HF 2942

as introduced - 90th Legislature (2017 - 2018) Posted on 02/22/2018 02:56pm

A bill for an act
relating to taxation; income; corporate franchise; property tax refund; estate tax;
adopting certain changes to federal law and making conforming changes; amending
Minnesota Statutes 2016, sections 289A.08, subdivision 7; 290.01, subdivision
29a; 290.0131, subdivision 3, by adding a subdivision; 290.0132, subdivision 7,
by adding subdivisions; 290.0133, subdivision 6, by adding a subdivision; 290.06,
subdivision 2c; 290.095, subdivision 4; 290A.04, subdivisions 2, 2a; Minnesota
Statutes 2017 Supplement, sections 289A.02, subdivision 7; 290.01, subdivisions
19, 31; 290.0681, subdivision 2; 290.091, subdivision 2; 290A.03, subdivisions
3, 15; 291.005, subdivision 1; repealing Minnesota Statutes 2016, sections
290.0131, subdivisions 7, 11, 13; 290.0132, subdivisions 19, 20; 290.0133,
subdivisions 13, 14; 290.10, subdivision 2.

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

Section 1.

Minnesota Statutes 2017 Supplement, section 289A.02, subdivision 7, is
amended to read:

Subd. 7.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through December
deleted text begin 16, 2016 deleted text end new text begin 31, 2017 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2016, section 289A.08, subdivision 7, is amended to read:

Subd. 7.

Composite income tax returns for nonresident partners, shareholders, and
beneficiaries.

(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 11 deleted text end new text begin 10 new 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 EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 3.

Minnesota Statutes 2017 Supplement, section 290.01, subdivision 19, is amended
to read:

Subd. 19.

Net income.

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.

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.

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.

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.

The Internal Revenue Code of 1986, as amended through December deleted text begin 16, 2016 deleted text end new text begin 31, 2017 new text end ,
shall be in effect for taxable years beginning after December 31, 1996.

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 EFFECTIVE DATE. new 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 as
the changes were effective for federal purposes.
new text end

Sec. 4.

Minnesota Statutes 2016, section 290.01, subdivision 29a, is amended to read:

Subd. 29a.

State itemized deduction.

"State itemized deduction" means 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 deleted text begin , and reduced by the amount of
the addition required under section 290.0131, subdivision 13 deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2017 Supplement, section 290.01, subdivision 31, is amended
to read:

Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through December
deleted text begin 16, 2016 deleted text end new text begin 31, 2017 new 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. When used in this chapter, the reference to "subtitle A, chapter 1, subchapter
N, part 1, of the Internal Revenue Code" is to the Internal Revenue Code as amended through
March 18, 2010.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies to the same taxable years as the changes incorporated by federal changes are
applicable for federal purposes, including any provisions that are retroactive to taxable years
beginning after December 31, 2016.
new text end

Sec. 6.

Minnesota Statutes 2016, section 290.0131, subdivision 3, is amended to read:

Subd. 3.

Income, sales and use, motor vehicle sales, or excise taxes paid.

(a) 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.

(b) The addition under paragraph (a) may not be more than the new text begin least of the following
amounts:
new text end

new text begin (1) the new text end amount by which the deleted text begin state deleted text end new text begin total new text end itemized deduction new text begin allowed under section 164
of the Internal Revenue Code new text end exceeds the amount of the standard deduction as defined in
section 63(c) of the Internal Revenue Code deleted text begin . For the purpose of this subdivision, deleted text end new text begin ;
new text end

new text begin (2) the amount of new text end income, sales and use, motor vehicle sales, or excise taxes deleted text begin are the last
itemized deductions disallowed under subdivision 12. deleted text end new text begin allowed under section 164 of the
Internal Revenue Code for the taxable year; or
new text end

new text begin (3) $10,000, or $5,000 in the case of a married individual filing a separate return, less
the amount of real and personal property taxes that are subject to the limit under section
164(b)(6) of the Internal Revenue Code, but the remainder cannot be less than zero.
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, 2017.
new text end

Sec. 7.

Minnesota Statutes 2016, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin Qualified business income. new text end

new text begin The amount of the deduction for qualified business
income allowed under section 199A of the Internal Revenue Code for the taxable year is
an addition.
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, 2017.
new text end

Sec. 8.

Minnesota Statutes 2016, section 290.0132, subdivision 7, is amended to read:

Subd. 7.

Charitable contributions for taxpayers who do not itemize.

To the extent
not deducted or not deductible under section 408(d)(8)(E) of the Internal Revenue Code in
determining federal taxable income by an individual who does not itemize deductions for
federal income tax purposes for the taxable year, an amount equal to deleted text begin 50 percent of deleted text end the deleted text begin excess deleted text end
deleted text begin of deleted text end charitable contributions deleted text begin over $500 deleted text end allowable as a deduction for the taxable year under
section 170(a) of the Internal Revenue Code is a subtraction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 9.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 27. new text end

new text begin Dependent and personal exemptions. new text end

new text begin (a) An amount equal to the sum of
the taxpayer's dependent and personal exemptions, less the disallowed personal exemption
amount determined under paragraph (d), is a subtraction.
new text end

new text begin (b) A taxpayer's dependent exemption equals $4,150 for each individual who is a
dependent of the taxpayer, as defined in section 152 of the Internal Revenue Code.
new text end

new text begin (c) A taxpayer's personal exemption equals $8,300 for married individuals filing a joint
return and $4,150 for all other taxpayers.
new text end

new text begin (d) The disallowed personal exemption amount equals the sum of the taxpayer's dependent
and personal exemptions multiplied by the applicable percentage. 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. "Threshold amount" means:
new text end

new text begin (1) $285,050 for a joint return or a surviving spouse;
new text end

new text begin (2) $237,550 for a head of a household;
new text end

new text begin (3) $190,050 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) $142,500 for a married individual filing a separate return.
new text end

new text begin (e) For taxable years beginning after December 31, 2018, the commissioner must adjust
the amounts in this subdivision for inflation by the percentage determined under paragraph
(f). The commissioner must round the personal and dependent exemption amounts to the
nearest $50 amount. If the personal or dependent exemption ends in $25, the commissioner
must round it to the nearest $50 amount.
new text end

new text begin (f) The commissioner must adjust the amounts in this subdivision using the Consumer
Price Index for all-urban consumers. For 2019, the commissioner must determine the percent
change from the 12 months ending on August 31, 2017, to the 12 months ending on August
31, 2018, and in each subsequent year, from the 12 months ending on August 31, 2017, to
the 12 months ending on August 31 of the year preceding the taxable year.
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, 2017.
new text end

Sec. 10.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 28. new text end

new text begin Property taxes. new text end

new text begin For a taxpayer electing to itemize deductions for federal
income tax purposes, the amount of state or local real or personal property taxes that are
subject to and exceed the dollar limitation under section 164(b)(6) of the Internal Revenue
Code is a deduction.
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, 2017.
new text end

Sec. 11.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 29. new text end

new text begin Moving expenses. new text end

new text begin (a) The amount of a taxpayer's eligible moving expenses
is a subtraction.
new text end

new text begin (b) The amount of a taxpayer's eligible moving expenses equals any amounts suspended
as not applying to the taxable year by section 217(k) of the Internal Revenue Code.
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, 2017.
new text end

Sec. 12.

Minnesota Statutes 2016, section 290.0133, subdivision 6, is amended to read:

Subd. 6.

Special deductions.

new text begin (a) new text end The amount of any special deductions under sections
241 to 247 deleted text begin and 965 deleted 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 that represents amounts included in federal
taxable income in a prior taxable year under section 965 of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective retroactively for taxable years beginning
after December 31, 2016. Paragraph (b) is effective for taxable years beginning after
December 31, 2017.
new text end

Sec. 13.

Minnesota Statutes 2016, section 290.0133, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin Deferred foreign income. new text end

new text begin (a) The amount of the deduction provided under
section 965(c) of the Internal Revenue Code is an addition.
new text end

new text begin (b) For a taxpayer making a federal election under section 965(h) of the Internal Revenue
Code, the addition under paragraph (a) must be applied ratably to the same tax periods and
be calculated using the same percentages that are used to determine the payments of federal
tax on the deferred foreign income under section 965(h) of the Internal Revenue Code for
the tax period.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2016.
new text end

Sec. 14.

Minnesota Statutes 2016, 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 $35,480, 5.35 percent;

(2) On all over $35,480, but not over $140,960, 7.05 percent;

(3) On all over $140,960, but not over $250,000, 7.85 percent;

(4) On all over $250,000, 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 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 $24,270, 5.35 percent;

(2) On all over $24,270, but not over $79,730, 7.05 percent;

(3) On all over $79,730, but not over $150,000, 7.85 percent;

(4) On all over $150,000, 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 $29,880, 5.35 percent;

(2) On all over $29,880, but not over $120,070, 7.05 percent;

(3) On all over $120,070, but not over $200,000, 7.85 percent;

(4) On all over $200,000, 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 and 6 to deleted text begin 11 deleted text end new text begin 10 new 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, and 18, 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 and 6 to deleted text begin 11 deleted text end new text begin 10 new text end , and reduced by the amounts specified in section 290.0132,
subdivisions 2, 9, 10, 14, 15, 17, and 18.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 15.

Minnesota Statutes 2017 Supplement, section 290.0681, subdivision 2, is amended
to read:

Subd. 2.

Credit or grant allowed; certified historic structure.

(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 Notwithstanding the provisions of section 47(a) of the Internal Revenue Code allowing the
federal credit ratably over a five-year period, the full amount of the credit under this section
is allowed in the taxable year in which the qualified rehabilitated building 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.

(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 EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 16.

Minnesota Statutes 2017 Supplement, 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; new text begin
and
new text end

(ii) the medical expense deduction;

deleted text begin (iii) the casualty, theft, and disaster loss deduction; and
deleted text end

deleted text begin (iv) the impairment-related work expenses of a disabled person;
deleted text end

(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; and

(6) the amount of addition required by section 290.0131, subdivisions 9 to deleted text begin 11 deleted text end new text begin 10 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 26; and

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c).

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) "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 EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 17.

Minnesota Statutes 2016, section 290.095, subdivision 4, is amended to read:

Subd. 4.

Computation and modifications.

The following modifications shall be made
in computing a net operating loss in any taxable year and also in computing the taxable net
income for any taxable year before a net operating loss deduction shall be allowed:

(a) No deduction shall be allowed for or with respect to losses connected with income
producing activities if the income therefrom would not be required to be either assignable
to this state or included in computing the taxpayer's taxable net income.

(b) A net operating loss deduction shall not be allowed.

(c) The amount deductible on account of losses from sales or exchanges of capital assets
shall not exceed the amount includable on account of gains from sales or exchanges of
capital assets.

(d) Renegotiation of profits for a prior taxable year under the renegotiation laws of the
United States of America, including renegotiation of the profits with a subcontractor, shall
not enter into the computation.

(e) Federal income and excess profits taxes shall not be allowed as a deduction.

new text begin (f) The 80-percent limitation under section 172(a)(2) of the Internal Revenue Code does
not apply to the computations for corporate taxpayers under this section.
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, 2017.
new text end

Sec. 18.

Minnesota Statutes 2017 Supplement, section 290A.03, subdivision 3, is amended
to read:

Subd. 3.

Income.

(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) the amount of deduction allowed under section 199 of the Internal Revenue Code;

(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; or

(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 107-16.

(c) The sum of the following amounts may be subtracted from income:

(1) for the claimant's first dependent, deleted text begin the exemption amount multiplied by 1.4 deleted text end new text begin $5,810 new text end ;

(2) for the claimant's second dependent, deleted text begin the exemption amount multiplied by 1.3 deleted text end new text begin $5,395 new text end ;

(3) for the claimant's third dependent, deleted text begin the exemption amount multiplied by 1.2 deleted text end new text begin $4,980 new text end ;

(4) for the claimant's fourth dependent, deleted text begin the exemption amount multiplied by 1.1 deleted text end new text begin $4,565 new text end ;

(5) for the claimant's fifth dependent, deleted text begin the exemption amount deleted text end new text begin $4,150 new text end ; 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, deleted text begin the exemption
amount deleted text end new text begin $4,150 new text end .

(d) For purposes of this subdivision, the deleted text begin "exemption amount" means the exemption
amount under section 151(d) of the Internal Revenue Code for the taxable year for which
the income is reported; deleted 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 "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 (e) Beginning for property tax refunds payable in 2019, the commissioner shall adjust
the subtraction from income amounts in paragraph (c) 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 "2017" shall be substituted for the word "1992." For
2019, the commissioner shall then determine the percentage change from the 12 months
ending on August 31, 2017, to the 12 months ending on August 31, 2018, and in each
subsequent year, from the 12 months ending on August 31, 2017, 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 14.386. The
subtraction from income amounts as adjusted must be rounded to the nearest $5 amount.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on property
taxes payable after December 31, 2018, and rent paid after December 31, 2016.
new text end

Sec. 19.

Minnesota Statutes 2017 Supplement, section 290A.03, subdivision 15, is amended
to read:

Subd. 15.

Internal Revenue Code.

"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through December deleted text begin 16, 2016 deleted text end new text begin 31, 2017, except as otherwise
provided in subdivision 3, paragraph (d), to calculate the exemption amount new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on property
taxes payable after December 31, 2018, and rent paid after December 31, 2016.
new text end

Sec. 20.

Minnesota Statutes 2016, section 290A.04, subdivision 2, is amended to read:

Subd. 2.

Homeowners; homestead credit refund.

A claimant whose property taxes
payable are in excess of the percentage of the household income stated below shall pay an
amount equal to the percent of income shown for the appropriate household income level
along with the percent to be paid by the claimant of the remaining amount of property taxes
payable. The state refund equals the amount of property taxes payable that remain, up to
the state refund amount shown below.

deleted text begin Household Income deleted text end	deleted text begin Percent of Income deleted text end	deleted text begin Percent Paid by Claimant deleted text end	deleted text begin Maximum State Refund deleted text end
deleted text begin $0 to 1,619 deleted text end	deleted text begin 1.0 percent deleted text end	deleted text begin 15 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 1,620 to 3,229 deleted text end	deleted text begin 1.1 percent deleted text end	deleted text begin 15 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 3,230 to 4,889 deleted text end	deleted text begin 1.2 percent deleted text end	deleted text begin 15 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 4,890 to 6,519 deleted text end	deleted text begin 1.3 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 6,520 to 8,129 deleted text end	deleted text begin 1.4 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 8,130 to 11,389 deleted text end	deleted text begin 1.5 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 11,390 to 13,009 deleted text end	deleted text begin 1.6 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 13,010 to 14,649 deleted text end	deleted text begin 1.7 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 14,650 to 16,269 deleted text end	deleted text begin 1.8 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 16,270 to 17,879 deleted text end	deleted text begin 1.9 percent deleted text end	deleted text begin 25 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 17,880 to 22,779 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 25 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 22,780 to 24,399 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 24,400 to 27,659 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 27,660 to 39,029 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 35 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,580 deleted text end
deleted text begin 39,030 to 56,919 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 35 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,090 deleted text end
deleted text begin 56,920 to 65,049 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,830 deleted text end
deleted text begin 65,050 to 73,189 deleted text end	deleted text begin 2.1 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,510 deleted text end
deleted text begin 73,190 to 81,319 deleted text end	deleted text begin 2.2 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,350 deleted text end
deleted text begin 81,320 to 89,449 deleted text end	deleted text begin 2.3 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,180 deleted text end
deleted text begin 89,450 to 94,339 deleted text end	deleted text begin 2.4 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,000 deleted text end
deleted text begin 94,340 to 97,609 deleted text end	deleted text begin 2.5 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 830 deleted text end
deleted text begin 97,610 to 101,559 deleted text end	deleted text begin 2.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 680 deleted text end
deleted text begin 101,560 to 105,499 deleted text end	deleted text begin 2.5 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 500 deleted text end

new text begin Household Income new text end	new text begin Percent of Income new text end	new text begin Percent Paid by Claimant new text end	new text begin Maximum State Refund new text end
new text begin $0 to 1,730 new text end	new text begin 1.0 percent new text end	new text begin 10 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 1,730 to 3,450 new text end	new text begin 1.1 percent new text end	new text begin 10 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 3,450 to 5,220 new text end	new text begin 1.2 percent new text end	new text begin 10 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 5,220 to 6,960 new text end	new text begin 1.3 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 6,960 to 8,680 new text end	new text begin 1.4 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 8,680 to 12,160 new text end	new text begin 1.5 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 12,160 to 13,890 new text end	new text begin 1.6 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 13,890 to 15,640 new text end	new text begin 1.7 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 15,640 to 17,370 new text end	new text begin 1.8 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 17,370 to 19,090 new text end	new text begin 1.9 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 19,090 to 24,320 new text end	new text begin 2.0 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 24,320 to 26,050 new text end	new text begin 2.0 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 26,050 to 29,520 new text end	new text begin 2.0 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 29,520 to 41,660 new text end	new text begin 2.0 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 3,250 new text end
new text begin 41,660 to 60,760 new text end	new text begin 2.0 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 2,730 new text end
new text begin 60,760 to 69,440 new text end	new text begin 2.0 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 2,700 new text end
new text begin 69,440 to 78,120 new text end	new text begin 2.1 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 2,460 new text end
new text begin 78,120 to 86,800 new text end	new text begin 2.2 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 2,390 new text end
new text begin 86,800 to 95,480 new text end	new text begin 2.3 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 2,260 new text end
new text begin 95,480 to 100,700 new text end	new text begin 2.4 percent new text end	new text begin 40 percent new text end	new text begin $ new text end	new text begin 2,170 new text end
new text begin 100,700 to 104,190 new text end	new text begin 2.5 percent new text end	new text begin 45 percent new text end	new text begin $ new text end	new text begin 2,090 new text end
new text begin 104,190 to 108,410 new text end	new text begin 2.5 percent new text end	new text begin 50 percent new text end	new text begin $ new text end	new text begin 2,030 new text end
new text begin 108,410 to 112,610 new text end	new text begin 2.5 percent new text end	new text begin 50 percent new text end	new text begin $ new text end	new text begin 1,930 new text end
new text begin 112,610 and greater new text end	new text begin 2.5 percent new text end	new text begin 60 percent new text end	new text begin $ new text end	new text begin 1,900 new text end

The payment made to a claimant shall be the amount of the state refund calculated under
this subdivision. deleted text begin No payment is allowed if the claimant's household income is $105,500 or
more.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refunds based on property taxes
payable in 2019 and following years.
new text end

Sec. 21.

Minnesota Statutes 2016, section 290A.04, subdivision 2a, is amended to read:

Subd. 2a.

Renters.

A claimant whose rent constituting property taxes exceeds the
percentage of the household income stated below must pay an amount equal to the percent
of income shown for the appropriate household income level along with the percent to be
paid by the claimant of the remaining amount of rent constituting property taxes. The state
refund equals the amount of rent constituting property taxes that remain, up to the maximum
state refund amount shown below.

deleted text begin Household Income deleted text end	deleted text begin Percent of Income deleted text end	deleted text begin Percent Paid by Claimant deleted text end	deleted text begin Maximum State Refund deleted text end
deleted text begin $0 to 4,909 deleted text end	deleted text begin 1.0 percent deleted text end	deleted text begin 5 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,000 deleted text end
deleted text begin 4,910 to 6,529 deleted text end	deleted text begin 1.0 percent deleted text end	deleted text begin 10 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 2,000 deleted text end
deleted text begin 6,530 to 8,159 deleted text end	deleted text begin 1.1 percent deleted text end	deleted text begin 10 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,950 deleted text end
deleted text begin 8,160 to 11,439 deleted text end	deleted text begin 1.2 percent deleted text end	deleted text begin 10 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,900 deleted text end
deleted text begin 11,440 to 14,709 deleted text end	deleted text begin 1.3 percent deleted text end	deleted text begin 15 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,850 deleted text end
deleted text begin 14,710 to 16,339 deleted text end	deleted text begin 1.4 percent deleted text end	deleted text begin 15 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,800 deleted text end
deleted text begin 16,340 to 17,959 deleted text end	deleted text begin 1.4 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,750 deleted text end
deleted text begin 17,960 to 21,239 deleted text end	deleted text begin 1.5 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,700 deleted text end
deleted text begin 21,240 to 22,869 deleted text end	deleted text begin 1.6 percent deleted text end	deleted text begin 20 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,650 deleted text end
deleted text begin 22,870 to 24,499 deleted text end	deleted text begin 1.7 percent deleted text end	deleted text begin 25 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,650 deleted text end
deleted text begin 24,500 to 27,779 deleted text end	deleted text begin 1.8 percent deleted text end	deleted text begin 25 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,650 deleted text end
deleted text begin 27,780 to 29,399 deleted text end	deleted text begin 1.9 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,650 deleted text end
deleted text begin 29,400 to 34,299 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 30 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,650 deleted text end
deleted text begin 34,300 to 39,199 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 35 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,650 deleted text end
deleted text begin 39,200 to 45,739 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 40 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,650 deleted text end
deleted text begin 45,740 to 47,369 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,500 deleted text end
deleted text begin 47,370 to 49,009 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,350 deleted text end
deleted text begin 49,010 to 50,649 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 45 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,150 deleted text end
deleted text begin 50,650 to 52,269 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 1,000 deleted text end
deleted text begin 52,270 to 53,909 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 900 deleted text end
deleted text begin 53,910 to 55,539 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 500 deleted text end
deleted text begin 55,540 to 57,169 deleted text end	deleted text begin 2.0 percent deleted text end	deleted text begin 50 percent deleted text end	deleted text begin $ deleted text end	deleted text begin 200 deleted text end

new text begin Household Income new text end	new text begin Percent of Income new text end	new text begin Percent Paid by Claimant new text end	new text begin Maximum State Refund new text end
new text begin $0 to 5,240 new text end	new text begin 0.8 percent new text end	new text begin 5 percent new text end	new text begin $ new text end	new text begin 2,130 new text end
new text begin 5,240 to 6,970 new text end	new text begin 1.0 percent new text end	new text begin 5 percent new text end	new text begin $ new text end	new text begin 2,130 new text end
new text begin 6,970 to 8,710 new text end	new text begin 1.1 percent new text end	new text begin 5 percent new text end	new text begin $ new text end	new text begin 2,080 new text end
new text begin 8,710 to 12,210 new text end	new text begin 1.2 percent new text end	new text begin 5 percent new text end	new text begin $ new text end	new text begin 2,030 new text end
new text begin 12,210 to 15,700 new text end	new text begin 1.3 percent new text end	new text begin 10 percent new text end	new text begin $ new text end	new text begin 1,970 new text end
new text begin 15,700 to 17,440 new text end	new text begin 1.4 percent new text end	new text begin 10 percent new text end	new text begin $ new text end	new text begin 1,920 new text end
new text begin 17,440 to 19,170 new text end	new text begin 1.4 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 1,870 new text end
new text begin 19,170 to 22,670 new text end	new text begin 1.5 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 1,810 new text end
new text begin 22,670 to 24,410 new text end	new text begin 1.6 percent new text end	new text begin 15 percent new text end	new text begin $ new text end	new text begin 1,760 new text end
new text begin 24,410 to 26,150 new text end	new text begin 1.7 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 1,760 new text end
new text begin 26,150 to 29,650 new text end	new text begin 1.8 percent new text end	new text begin 20 percent new text end	new text begin $ new text end	new text begin 1,760 new text end
new text begin 29,650 to 31,380 new text end	new text begin 1.9 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 1,760 new text end
new text begin 31,380 to 36,610 new text end	new text begin 2.0 percent new text end	new text begin 25 percent new text end	new text begin $ new text end	new text begin 1,760 new text end
new text begin 36,610 to 41,840 new text end	new text begin 2.0 percent new text end	new text begin 30 percent new text end	new text begin $ new text end	new text begin 1,760 new text end
new text begin 41,840 to 48,820 new text end	new text begin 2.0 percent new text end	new text begin 35 percent new text end	new text begin $ new text end	new text begin 1,760 new text end
new text begin 48,820 to 50,560 new text end	new text begin 2.0 percent new text end	new text begin 40 percent new text end	new text begin $ new text end	new text begin 1,600 new text end
new text begin 50,560 to 52,310 new text end	new text begin 2.0 percent new text end	new text begin 40 percent new text end	new text begin $ new text end	new text begin 1,440 new text end
new text begin 52,310 to 54,060 new text end	new text begin 2.0 percent new text end	new text begin 40 percent new text end	new text begin $ new text end	new text begin 1,230 new text end
new text begin 54,060 to 55,790 new text end	new text begin 2.0 percent new text end	new text begin 45 percent new text end	new text begin $ new text end	new text begin 1,070 new text end
new text begin 55,790 to 57,540 new text end	new text begin 2.0 percent new text end	new text begin 45 percent new text end	new text begin $ new text end	new text begin 960 new text end
new text begin 57,540 to 59,280 new text end	new text begin 2.0 percent new text end	new text begin 45 percent new text end	new text begin $ new text end	new text begin 530 new text end
new text begin 59,280 to 61,020 new text end	new text begin 2.0 percent new text end	new text begin 45 percent new text end	new text begin $ new text end	new text begin 210 new text end

The payment made to a claimant is the amount of the state refund calculated under this
subdivision. No payment is allowed if the claimant's household income is deleted text begin $57,170 deleted text end new text begin $61,020 new text end
or more.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for claims based on rent paid in 2018
and following years.
new text end

Sec. 22.

Minnesota Statutes 2017 Supplement, section 291.005, subdivision 1, is amended
to read:

Subdivision 1.

Scope.

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 December deleted text begin 16, 2016 deleted text end new text begin 31, 2017 new 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 includible 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 EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2017.
new text end

Sec. 23. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2016, sections 290.0131, subdivisions 7, 11, and 13; 290.0132,
subdivisions 19 and 20; 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 EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

APPENDIX

Repealed Minnesota Statutes: HF2942-0

290.0131 INDIVIDUALS; ADDITIONS TO FEDERAL TAXABLE INCOME.

Subd. 7.

Fines, fees, and penalties.

The amount of expenses disallowed under section 290.10, subdivision 2, is an addition.

Subd. 11.

Income attributable to domestic production activities.

The amount of the deduction allowable under section 199 of the Internal Revenue Code is an addition.

Subd. 13.

Disallowed personal exemption amount.

(a) The amount of disallowed personal exemptions for taxpayers with federal adjusted gross income over the threshold amount is an addition.

(b) The disallowed personal exemption amount is equal to the number of personal exemptions allowed under section 151(b) and (c) of the Internal Revenue Code multiplied by the dollar amount for personal exemptions under section 151(d)(1) and (2) of the Internal Revenue Code, as adjusted for inflation by section 151(d)(4) of the Internal Revenue Code, and by the applicable percentage.

(c) 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.

(d) "Threshold amount" means:

(1) $150,000 for a joint return or a surviving spouse;

(2) $125,000 for a head of a household;

(3) $100,000 for an individual who is not married and who is not a surviving spouse or head of a household; and

(4) $75,000 for a married individual filing a separate return.

(e) The thresholds must be increased by an amount equal to:

(1) the threshold dollar amount, multiplied by

(2) the cost-of-living adjustment determined under section 1(f)(3) of the Internal Revenue Code for the calendar year in which the taxable year begins, by substituting "calendar year 1990" for "calendar year 1992" in subparagraph (B) of section 1(f)(3).

290.0132 INDIVIDUALS; SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.

Subd. 19.

Disallowed itemized deductions.

The amount of the limitation on itemized deductions under section 68(b) of the Internal Revenue Code is a subtraction.

Subd. 20.

Disallowed personal exemption.

The amount of the phaseout of personal exemptions under section 151(d) of the Internal Revenue Code is a subtraction.

290.0133 CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE INCOME.

Subd. 13.

Income attributable to domestic production activities.

The amount of the deduction allowable under section 199 of the Internal Revenue Code is an addition.

Subd. 14.

Fines, fees, and penalties.

The amount of expenses disallowed under section 290.10, subdivision 2, is an addition.

290.10 NONDEDUCTIBLE ITEMS.

Subd. 2.

Fines, fees, and penalties.

(a) Except as provided in this subdivision, no deduction from taxable income for a trade or business expense under section 162(a) of the Internal Revenue Code shall be allowed for any amount paid or incurred, whether by suit, agreement, or otherwise, to, or at the direction of, a government or entity described in paragraph (d) in relation to the violation of any law or the investigation or inquiry by such government or entity into the potential violation of any law.

(b) Exception for amounts constituting restitution or paid to come into compliance with the law. Paragraph (a) does not apply to any amount which:

(1) the taxpayer establishes:

(i) constitutes restitution, including remediation of property for damage or harm caused by or which may be caused by the violation of any law or the potential violation of any law; or

(ii) is paid to come into compliance with any law which was violated or involved in the investigation or inquiry; and

(2) is identified as restitution or as an amount paid to come into compliance with the law, as the case may be, in the court order or settlement agreement.

This paragraph does not apply to any amount paid or incurred as reimbursement to the government or entity for the costs of any investigation or litigation.

(c) Paragraph (a) does not apply to any amount paid or incurred by order of a court in a suit in which no government or entity described in paragraph (d) is a party.

(d) An entity is described in this paragraph if it is:

(1) a nongovernmental entity which exercises self-regulatory powers, including imposing sanctions, in connection with a qualified board or exchange, as defined in section 1256(g)(7) of the Internal Revenue Code, or;

(2) to the extent provided in federal regulations, a nongovernmental entity which exercises self-regulatory powers, including imposing sanctions, as part of performing an essential governmental function.

(e) Paragraph (a) does not apply to any amount paid or incurred as taxes due.