification and is rejected may reapply.
(c) To receive certification, an investor must (1) be a natural person; and (2) certify to
the commissioner that the investor will only invest in a transaction that is exempt under
section 80A.46, clause (13) or (14), in a security exempt under section 80A.461, or in a
security registered under section 80A.50, paragraph (b).
(d) In order for a qualified investment in a qualified small business to be eligible for tax
credits, a qualified investor who makes the investment must have applied for and received
certification for the calendar year prior to making the qualified investment, except in the
case of an investor who is not an accredited investor, within the meaning of Regulation D
of the Securities and Exchange Commission, Code of Federal Regulations, title 17, section
230.501, paragraph (a), application for certification may be made within 30 days after
making the qualified investment.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 116J.8737, subdivision 4, is amended to read:
(a) A pass-through entity may apply to the
commissioner for certification as a qualified fund for a calendar year. The application must
be in the form and be made under the procedures specified by the commissioner, accompanied
by an application fee of $1,000. Application fees are deposited in the small business
investment tax credit administration account in the special revenue fund. deleted text begin The application
for certification for 2010 of qualified funds must be made available on the department's
website by August 1, 2010.deleted text end Applications for deleted text begin subsequent years'deleted text end certification must be made
available by November 1 of the preceding year.
(b) Within 30 days of receiving an application for certification under this subdivision,
the commissioner must either certify the fund as satisfying the conditions required of a
qualified fund, request additional information from the fund, or reject the application for
certification. If the commissioner requests additional information from the fund, the
commissioner must either certify the fund or reject the application within 30 days of receiving
the additional information. If the commissioner neither certifies the fund nor rejects the
application within 30 days of receiving the original application or within 30 days of receiving
the additional information requested, whichever is later, then the application is deemed
rejected, and the commissioner must refund the $1,000 application fee. A fund that applies
for certification and is rejected may reapply.
(c) To receive certification, a fund must:
(1) invest or intend to invest in qualified small businesses;
(2) be organized as a pass-through entity; and
(3) have at least three separate investors, of whom at least three whose investment is
made in the certified business and who seek a tax credit allocation satisfy the conditions in
subdivision 3, paragraph (c).
(d) Investments in the fund may consist of equity investments or notes that pay interest
or other fixed amounts, or any combination of both.
(e) In order for a qualified investment in a qualified small business to be eligible for tax
credits, a qualified fund that makes the investment must have applied for and received
certification for the calendar year prior to making the qualified investment.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 116J.8737, subdivision 5, is amended to read:
(a)deleted text begin (1)deleted text end A qualified investor or qualified fund is eligible for a
credit equal to 25 percent of the qualified investment in a qualified small business.
Investments made by a pass-through entity qualify for a credit only if the entity is a qualified
fund. The commissioner must not allocate more than deleted text begin $15,000,000deleted text end new text begin $10,000,000new text end in credits
to qualified investors or qualified funds for taxable years beginning after December 31,
deleted text begin 2013, and before January 1, 2017, and must not allocate more than $10,000,000 in credits
to qualified investors or qualified funds for taxable years beginning after December 31,
2016, and before January 1, 2018; and (2) for taxable years beginning after December 31,
2014, and before January 1,deleted text end 2018,new text begin and before January 1, 2021. For each taxable year,new text end 50
percent must be allocated to credits for qualifying investments in qualified greater Minnesota
businesses and minority- or women-owned qualified small businesses in Minnesota. Any
portion of a taxable year's credits that is reserved for qualifying investments in greater
Minnesota businesses and minority- or women-owned qualified small businesses in
Minnesota that is not allocated by September 30 of the taxable year is available for allocation
to other credit applications beginning on October 1. Any portion of a taxable year's credits
that is not allocated by the commissioner does not cancel and may be carried forward to
subsequent taxable years until all credits have been allocated.
(b) The commissioner may not allocate more than a total maximum amount in credits
for a taxable year to a qualified investor for the investor's cumulative qualified investments
as an individual qualified investor and as an investor in a qualified fund; for married couples
filing joint returns the maximum is $250,000, and for all other filers the maximum is
$125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
over all taxable years for qualified investments in any one qualified small business.
(c) The commissioner may not allocate a credit to a qualified investor either as an
individual qualified investor or as an investor in a qualified fund if, at the time the investment
is proposed:
(1) the investor is an officer or principal of the qualified small business; or
(2) the investor, either individually or in combination with one or more members of the
investor's family, owns, controls, or holds the power to vote 20 percent or more of the
outstanding securities of the qualified small business.
A member of the family of an individual disqualified by this paragraph is not eligible for a
credit under this section. For a married couple filing a joint return, the limitations in this
paragraph apply collectively to the investor and spouse. For purposes of determining the
ownership interest of an investor under this paragraph, the rules under section 267(c) and
267(e) of the Internal Revenue Code apply.
(d) Applications for tax credits for 2010 must be made available on the department's
website by September 1, 2010, and the department must begin accepting applications by
September 1, 2010. Applications for subsequent years must be made available by November
1 of the preceding year.
(e) Qualified investors and qualified funds must apply to the commissioner for tax credits.
Tax credits must be allocated to qualified investors or qualified funds in the order that the
tax credit request applications are filed with the department. The commissioner must approve
or reject tax credit request applications within 15 days of receiving the application. The
investment specified in the application must be made within 60 days of the allocation of
the credits. If the investment is not made within 60 days, the credit allocation is canceled
and available for reallocation. A qualified investor or qualified fund that fails to invest as
specified in the application, within 60 days of allocation of the credits, must notify the
commissioner of the failure to invest within five business days of the expiration of the
60-day investment period.
(f) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified investors or
qualified funds file tax credit request applications on the same day, and the aggregate amount
of credit allocation claims exceeds the aggregate limit of credits under this section or the
lesser amount of credits that remain unallocated on that day, then the credits must be allocated
among the qualified investors or qualified funds who filed on that day on a pro rata basis
with respect to the amounts claimed. The pro rata allocation for any one qualified investor
or qualified fund is the product obtained by multiplying a fraction, the numerator of which
is the amount of the credit allocation claim filed on behalf of a qualified investor and the
denominator of which is the total of all credit allocation claims filed on behalf of all
applicants on that day, by the amount of credits that remain unallocated on that day for the
taxable year.
(g) A qualified investor or qualified fund, or a qualified small business acting on their
behalf, must notify the commissioner when an investment for which credits were allocated
has been made, and the taxable year in which the investment was made. A qualified fund
must also provide the commissioner with a statement indicating the amount invested by
each investor in the qualified fund based on each investor's share of the assets of the qualified
fund at the time of the qualified investment. After receiving notification that the investment
was made, the commissioner must issue credit certificates for the taxable year in which the
investment was made to the qualified investor or, for an investment made by a qualified
fund, to each qualified investor who is an investor in the fund. The certificate must state
that the credit is subject to revocation if the qualified investor or qualified fund does not
hold the investment in the qualified small business for at least three years, consisting of the
calendar year in which the investment was made and the two following years. The three-year
holding period does not apply if:
(1) the investment by the qualified investor or qualified fund becomes worthless before
the end of the three-year period;
(2) 80 percent or more of the assets of the qualified small business is sold before the end
of the three-year period;
(3) the qualified small business is sold before the end of the three-year period;
(4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period; or
(5) the qualified investor dies before the end of the three-year period.
(h) The commissioner must notify the commissioner of revenue of credit certificates
issued under this section.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 116J.8737, subdivision 6, is amended to read:
(a) By February 1 of each year each qualified small business
that received an investment that qualified for a credit, and each qualified investor and
qualified fund that made an investment that qualified for a credit, must submit an annual
report to the commissioner and pay a filing fee of $100 as required under this subdivision.
Each qualified investor and qualified fund must submit reports for three years following
each year in which it made an investment that qualified for a credit, and each qualified small
business must submit reports for five years following the year in which it received an
investment qualifying for a credit. Reports must be made in the form required by the
commissioner. All filing fees collected are deposited in the small business investment tax
credit administration account in the special revenue fund.
(b) A report from a qualified small business must certify that the business satisfies the
following requirements:
(1) the business has its headquarters in Minnesota;
(2) at least 51 percent of the business's employees are employed in Minnesota, and 51
percent of the business's total payroll is paid or incurred in the state;
(3) that the business is engaged in, or is committed to engage in, innovation in Minnesota
as defined under subdivision 2; and
(4) that the business meets the payroll requirements in subdivision 2, paragraph (c),
clause (6).
(c) Reports from qualified investors must certify that the investor remains invested in
the qualified small business as required by subdivision 5, paragraph (g).
(d) Reports from qualified funds must certify that the fund remains invested in the
qualified small business as required by subdivision 5, paragraph (g).
(e) A qualified small business that ceases all operations and becomes insolvent must file
a final annual report in the form required by the commissioner documenting its insolvency.
In following years the business is exempt from the annual reporting requirement, the report
filing fee, and the fine for failure to file a report.
(f) A qualified small business, qualified investor, or qualified fund that fails to file an
annual reportnew text begin by February 1new text end as required under this subdivision is subject to a deleted text begin $500deleted text end new text begin $100new text end
fine.
new text begin
(g) A qualified investor or qualified fund that fails to file an annual report by April 1
may, at the commissioner's discretion, have any credit allocated and certified to the investor
or fund revoked and such credit must be repaid by the investor.
new text end
new text begin
(h) A qualified business that fails to file an annual report by April 1 may, at the
commissioner's discretion, be subject to the credit repayment provisions in subdivision 7,
paragraph (b).
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 116J.8737, subdivision 12, is amended to read:
This section expires for taxable years beginning after December 31,
deleted text begin 2017deleted text end new text begin 2020new text end , except that reporting requirements under subdivision 6 and revocation of credits
under subdivision 7 remain in effect through deleted text begin 2019deleted text end new text begin 2022new text end for qualified investors and qualified
funds, and through deleted text begin 2021deleted text end new text begin 2024new text end for qualified small businesses, reporting requirements under
subdivision 9 remain in effect through deleted text begin 2022deleted text end new text begin 2020new text end , and the appropriation in subdivision 11
remains in effect through deleted text begin 2021deleted text end new text begin 2024new text end .
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 270C.13, subdivision 2, is amended to read:
At the request of the chair new text begin or ranking minority member new text end of the
house of representatives Tax Committee or the senate Committee on Taxes and Tax Laws,
the commissioner shall prepare an incidence impact analysis of a bill or a proposal to change
the tax system which increases, decreases, or redistributes taxes by more than $20,000,000.
To the extent data is available on the changes in the distribution of the tax burden that are
affected by the bill or proposal, the analysis shall report on the incidence effects that would
result if the bill were enacted. The report may present information using systemwide
measures, such as Suits or other similar indexes, by income classes, taxpayer characteristics,
or other relevant categories. The report may include analyses of the effect of the bill or
proposal on representative taxpayers. The analysis must include a statement of the incidence
assumptions that were used in computing the burdens.new text begin For purposes of this subdivision,
"ranking minority member" means the ranking minority member from the largest minority
party in the body.
new text end
new text begin
This section is effective the day following final enactment.
new text end
Minnesota Statutes 2018, section 289A.10, subdivision 1, is amended to read:
new text begin (a) new text end In the case of a decedent who has an interest in
property with a situs in Minnesota, the personal representative must submit a Minnesota
estate tax return to the commissioner, on a form prescribed by the commissioner, if:
(1) a federal estate tax return is required to be filed; or
(2) the sum of the federal gross estate and federal adjusted taxable gifts, as defined in
section 2001(b) of the Internal Revenue Code, made within three years of the date of the
decedent's death exceeds deleted text begin $1,200,000 for estates of decedents dying in 2014; $1,400,000 for
estates of decedents dying in 2015; $1,600,000 for estates of decedents dying in 2016;
$2,100,000 for estates of decedents dying in 2017;deleted text end $2,400,000 for estates of decedents dying
in 2018; new text begin and new text end $2,700,000 for estates of decedents dying in 2019deleted text begin ; and $3,000,000 for estates
of decedents dying in 2020deleted text end and thereafter.
new text begin (b) new text end The return must contain a computation of the Minnesota estate tax due. The return
must be signed by the personal representative.
new text begin
This section is effective retroactively for estates of decedents
dying in 2019 and thereafter.
new text end
Minnesota Statutes 2018, section 290.01, subdivision 4a, is amended to read:
(a) "Financial institution" means:
(1) any corporation or other business entity registered (i) under state law as a bank
holding company; (ii) under the federal Bank Holding Company Act of 1956, as amended;
or (iii) as a savings and loan holding company under the federal National Housing Act, as
amended;
(2) a national bank organized and existing as a national bank association pursuant to the
provisions of United States Code, title 12, chapter 2;
(3) a savings association or federal savings bank as defined in United States Code, title
12, section 1813(b)(1);
(4) any bank or thrift institution incorporated or organized under the laws of any state;
(5) any corporation organized under United States Code, title 12, sections 611 to 631;
(6) any agency or branch of a foreign depository as defined under United States Code,
title 12, section 3101;
(7) any corporation or other business entity that is more than 50 percent owned, directly
or indirectly, by any person or business entity described in clauses (1) to (6), other than an
insurance company taxable under chapter 297I;
(8) a corporation or other business entity that derives more than 50 percent of its total
gross income for financial accounting purposes from finance leases. For the purposes of
this clause, "gross income" means the average from the current tax year and immediately
preceding two years and excludes gross income from incidental or occasional transactions.
For purposes of this clause, "finance lease" means any lease transaction that is the functional
equivalent of an extension of credit and that transfers substantially all the benefits and risks
incident to the ownership of property, including any direct financing lease or leverage lease
that meets the criteria of Financial Accounting Standards Board Statement No. 13, accounting
for leases, or any other lease that is accounted for as financing by a lessor under generally
accepted accounting principles; or
(9) any other person or business entity, other than an insurance company deleted text begin taxable under
chapter 297Ideleted text end , that derives more than 50 percent of its gross income from activities that an
entity described in clauses (2) to (6) or (8) is authorized to transact. For the purposes of this
clause, gross income does not include income from nonrecurring, extraordinary items.
(b) The commissioner is authorized to exclude any person from the application of
paragraph (a), clause (9), if the person proves by clear and convincing evidence that the
person's income-producing activity is not in substantial competition with any person described
in paragraph (a), clauses (2) to (6) or (8).
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2016.
new text end
Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:
new text begin
(a) "Captive insurance company"
means a company that:
new text end
new text begin
(1) is licensed as a captive insurance company under the laws of any state or foreign
country; or
new text end
new text begin
(2) derives less than 50 percent of its total premiums for the taxable year from sources
outside of the unitary business, as that term is used in section 290.17.
new text end
new text begin
(b) A captive insurance company is a "disqualified captive insurance company" if the
company:
new text end
new text begin
(1) pays less than 0.5 percent of its total premiums for the taxable year in tax under
chapter 297I or a comparable tax of another state; or
new text end
new text begin
(2) receives less than 50 percent of its gross receipts for the taxable year from premiums.
new text end
new text begin
(c) For purposes of this subdivision, "premiums" means amounts paid for arrangements
that constitute insurance for federal income tax purposes, but excludes return premiums,
premiums for reinsurance assumed from other insurance companies, and any other premiums
that are or would be exempt from taxation under section 297I.05 as a result of their type or
character, if the insurance was for business in Minnesota.
new text end
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2016.
new text end
Minnesota Statutes 2018, section 290.0132, subdivision 26, is amended to read:
(a) A portion ofnew text begin taxablenew text end Social Security benefits is
allowed as a subtraction. The subtraction equals the lesser ofnew text begin taxablenew text end 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 deleted text begin $4,500deleted text end new text begin $6,000new text end . The maximum subtraction is reduced by 20 percent of
provisional income over deleted text begin $77,000deleted text end new text begin $74,000new text end . In no case is the subtraction less than zero.
(c) For single or head-of-household taxpayers, the maximum subtraction equals deleted text begin $3,500deleted text end new text begin
$4,500new text end . The maximum subtraction is reduced by 20 percent of provisional income over
deleted text begin $60,200deleted text end new text begin $58,700new text end . In no case is the subtraction less than zero.
(d) For married taxpayers filing separate returns, the maximum subtraction equals deleted text begin $2,250deleted text end new text begin
$3,000new text end . The maximum subtraction is reduced by 20 percent of provisional income over
deleted text begin $38,500deleted text end new text begin $37,000new text end . 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
thenew text begin taxablenew text end 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 adjust the maximum subtraction and threshold 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 14.386deleted text end new text begin as provided in section 270C.22. The
statutory year is taxable year 2019new text end . 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.
new text begin
(a) The amendments to paragraphs (b), (c), and (d) are effective
for taxable years beginning after December 31, 2018.
new text end
new text begin
(b) The amendments to paragraphs (a) and (e) are effective retroactively for taxable
years beginning after December 31, 2017.
new text end
new text begin
(c) The amendments to paragraph (f) are effective for adjustments beginning with taxable
years beginning after December 31, 2019.
new text end
Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:
new text begin
The
amount of expenses of a medical cannabis manufacturer, as defined under section 152.22,
subdivision 7, related to the business of medical cannabis under sections 152.21 to 152.37,
and not allowed for federal income tax purposes under section 280E of the Internal Revenue
Code is a subtraction.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0134, is amended by adding a subdivision
to read:
new text begin
The
amount of expenses of a medical cannabis manufacturer, as defined under section 152.22,
subdivision 7, related to the business of medical cannabis under sections 152.21 to 152.37,
and not allowed for federal income tax purposes under section 280E of the Internal Revenue
Code is a subtraction.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.05, subdivision 1, is amended to read:
The following corporations, individuals, estates, trusts,
and organizations shall be exempted from taxation under this chapter, provided that every
such person or corporation claiming exemption under this chapter, in whole or in part, must
establish to the satisfaction of the commissioner the taxable status of any income or activity:
(a) corporations, individuals, estates, and trusts engaged in the business of mining or
producing iron ore and mining, producing, or refining other ores, metals, and minerals, the
mining, production, or refining of which is subject to the occupation tax imposed by section
298.01; but if any such corporation, individual, estate, or trust engages in any other business
or activity or has income from any property not used in such business it shall be subject to
this tax computed on the net income from such property or such other business or activity.
Royalty shall not be considered as income from the business of mining or producing iron
ore within the meaning of this section;
(b) the United States of America, the state of Minnesota or any political subdivision of
either agencies or instrumentalities, whether engaged in the discharge of governmental or
proprietary functions; and
(c) any insurance company, deleted text begin as defined in section 290.17, subdivision 4, paragraph (j),
but including any insurance company licensed and domiciled in another state that grants,
on a reciprocal basis, exemption from retaliatory taxesdeleted text end new text begin other than a disqualified captive
insurance companynew text end .
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2016.
new text end
new text begin
(a) For purposes of this section, the following terms have
the meanings given.
new text end
new text begin
(b) "Net capital gain" has the meaning given in section 1222 of the Internal Revenue
Code.
new text end
new text begin
(c) "Preferential rate income" means the lesser of:
new text end
new text begin
(1) a taxpayer's adjusted net capital gain, as defined in section 1(h)(3) of the Internal
Revenue Code, but excluding a capital gain resulting from the sale of property classified
as 2a property under section 273.13, subdivision 23; or
new text end
new text begin
(2) the taxpayer's federal taxable income, as defined in section 63 of the Internal Revenue
Code.
new text end
new text begin
In addition to the taxes imposed under sections
289A.08, subdivision 7, 290.03, and 290.091, an individual, trust, or estate is liable for a
tax equal to three percent of preferential rate income in excess of $500,000.
new text end
new text begin
(a) For an individual who is not a resident for the entire taxable
year, the tax under subdivision 2 is imposed in an amount equal to: (1) the amount calculated
under subdivision 2 for the full year and for all preferential rate income; multiplied by (2)
the Minnesota percentage determined under paragraph (b).
new text end
new text begin
(b) "Minnesota percentage" equals:
new text end
new text begin
(1) the sum of the following amounts for the taxable year:
new text end
new text begin
(i) net capital gain from the sale of real property located in Minnesota and tangible
personal property with a situs in Minnesota on the date of the sale; plus
new text end
new text begin
(ii) adjusted net capital gain, other than gain included under item (i), received during a
period when the taxpayer was domiciled in Minnesota; divided by
new text end
new text begin
(2) the total amount of preferential rate income for the taxable year.
new text end
new text begin
For purposes of computing the credit
for taxes paid to another state under section 290.06, subdivision 22, if the net long-term
capital gain qualified for an exclusion, deduction, or exemption, in whole or part, from
taxation under the other state's tax, the tax under this section used to calculate the credit
must be reduced by three percent of the dollar amount of the exclusion, deduction, or
exemption amount that applies under the other state's tax.
new text end
new text begin
This section is effective for preferential rate income recognized
in taxable years beginning after December 31, 2018.
new text end
Minnesota Statutes 2018, section 290.06, subdivision 2c, is amended to read:
(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 deleted text begin $35,480deleted text end new text begin $40,240new text end , 5.35 percent;
(2) On all over deleted text begin $35,480deleted text end new text begin $40,240new text end , but not over deleted text begin $140,960deleted text end new text begin $150,900new text end , 7.05 percent;
(3) On all over deleted text begin $140,960deleted text end new text begin $150,900new text end , but not over deleted text begin $250,000deleted text end new text begin $273,150new text end , 7.85 percent;
(4) On all over deleted text begin $250,000deleted text end new text begin $273,150new text end , 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 amountsnew text begin after the adjustment required in subdivision 2dnew 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 deleted text begin $24,270deleted text end new text begin $27,520new text end , 5.35 percent;
(2) On all over deleted text begin $24,270deleted text end new text begin $27,520new text end , but not over deleted text begin $79,730deleted text end new text begin $84,990new text end , 7.05 percent;
(3) On all over deleted text begin $79,730deleted text end new text begin $84,990new text end , but not over deleted text begin $150,000deleted text end new text begin $163,890new text end , 7.85 percent;
(4) On all over deleted text begin $150,000deleted text end new text begin $163,890new text end , 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 deleted text begin $29,880deleted text end new text begin $33,880new text end , 5.35 percent;
(2) On all over deleted text begin $29,880deleted text end new text begin $33,880new text end , but not over deleted text begin $120,070deleted text end new text begin $128,580new text end , 7.05 percent;
(3) On all over deleted text begin $120,070deleted text end new text begin $128,580new text end , but not over deleted text begin $200,000deleted text end new text begin $218,520new text end , 7.85 percent;
(4) On all over deleted text begin $200,000deleted text end new text begin $218,520new text end , 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 deleted text begin anddeleted text end new text begin ,new text end 6new text begin , 8new text end to deleted text begin 11deleted text end new text begin 10, and 16new text end , 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, deleted text begin anddeleted text end 18,new text begin and 27,new text end 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 deleted text begin anddeleted text end new text begin ,new text end 6 deleted text begin to 11deleted text end new text begin , 8 to 10, and 16new text end , and reduced by the amounts specified in section
290.0132, subdivisions 2, 9, 10, 14, 15, 17, deleted text begin anddeleted text end 18new text begin , and 27new text end .
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0671, subdivision 1, is amended to read:
(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 thatnew text begin :
new text end
new text begin (1)new text end 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 creditdeleted text begin .deleted text end new text begin ; and
new text end
new text begin
(2) a taxpayer who is otherwise eligible for a credit under section 32 of the Internal
Revenue Code remains eligible for the credit even if the taxpayer's earned income or adjusted
gross income exceeds the income limitation under section 32 of the Internal Revenue Code.
new text end
(b) For individuals with no qualifying children, the credit equals deleted text begin 2.10deleted text end new text begin 3.9new text end percent of the
first deleted text begin $6,180deleted text end new text begin $7,150new text end of earned income. The credit is reduced by deleted text begin 2.01deleted text end new text begin 2.0new text end percent of earned
income or adjusted gross income, whichever is greater, in excess ofdeleted text begin $8,130deleted text end new text begin the phase-out
thresholdnew text end , but in no case is the credit less than zero.
(c) For individuals with one qualifying child, the credit equals deleted text begin 9.35deleted text end new text begin 9.5new text end percent of the
first deleted text begin $11,120deleted text end new text begin $12,350 new text end of earned income. The credit is reduced by deleted text begin 6.02deleted text end new text begin 6.0new text end percent of earned
income or adjusted gross income, whichever is greater, in excess of deleted text begin $21,190deleted text end new text begin the phase-out
thresholdnew text end , but in no case is the credit less than zero.
(d) For individuals with two deleted text begin or moredeleted text end qualifying children, the credit equals deleted text begin 11deleted text end new text begin 12new text end percent
of the first deleted text begin $18,240deleted text end new text begin $18,450new text end of earned income. The credit is reduced by deleted text begin 10.82deleted text end new text begin 10.5new text end percent
of earned income or adjusted gross income, whichever is greater, in excess of deleted text begin $25,130deleted text end new text begin the
phase-out thresholdnew text end , but in no case is the credit less than zero.
(e)new text begin For individuals with three or more qualifying children, the credit equals 12.5 percent
of the first $20,000 of earned income. The credit is reduced by 10.5 percent of earned income
or adjusted gross income, whichever is greater, in excess of the phase-out threshold, but in
no case is the credit less than zero.
new text end
new text begin (f)new text end For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).
deleted text begin (f)deleted text end new text begin (g)new text end 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.
deleted text begin
(g) 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
(h)new text begin For the purposes of this section, the phase-out threshold equals:
new text end
new text begin
(1) $14,570 for married taxpayers filing joint returns with no qualifying children;
new text end
new text begin
(2) $8,730 for all other taxpayers with no qualifying children;
new text end
new text begin
(3) $28,610 for married taxpayers filing joint returns with one qualifying child;
new text end
new text begin
(4) $22,770 for all other taxpayers with one qualifying child;
new text end
new text begin
(5) $32,840 for married taxpayers filing joint returns with two qualifying children;
new text end
new text begin
(6) $27,000 for all other taxpayers with two qualifying children;
new text end
new text begin
(7) $32,840 for married taxpayers filing joint returns with three or more qualifying
children; and
new text end
new text begin
(8) $27,000 for all other taxpayers with three or more qualifying children.
new text end
new text begin (i)new text end 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
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0677, subdivision 1a, is amended to read:
(a) A qualified individual is allowed
a credit against the tax imposed under this chapter for past military service. The credit equals
$750. The credit allowed under this subdivision is reduced by ten percent of adjusted gross
income in excess of deleted text begin $30,000deleted text end new text begin $50,000new text end , but in no case is the credit less than zero.
(b) For a nonresident or a part-year resident, the credit under this subdivision must be
allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph
(e).
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0682, subdivision 1, is amended to read:
(a) For purposes of this section, the following terms have
the meanings given.
(b) "Adjusted gross income" means federal adjusted gross income as defined in section
62 of the Internal Revenue Code.
(c) "Earned income" has the meaning given in deleted text begin section 32(c) of the Internal Revenue
Codedeleted text end new text begin section 290.0675, subdivision 1, paragraph (b)new text end .
(d) "Eligible individual" means a resident individual with one or more qualified education
loans related to an undergraduate or graduate degree program at a postsecondary educational
institution.
(e) "Eligible loan payments" means the amount the eligible individual paid during the
taxable year in principal and interest on qualified education loans.
(f) "Postsecondary educational institution" means a public or nonprofit postsecondary
institution eligible for state student aid under section 136A.103 or, if the institution is not
located in this state, a public or nonprofit 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.
(g) "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.
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0682, subdivision 2, is amended to read:
(a) An eligible individual is allowed a credit against the tax
due under this chapter.
(b) The credit for an eligible individual equals the least of:
(1) eligible loan payments minus ten percent of an amount equal to adjusted gross income
in excess of $10,000, but in no case less than zero;
(2) the earned income for the taxable year of the eligible individual, if any;
(3) the sum of:
(i) the interest portion of eligible loan payments made during the taxable year; and
(ii) ten percent of the original loan amount of all qualified education loans of the eligible
individual; or
(4) $500.
(c) For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).
(d) In the case of a married couple, each spouse is eligible for the credit in this section.new text begin
For the purposes of paragraph (b), for married couples filing joint returns, each spouse's
adjusted gross income equals the spouse's percentage share of the couple's earned income,
multiplied by the couple's adjusted gross income.
new text end
new text begin
This section is effective for taxable years beginning after December
31, 2018.
new text end
Minnesota Statutes 2018, section 290.0684, subdivision 2, is amended to read:
(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 deleted text begin $100,000deleted text end new text begin $135,000new text end , the maximum credit is reduced by one percent of adjusted gross
income in excess of $75,000new text begin until the maximum credit amount equals $250new text end ;new text begin and
new text end
deleted text begin
(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
deleted text end
deleted text begin (3)deleted text end new text begin (2)new text end 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 income thresholds in paragraphs (c) and (d) 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.
new text begin
This section is effective for taxable years beginning after December
31, 2019.
new text end
Minnesota Statutes 2018, section 290.0685, subdivision 1, is amended to read:
(a) An new text begin eligible new text end individual is allowed a credit against the
tax imposed by this chapter equal to $2,000 for each deleted text begin birth for which a certificate of birth
resulting in stillbirth has been issued under section 144.2151deleted text end new text begin stillbirthnew text end . The credit under this
section is allowed only in the taxable year in which the stillbirth occurred deleted text begin and if the child
would have been a dependent of the taxpayer as defined in section 152 of the Internal
Revenue Codedeleted text end .
(b) For a deleted text begin nonresident ordeleted text end part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2015.
new text end
Minnesota Statutes 2018, section 290.0685, is amended by adding a subdivision
to read:
new text begin
(a) For purposes of this section, the following terms have the
meanings given, unless the context clearly indicates otherwise.
new text end
new text begin
(b) "Certificate of birth" means the printed certificate of birth resulting in stillbirth issued
by the commissioner of health under section 144.2151 or for a birth occurring in another
state or country a similar certificate issued under that state's or country's law.
new text end
new text begin
(c) "Eligible individual" means an individual who is:
new text end
new text begin
(1)(i) a resident; or
new text end
new text begin
(ii) the nonresident spouse of a resident who is a member of armed forces of the United
States or the United Nations; and
new text end
new text begin
(2)(i) the individual listed first as a parent on the certificate of birth; or
new text end
new text begin
(ii) the individual who gave birth resulting in stillbirth for a birth outside of this state
for which no certificate of birth was issued.
new text end
new text begin
(d) "Stillbirth" means a birth for which a fetal death report would be required under
section 144.222, subdivision 1, if the birth occurred in this state.
new text end
new text begin
This section is effective retroactively for taxable years beginning
after December 31, 2015.
new text end
Minnesota Statutes 2018, section 290.0921, subdivision 3, is amended to read:
"Alternative minimum taxable income"
is Minnesota net income as defined in section 290.01, subdivision 19, and includes the
adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), (f), and (h) of
the Internal Revenue Code. If a corporation files a separate company Minnesota tax return,
the minimum tax must be computed on a separate company basis. If a corporation is part
of a tax group filing a unitary return, the minimum tax must be computed on a unitary basis.
The following adjustments must be made.
(1) The portion of the depreciation deduction allowed for federal income tax purposes
under section 168(k) of the Internal Revenue Code that is required as an addition under
section 290.0133, subdivision 11, is disallowed in determining alternative minimum taxable
income.