HF 2433

as introduced - 93rd Legislature (2023 - 2024) Posted on 02/26/2024 03:51pm

A bill for an act
relating to taxation; income; proposing a credit for graduates of aerospace and
aviation-related educational programs and employers of program graduates;
requiring reports; proposing coding for new law in Minnesota Statutes, chapter
290.

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

Sec. 1.

new text begin [290.0687] AEROSPACE AND AVIATION CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given them.
new text end

new text begin (b) "Aerospace" means relating to vehicles or objects for the purpose of suborbital,
orbital, or space flight, whether for private or public, or civil or defense-related purposes.
new text end

new text begin (c) "Aviation" means relating to vehicles or objects, except parachutes, for the purpose
of controlled flight through the air, regardless of how propelled or controlled, whether
manned or unmanned, whether for private or public, or civil or defense-related purposes,
or whether equipped with parachute systems.
new text end

new text begin (d) "Aviation and aerospace sector" means a private or public organization engaged in
the manufacture of aviation or aerospace hardware or software, aviation or aerospace
maintenance, aviation or aerospace repair and overhaul, supply of parts to the aviation or
aerospace industry, provision of services and support relating to the aviation or aerospace
industry, research and development of aviation or aerospace technology and systems, or
the education and training of aviation or aerospace personnel.
new text end

new text begin (e) "Compensation" means payments for performance of services for which the payor
is required to provide federal Form 1099 to the person paid. Compensation includes wages,
salary, or other remuneration subject to withholding tax, paid to a full-time employee.
Compensation does not include employer-provided retirement, medical or health care
benefits, or reimbursement for travel, meals, lodging, or any other expense.
new text end

new text begin (f) "Eligible institution" means any postsecondary institution that participates in the
federal Pell Grant Program under Title IV of the Higher Education Act of 1965, Public Law
89-329, as amended.
new text end

new text begin (g) "Qualified employee" means any person who meets the following requirements:
new text end

new text begin (1) was newly employed by a qualified employer on a full-time basis, or first contracted
with a qualified employer on a full-time basis, on or after January 1, 2024; and
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new text begin (2) has been awarded, within one year before or after the beginning date of employment,
an undergraduate degree, graduate degree, technical degree, or certificate in a qualified
program by an qualified institution.
new text end

new text begin (h) "Qualified employer" means a sole proprietorship, general partnership, limited
partnership, limited liability company, corporation, other legally recognized business entity,
or public entity whose principal business activity involves the aviation and aerospace sector
and who employs a qualified employee.
new text end

new text begin (i) "Qualified program" means a program at an eligible institution that:
new text end

new text begin (1) has been accredited by the Engineering Accreditation Commission of the Accreditation
Board for Engineering and Technology, the Federal Aviation Administration, or a regional
accrediting body and that awards an undergraduate or graduate degree;
new text end

new text begin (2) is within the meaning of an associate of applied science degree program or career
technical education program that results in the awarding of a degree or certificate that
prepares the graduate for gainful employment with a qualified employer; or
new text end

new text begin (3) results in obtaining a certification or rating which directly relates to the aviation and
aerospace sector and is granted through the Federal Aviation Administration or regional
accredited body.
new text end

new text begin (j) "Tuition" means the amount paid for enrollment, program-specific course fees, and
instruction in a qualified program that includes both amounts paid during participation in
a qualified program and amounts paid for tuition debt upon completion of a qualified
program. Tuition does not include the cost of books, fees that are not program-specific
course fees, or room and board.
new text end

new text begin Subd. 2. new text end

new text begin Credit for qualified employees; carryover. new text end

new text begin (a) A qualified employee is allowed
a credit against the tax imposed under this chapter in an amount equal to $5,000 each year
in the first through fifth consecutive years of employment with a qualified employer. A
qualified employee may claim the credit for the taxable year in which the qualified employee
first became eligible for the credit under this section and for each of the four taxable years
following the taxable year in which the credit was first allowed. The credit each year is
limited to the qualified employee's liability for tax.
new text end

new text begin (b) If the amount of the credit under this subdivision for any taxable year exceeds the
limitations under paragraph (a), the excess is a credit carryover to each of the four succeeding
taxable years. The entire amount of the excess unused credit for the taxable year must be
carried first to the earliest of the taxable years to which the credit may be carried. The
amount of the unused credit that may be added under this paragraph may not exceed the
qualified employee's liability for tax, less the credit for the taxable year. The credit may not
be carried over to any taxable year after the fourth taxable year following the taxable year
in which the credit was first allowed.
new text end

new text begin Subd. 3. new text end

new text begin Credit for tuition paid by qualified employers; limitation. new text end

new text begin (a) A qualified
employer is allowed a credit against the tax imposed under this chapter for tuition reimbursed
each year to a qualified employee in the first through fifth consecutive years of employment.
new text end

new text begin (b) The credit equals 50 percent of the amount of tuition reimbursed by the qualified
employer to each qualified employee except that the credit must not exceed 50 percent of
the average annual amount paid by a qualified employee for enrollment and instruction in
a qualified program. The credit is limited to the qualified employer's liability for tax. The
credit is not refundable and may not be carried forward.
new text end

new text begin Subd. 4. new text end

new text begin Credit for compensation paid by qualified employers; limitation. new text end

new text begin (a) A
qualified employer is allowed a credit against the tax for compensation paid during the
taxable year to a qualified employee. The credit is allowed in the first through fifth
consecutive years of employment. No credit may be claimed for compensation paid to a
qualified employee after the fifth year of employment of the qualified employee.
new text end

new text begin (b) The credit equals ten percent of the compensation paid to a qualified employee each
year. The credit must not exceed $15,000 each year for each qualified employee. The credit
is limited to the qualified employer's liability for tax. The credit is not refundable and may
not be carried forward.
new text end

new text begin Subd. 5. new text end

new text begin Qualified employer credits; pass through entities. new text end

new text begin Credits under subdivisions
3 and 4 allowed to a partnership, a limited liability company taxed as a partnership, an S
corporation, or multiple owners of property are passed through to the partners, members,
shareholders, or owners, respectively, pro rata to each based on the partner's, member's,
shareholder's, or owner's share of the entity's assets or as specially allocated in the
organizational documents or any other executed agreement, as of the last day of the taxable
year.
new text end

new text begin Subd. 6. new text end

new text begin Reports. new text end

new text begin Beginning January 15, 2026, and each year thereafter, the
commissioner must submit a written report to the chairs and ranking minority members of
the legislative committees with jurisdiction over taxes, in compliance with sections 3.195
and 3.197, on the tax credits issued under this section. The report must include information
regarding the cost and effectiveness of the tax credit program. The report may also include
any recommendations for changes to law necessary to implement the credit.
new text end

new text begin Subd. 7. new text end

new text begin Expiration. new text end

new text begin No new credits may be earned for taxable years beginning after
December 31, 2028. Credits allowed under this section may be claimed for taxable years
beginning before January 1, 2033. This section expires January 1, 2033, for taxable years
beginning after December 31, 2032.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2023.
new text end