HF 2190

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; individual income; modifying the 
  1.3             definition of taxable income and the tax rates; 
  1.4             amending Minnesota Statutes 2000, sections 290.01, 
  1.5             subdivisions 19a, 19b; 290.06, subdivision 2c; 
  1.6             290.091, subdivision 6; repealing Minnesota Statutes 
  1.7             2000, sections 290.0675; 290.091. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 2000, section 290.01, 
  1.10  subdivision 19a, is amended to read: 
  1.11     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
  1.12  individuals, estates, and trusts, there shall be added to 
  1.13  federal taxable income: 
  1.14     (1)(i) interest income on obligations of any state other 
  1.15  than Minnesota or a political or governmental subdivision, 
  1.16  municipality, or governmental agency or instrumentality of any 
  1.17  state other than Minnesota exempt from federal income taxes 
  1.18  under the Internal Revenue Code or any other federal statute, 
  1.19  and 
  1.20     (ii) exempt-interest dividends as defined in section 
  1.21  852(b)(5) of the Internal Revenue Code, except the portion of 
  1.22  the exempt-interest dividends derived from interest income on 
  1.23  obligations of the state of Minnesota or its political or 
  1.24  governmental subdivisions, municipalities, governmental agencies 
  1.25  or instrumentalities, but only if the portion of the 
  1.26  exempt-interest dividends from such Minnesota sources paid to 
  2.1   all shareholders represents 95 percent or more of the 
  2.2   exempt-interest dividends that are paid by the regulated 
  2.3   investment company as defined in section 851(a) of the Internal 
  2.4   Revenue Code, or the fund of the regulated investment company as 
  2.5   defined in section 851(g) of the Internal Revenue Code, making 
  2.6   the payment; and 
  2.7      (iii) for the purposes of items (i) and (ii), interest on 
  2.8   obligations of an Indian tribal government described in section 
  2.9   7871(c) of the Internal Revenue Code shall be treated as 
  2.10  interest income on obligations of the state in which the tribe 
  2.11  is located; 
  2.12     (2) the amount of income taxes paid or accrued within the 
  2.13  taxable year under this chapter and income taxes paid to any 
  2.14  other state or to any province or territory of Canada, to the 
  2.15  extent allowed as a deduction under section 63(d) of the 
  2.16  Internal Revenue Code, but the addition may not be more than the 
  2.17  amount by which the itemized deductions as allowed under section 
  2.18  63(d) of the Internal Revenue Code exceeds the amount of the 
  2.19  standard deduction as defined in section 63(c) of the Internal 
  2.20  Revenue Code.  For the purpose of this paragraph, the 
  2.21  disallowance of itemized deductions under section 68 of the 
  2.22  Internal Revenue Code of 1986, income tax is the last itemized 
  2.23  deduction disallowed; 
  2.24     (3) the capital gain amount of a lump sum distribution to 
  2.25  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
  2.26  Reform Act of 1986, Public Law Number 99-514, applies; 
  2.27     (4) the amount of income taxes paid or accrued within the 
  2.28  taxable year under this chapter and income taxes paid to any 
  2.29  other state or any province or territory of Canada, to the 
  2.30  extent allowed as a deduction in determining federal adjusted 
  2.31  gross income.  For the purpose of this paragraph, income taxes 
  2.32  do not include the taxes imposed by sections 290.0922, 
  2.33  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
  2.34     (5) the amount of expense, interest, or taxes disallowed 
  2.35  pursuant to section 290.10; and 
  2.36     (6) the amount of a partner's pro rata share of net income 
  3.1   which does not flow through to the partner because the 
  3.2   partnership elected to pay the tax on the income under section 
  3.3   6242(a)(2) of the Internal Revenue Code; and 
  3.4      (7) the amount of the standard deduction provided by 
  3.5   section 63(c) of the Internal Revenue Code, or the itemized 
  3.6   deductions as defined in section 63(d) of the Internal Revenue 
  3.7   Code reduced by the amount by which the itemized deductions were 
  3.8   reduced for federal income tax return purposes under section 68 
  3.9   of the Internal Revenue Code, in accordance with whether the 
  3.10  standard deduction or itemized deductions were claimed on the 
  3.11  federal income tax return; 
  3.12     (8) the amount of the deduction for personal exemptions 
  3.13  provided by section 151 of the Internal Revenue Code and claimed 
  3.14  on the federal income tax return; 
  3.15     (9) the amount of the deduction for dependent exemptions 
  3.16  provided by section 152 of the Internal Revenue Code and claimed 
  3.17  on the federal income tax return; 
  3.18     (10) the amount of the deduction for education loan 
  3.19  interest provided by section 221 of the Internal Revenue Code 
  3.20  and claimed on the federal income tax return; 
  3.21     (11) the amount of the deduction for medical savings 
  3.22  accounts provided by section 220 of the Internal Revenue Code 
  3.23  and claimed on the federal income tax return; and 
  3.24     (12) the amount of the deduction for moving expenses 
  3.25  provided by section 217 of the Internal Revenue Code and claimed 
  3.26  on the federal income tax return. 
  3.27     [EFFECTIVE DATE.] This section is effective for taxable 
  3.28  years beginning after December 31, 2000. 
  3.29     Sec. 2.  Minnesota Statutes 2000, section 290.01, 
  3.30  subdivision 19b, is amended to read: 
  3.31     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  3.32  individuals, estates, and trusts, there shall be subtracted from 
  3.33  federal taxable income: 
  3.34     (1) interest income on obligations of any authority, 
  3.35  commission, or instrumentality of the United States to the 
  3.36  extent includable in taxable income for federal income tax 
  4.1   purposes but exempt from state income tax under the laws of the 
  4.2   United States; 
  4.3      (2) if included in federal taxable income, the amount of 
  4.4   any overpayment of income tax to Minnesota or to any other 
  4.5   state, for any previous taxable year, whether the amount is 
  4.6   received as a refund or as a credit to another taxable year's 
  4.7   income tax liability; 
  4.8      (3) the amount paid to others, less the credit allowed 
  4.9   under section 290.0674, not to exceed $1,625 for each qualifying 
  4.10  child in grades kindergarten to 6 and $2,500 for each qualifying 
  4.11  child in grades 7 to 12, for tuition, textbooks, and 
  4.12  transportation of each qualifying child in attending an 
  4.13  elementary or secondary school situated in Minnesota, North 
  4.14  Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
  4.15  this state may legally fulfill the state's compulsory attendance 
  4.16  laws, which is not operated for profit, and which adheres to the 
  4.17  provisions of the Civil Rights Act of 1964 and chapter 363.  For 
  4.18  the purposes of this clause, "tuition" includes fees or tuition 
  4.19  as defined in section 290.0674, subdivision 1, clause (1).  As 
  4.20  used in this clause, "textbooks" includes books and other 
  4.21  instructional materials and equipment used in elementary and 
  4.22  secondary schools in teaching only those subjects legally and 
  4.23  commonly taught in public elementary and secondary schools in 
  4.24  this state.  Equipment expenses qualifying for deduction 
  4.25  includes expenses as defined and limited in section 290.0674, 
  4.26  subdivision 1, clause (3).  "Textbooks" does not include 
  4.27  instructional books and materials used in the teaching of 
  4.28  religious tenets, doctrines, or worship, the purpose of which is 
  4.29  to instill such tenets, doctrines, or worship, nor does it 
  4.30  include books or materials for, or transportation to, 
  4.31  extracurricular activities including sporting events, musical or 
  4.32  dramatic events, speech activities, driver's education, or 
  4.33  similar programs.  For purposes of the subtraction provided by 
  4.34  this clause, "qualifying child" has the meaning given in section 
  4.35  32(c)(3) of the Internal Revenue Code; 
  4.36     (4) contributions made in taxable years beginning after 
  5.1   December 31, 1981, and before January 1, 1985, to a qualified 
  5.2   governmental pension plan, an individual retirement account, 
  5.3   simplified employee pension, or qualified plan covering a 
  5.4   self-employed person that were included in Minnesota gross 
  5.5   income in the taxable year for which the contributions were made 
  5.6   but were deducted or were not included in the computation of 
  5.7   federal adjusted gross income, less any amount allowed to be 
  5.8   subtracted as a distribution under this subdivision or a 
  5.9   predecessor provision in taxable years that began before January 
  5.10  1, 2000.  This subtraction applies only for taxable years 
  5.11  beginning after December 31, 1999, and before January 1, 2001.  
  5.12  If an individual's subtraction under this clause exceeds the 
  5.13  individual's taxable income, the excess may be carried forward 
  5.14  to taxable years beginning after December 31, 2000, and before 
  5.15  January 1, 2002; 
  5.16     (5) income as provided under section 290.0802; 
  5.17     (6) the amount of unrecovered accelerated cost recovery 
  5.18  system deductions allowed under subdivision 19g; 
  5.19     (7) to the extent included in federal adjusted gross 
  5.20  income, income realized on disposition of property exempt from 
  5.21  tax under section 290.491; 
  5.22     (8) to the extent not deducted in determining federal 
  5.23  taxable income or used to claim the long-term care insurance 
  5.24  credit under section 290.0672, the amount paid for health 
  5.25  insurance of self-employed individuals as determined under 
  5.26  section 162(l) of the Internal Revenue Code, except that the 
  5.27  percent limit does not apply.  If the individual deducted 
  5.28  insurance payments under section 213 of the Internal Revenue 
  5.29  Code of 1986, the subtraction under this clause must be reduced 
  5.30  by the lesser of: 
  5.31     (i) the total itemized deductions allowed under section 
  5.32  63(d) of the Internal Revenue Code, less state, local, and 
  5.33  foreign income taxes deductible under section 164 of the 
  5.34  Internal Revenue Code and the standard deduction under section 
  5.35  63(c) of the Internal Revenue Code; or 
  5.36     (ii) the lesser of (A) the amount of insurance qualifying 
  6.1   as "medical care" under section 213(d) of the Internal Revenue 
  6.2   Code to the extent not deducted under section 162(1) of the 
  6.3   Internal Revenue Code or excluded from income or (B) the total 
  6.4   amount deductible for medical care under section 213(a); 
  6.5      (9) the exemption amount allowed under Laws 1995, chapter 
  6.6   255, article 3, section 2, subdivision 3; 
  6.7      (10) to the extent included in federal taxable income, 
  6.8   postservice benefits for youth community service under section 
  6.9   124D.42 for volunteer service under United States Code, title 
  6.10  42, sections 12601 to 12604; 
  6.11     (11) to the extent not deducted in determining federal 
  6.12  taxable income by an individual who does not itemize deductions 
  6.13  for federal income tax purposes for the taxable year, an amount 
  6.14  equal to 50 percent of the excess of charitable contributions 
  6.15  allowable as a deduction for the taxable year under section 
  6.16  170(a) of the Internal Revenue Code over $500; 
  6.17     (12) (10) to the extent included in federal taxable income, 
  6.18  holocaust victims' settlement payments for any injury incurred 
  6.19  as a result of the holocaust, if received by an individual who 
  6.20  was persecuted for racial or religious reasons by Nazi Germany 
  6.21  or any other Axis regime or an heir of such a person; and 
  6.22     (13) (11) for taxable years beginning before January 1, 
  6.23  2008, the amount of the federal small ethanol producer credit 
  6.24  allowed under section 40(a)(3) of the Internal Revenue Code 
  6.25  which is included in gross income under section 87 of the 
  6.26  Internal Revenue Code.; 
  6.27     (12) a personal exemption equal to ..... for each exemption 
  6.28  allowed under section 151 of the Internal Revenue Code.  The 
  6.29  exemption amount in this clause must be adjusted for inflation.  
  6.30  The commissioner shall adjust the exemption by the percentage 
  6.31  determined under section 290.06, subdivision 2d, for the taxable 
  6.32  year; 
  6.33     (13) a dependent exemption equal to ..... for each 
  6.34  exemption allowed under section 152 of the Internal Revenue 
  6.35  Code.  The exemption amount in this clause must be adjusted for 
  6.36  inflation.  The commissioner shall adjust the exemption by the 
  7.1   percentage determined under section 290.06, subdivision 2d, for 
  7.2   the taxable year; and 
  7.3      (14) for an individual who was allowed to be claimed as a 
  7.4   dependent under section 151 of the Internal Revenue Code, the 
  7.5   lesser of (i) the personal exemption amount allowed in clause 
  7.6   (12) or (ii) the greater of (A) $....... or (B) $....... plus 
  7.7   the individual's earned income as defined in section 32(c)(2)(A) 
  7.8   of the Internal Revenue Code.  The amounts in (ii)(A) and 
  7.9   (ii)(B) must be adjusted for inflation.  The commissioner shall 
  7.10  adjust the amounts by the percentage determined under section 
  7.11  290.06, subdivision 2d, for the taxable year. 
  7.12     [EFFECTIVE DATE.] This section is effective for taxable 
  7.13  years beginning after December 31, 2000. 
  7.14     Sec. 3.  Minnesota Statutes 2000, section 290.06, 
  7.15  subdivision 2c, is amended to read: 
  7.16     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  7.17  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  7.18  married individuals filing joint returns and, surviving spouses 
  7.19  as defined in section 2(a) of the Internal Revenue Code must be 
  7.20  computed by applying to their taxable net income the following 
  7.21  schedule of rates: 
  7.22     (1) On the first $25,680, 5.35 percent; 
  7.23     (2) On all over $25,680, but not over $102,030, 7.05 
  7.24  percent; 
  7.25     (3) On all over $102,030, 7.85 percent. 
  7.26     Married individuals filing separate returns, estates, and 
  7.27  trusts must compute their income tax by applying the above rates 
  7.28  to their taxable income, except that the income brackets will be 
  7.29  one-half of the above amounts.  
  7.30     (b) The income taxes imposed by this chapter upon unmarried 
  7.31  individuals must be computed by applying to taxable net income 
  7.32  the following schedule of rates: 
  7.33     (1) On the first $17,570, 5.35 percent; 
  7.34     (2) On all over $17,570, but not over $57,710, 7.05 
  7.35  percent; 
  7.36     (3) On all over $57,710, 7.85 percent. 
  8.1      (c) The income taxes imposed by this chapter upon, 
  8.2   unmarried individuals, unmarried individuals qualifying as a 
  8.3   head of household as defined in section 2(b) of the Internal 
  8.4   Revenue Code, married individuals filing separate returns, 
  8.5   estates, and trusts must be computed by applying to ..... 
  8.6   percent to their taxable net income the following schedule of 
  8.7   rates: 
  8.8      (1) On the first $21,630, 5.35 percent; 
  8.9      (2) On all over $21,630, but not over $86,910, 7.05 
  8.10  percent; 
  8.11     (3) On all over $86,910, 7.85 percent. 
  8.12     (d) (b) In lieu of a tax computed according to the rates 
  8.13  set forth in this subdivision, the tax of any individual 
  8.14  taxpayer whose taxable net income for the taxable year is less 
  8.15  than an amount determined by the commissioner must be computed 
  8.16  in accordance with tables prepared and issued by the 
  8.17  commissioner of revenue based on income brackets of not more 
  8.18  than $100.  The amount of tax for each bracket shall be computed 
  8.19  at the rates set forth in this subdivision, provided that the 
  8.20  commissioner may disregard a fractional part of a dollar unless 
  8.21  it amounts to 50 cents or more, in which case it may be 
  8.22  increased to $1. 
  8.23     (e) (c) An individual who is not a Minnesota resident for 
  8.24  the entire year must compute the individual's Minnesota income 
  8.25  tax as provided in this subdivision.  After the application of 
  8.26  the nonrefundable credits provided in this chapter, the tax 
  8.27  liability must then be multiplied by a fraction in which:  
  8.28     (1) the numerator is the individual's Minnesota source 
  8.29  federal adjusted gross income as defined in section 62 of the 
  8.30  Internal Revenue Code and increased by the additions required 
  8.31  under section 290.01, subdivision 19a, clauses (1) and (6), 
  8.32  after applying the allocation and assignability provisions of 
  8.33  section 290.081, clause (a), or 290.17; and 
  8.34     (2) the denominator is the individual's federal adjusted 
  8.35  gross income as defined in section 62 of the Internal Revenue 
  8.36  Code of 1986, increased by the amounts specified in section 
  9.1   290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
  9.2   amounts specified in section 290.01, subdivision 19b, clause (1).
  9.3      [EFFECTIVE DATE.] This section is effective for taxable 
  9.4   years beginning after December 31, 2000. 
  9.5      Sec. 4.  Minnesota Statutes 2000, section 290.091, 
  9.6   subdivision 6, is amended to read: 
  9.7      Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) For tax 
  9.8   years beginning after December 31, 2000, and before January 1, 
  9.9   2002, a credit is allowed against the tax imposed by this 
  9.10  chapter on individuals, trusts, and estates equal to the minimum 
  9.11  tax credit for the taxable year.  The minimum tax credit equals 
  9.12  the adjusted net minimum tax for taxable years beginning after 
  9.13  December 31, 1988, reduced by the minimum tax credits allowed in 
  9.14  a prior taxable year.  The credit may not exceed the excess (if 
  9.15  any) for the taxable year of 
  9.16     (1) the regular tax, over 
  9.17     (2) the greater of (i) the tentative alternative minimum 
  9.18  tax, or (ii) zero. 
  9.19     (b) The adjusted net minimum tax for a taxable year equals 
  9.20  the lesser of the net minimum tax or the excess (if any) of 
  9.21     (1) the tentative minimum tax, over 
  9.22     (2) 6.4 6.0 percent of the sum of 
  9.23     (i) adjusted gross income as defined in section 62 of the 
  9.24  Internal Revenue Code, 
  9.25     (ii) interest income as defined in section 290.01, 
  9.26  subdivision 19a, clause (1), 
  9.27     (iii) interest on specified private activity bonds, as 
  9.28  defined in section 57(a)(5) of the Internal Revenue Code, to the 
  9.29  extent not included under clause (ii), 
  9.30     (iv) depletion as defined in section 57(a)(1), determined 
  9.31  without regard to the last sentence of paragraph (1), of the 
  9.32  Internal Revenue Code, less 
  9.33     (v) the deductions allowed in computing alternative minimum 
  9.34  taxable income provided in subdivision 2, paragraph (a), clause 
  9.35  (2) of the first series of clauses and clauses (1), (2), and (3) 
  9.36  of the second series of clauses, and 
 10.1      (vi) the exemption amount determined under subdivision 3. 
 10.2      In the case of an individual who is not a Minnesota 
 10.3   resident for the entire year, adjusted net minimum tax must be 
 10.4   multiplied by the fraction defined in section 290.06, 
 10.5   subdivision 2c, paragraph (e).  In the case of a trust or 
 10.6   estate, adjusted net minimum tax must be multiplied by the 
 10.7   fraction defined under subdivision 4, paragraph (b). 
 10.8      (c) For tax years beginning after December 31, 2000, and 
 10.9   before January 1, 2003, a credit is allowed against the tax 
 10.10  imposed by this chapter on individuals, trusts, and estates 
 10.11  equal to the minimum tax credit for the taxable year.  The 
 10.12  minimum tax credit equals the adjusted net minimum tax for 
 10.13  taxable years beginning after December 31, 1988, and before 
 10.14  January 1, 2001, reduced by the minimum tax credits allowed in a 
 10.15  prior taxable year.  The credit may not exceed the tax imposed 
 10.16  by this chapter after the allowance of the credits in sections 
 10.17  290.06, subdivisions 22, 22a, 26, and 28; 290.0672; and 290.075. 
 10.18     [EFFECTIVE DATE.] This section is effective for tax years 
 10.19  beginning after December 31, 2000. 
 10.20     Sec. 5.  [REPEALER.] 
 10.21     Minnesota Statutes 2000, sections 290.0675 and 290.091, are 
 10.22  repealed. 
 10.23     [EFFECTIVE DATE.] This section is effective for taxable 
 10.24  years beginning after December 31, 2000, except the repeal of 
 10.25  section 290.091, subdivision 6, is effective for taxable years 
 10.26  beginning after December 31, 2002.