Minnesota Legislature
HF 2796
as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am
Bill Text Versions
| Engrossments | ||
|---|---|---|
| Introduction | Posted on 02/16/2006 |
Current Version - as introduced
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A bill for an act
relating to taxation; income; modifying rates;
amending Minnesota Statutes 2004, sections 290.06,
subdivisions 2c, 2d; 290.091, subdivisions 1, 2, 6.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2004, section 290.06,
subdivision 2c, is amended to read:
Subd. 2c.
Schedules of rates for individuals, estates,
and trusts.
(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 $25,680 deleted text end new text begin $28,420new text end , deleted text begin 5.35 deleted text end new text begin 6 new text end percent;
(2) On all over deleted text begin $25,680 deleted text end new text begin $28,420new text end , but not
over deleted text begin $102,030 deleted text end new text begin $112,910new text end , deleted text begin 7.05 deleted text end new text begin 8 new text end percent;
(3) On all over deleted text begin $102,030 deleted text end new text begin $112,910new text end , deleted text begin 7.85 deleted text end new text begin 8.5 new text end 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 amounts.
(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 $17,570 deleted text end new text begin $19,440new text end , deleted text begin 5.35 deleted text end new text begin 6 new text end percent;
(2) On all over deleted text begin $17,570 deleted text end new text begin $19,440new text end , but not
over deleted text begin $57,710 deleted text end new text begin $63,860new text end , deleted text begin 7.05 deleted text end new text begin 8 new text end percent;
(3) On all over deleted text begin $57,710 deleted text end new text begin $63,860new text end , deleted text begin 7.85 deleted text end new text begin 8.5 new text end 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 $21,630 deleted text end new text begin $23,940new text end , deleted text begin 5.35 deleted text end new text begin 6 new text end percent;
(2) On all over deleted text begin $21,630 deleted text end new text begin $23,940new text end , but not
over deleted text begin $86,910 deleted text end new text begin $96,180new text end , deleted text begin 7.05 deleted text end new text begin 8 new text end percent;
(3) On all over deleted text begin $86,910 deleted text end new text begin $96,180new text end , deleted text begin 7.85 deleted text end new text begin 8.5 new text end 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 290.01, subdivision 19a, clauses (1), (5), and
(6), and reduced by the subtraction under section 290.01,
subdivision 19b, clause (11), and the Minnesota assignable
portion of the subtraction for United States government interest
under section 290.01, subdivision 19b, clause (1), 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 of 1986, increased by the amounts specified in section
290.01, subdivision 19a, clauses (1), (5), and (6), and reduced
by the amounts specified in section 290.01, subdivision 19b,
clauses (1) and (11).
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable
years beginning after December 31, 2004.
new text end
Sec. 2.
Minnesota Statutes 2004, section 290.06,
subdivision 2d, is amended to read:
Subd. 2d.
Inflation adjustment of brackets.
(a) For
taxable years beginning after December 31, deleted text begin 2000 deleted text end new text begin 2005new text end , the
minimum and maximum dollar amounts for each rate bracket for
which a tax is imposed in subdivision 2c 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, deleted text begin 1999 deleted text end new text begin 2004new text end , and before January
1, deleted text begin 2001 deleted text end new text begin 2006new 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.
(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 deleted text begin "1999" deleted text end new text begin "2004" new text end shall be substituted for the
word "1992." For deleted text begin 2001 deleted text end new text begin 2006new text end , the commissioner shall then
determine the percent change from the 12 months ending on August
31, deleted text begin 1999 deleted text end new text begin 2004new text end , to the 12 months ending on August 31, deleted text begin 2000 deleted text end new text begin 2005new text end ,
and in each subsequent year, from the 12 months ending on August
31, deleted text begin 1999 deleted text end new text begin 2004new text end , 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.
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.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable
years beginning after December 31, 2004.
new text end
Sec. 3.
Minnesota Statutes 2004, section 290.091,
subdivision 1, is amended to read:
Subdivision 1.
Imposition of tax.
In addition to all
other taxes imposed by this chapter a tax is imposed on
individuals, estates, and trusts equal to the excess (if any) of
(a) an amount equal to deleted text begin 6.4 deleted text end new text begin 7 new text end percent of alternative minimum
taxable income after subtracting the exemption amount, over
(b) the regular tax for the taxable year.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable
years beginning after December 31, 2004.
new text end
Sec. 4.
Minnesota Statutes 2004, section 290.091,
subdivision 2, is amended to read:
Subd. 2.
Definitions.
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 to the extent that the deduction
exceeds 1.0 percent of adjusted gross income, as defined in
section 62 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 290.01, subdivision 19a, clause (1); and
(6) the amount of addition required by section 290.01,
subdivision 19a, clause (7);
less the sum of the amounts determined under the following:
(1) interest income as defined in section 290.01,
subdivision 19b, clause (1);
(2) an overpayment of state income tax as provided by
section 290.01, subdivision 19b, clause (2), to the extent
included in federal alternative minimum taxable income;
(3) 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; and
(4) amounts subtracted from federal taxable income as
provided by section 290.01, subdivision 19b, clauses (10) and
(11).
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 Code.
(b) "Investment interest" means investment interest as
defined in section 163(d)(3) of the Internal Revenue Code.
(c) "Tentative minimum tax" equals deleted text begin 6.4 deleted text end new text begin 7 new text end percent of
alternative minimum taxable income after subtracting the
exemption amount determined under subdivision 3.
(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) "Net minimum tax" means the minimum tax imposed by this
section.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable
years beginning after December 31, 2004.
new text end
Sec. 5.
Minnesota Statutes 2004, section 290.091,
subdivision 6, is amended to read:
Subd. 6.
Credit for prior years' liability.
(a) A credit
is allowed against the tax imposed by this chapter on
individuals, trusts, and estates equal to the minimum tax credit
for the taxable year. The minimum tax credit equals the
adjusted net minimum tax for taxable years beginning after
December 31, 1988, reduced by the minimum tax credits allowed in
a prior taxable year. The credit may not exceed the excess (if
any) for the taxable year of
(1) the regular tax, over
(2) the greater of (i) the tentative alternative minimum
tax, or (ii) zero.
(b) The adjusted net minimum tax for a taxable year equals
the lesser of the net minimum tax or the excess (if any) of
(1) the tentative minimum tax, over
(2) deleted text begin 6.4 deleted text end new text begin 7 new text end percent of the sum of
(i) adjusted gross income as defined in section 62 of the
Internal Revenue Code,
(ii) interest income as defined in section 290.01,
subdivision 19a, clause (1),
(iii) interest on specified private activity bonds, as
defined in section 57(a)(5) of the Internal Revenue Code, to the
extent not included under clause (ii),
(iv) depletion as defined in section 57(a)(1), determined
without regard to the last sentence of paragraph (1), of the
Internal Revenue Code, less
(v) the deductions allowed in computing alternative minimum
taxable income provided in subdivision 2, paragraph (a), clause
(2) of the first series of clauses and clauses (1), (2), and (3)
of the second series of clauses, and
(vi) the exemption amount determined under subdivision 3.
In the case of an individual who is not a Minnesota
resident for the entire year, adjusted net minimum tax must be
multiplied by the fraction defined in section 290.06,
subdivision 2c, paragraph (e). In the case of a trust or
estate, adjusted net minimum tax must be multiplied by the
fraction defined under subdivision 4, paragraph (b).
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for taxable
years beginning after December 31, 2004.
new text end