HF 31

as introduced - 93rd Legislature (2023 - 2024) Posted on 01/23/2023 11:59am

A bill for an act
relating to taxation; individual income and corporate franchise; providing for
certain conformity to federal tax provisions; amending Minnesota Statutes 2022,
sections 289A.02, subdivision 7; 290.01, by adding a subdivision; 290.0123,
subdivision 3; 290.0131, by adding a subdivision; 290.0132, subdivisions 18, 24,
by adding a subdivision; 290.0133, by adding a subdivision; 290.0134, by adding
a subdivision; 290.0671, subdivision 1a; 290.0675, subdivision 1; 290.091,
subdivision 2; 290.095, subdivision 11; 290A.03, subdivision 15; 291.005,
subdivision 1; Minnesota Statutes 2023 Supplement, sections 289A.08, subdivision
7; 290.01, subdivisions 19, 31; 290.06, subdivision 2c.

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

Section 1.

Minnesota Statutes 2022, 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 deleted text begin December
31, 2018 deleted text end new text begin December 15, 2022 new text end .

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 the
changes were effective for federal purposes.
new text end

Sec. 2.

Minnesota Statutes 2022, 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, other electing partnerships, and other qualifying entities
electing to file and pay the pass-through entity tax under subdivision 7a. 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 10, 16, deleted text begin and deleted text end 17, new text begin and 19, new text end and the subtractions provided in: (1)
section 290.0132, subdivisions 9, 27, and 28, to the extent the amount is assignable or
allocable to Minnesota under section 290.17; and (2) section 290.0132, deleted text begin subdivision deleted text end new text begin
subdivisions new text end 14 new text begin and 31 new text end . 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, 2021.
new text end

Sec. 3.

Minnesota Statutes 2022, section 290.01, subdivision 19, is amended to read:

Subd. 19.

Net income.

(a) For a trust or estate taxable under section 290.03, and a
corporation taxable under section 290.02, 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.

(b) For an individual, the term "net income" means federal adjusted gross income with
the modifications provided in sections 290.0131, 290.0132, and 290.0135 to 290.0137.

(c) 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 deleted text begin which deleted text end new text begin that new text end the regulated investment company elects to have
treated as provided in section 852(b)(3)(D) of the Internal Revenue Code.

(d) 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.

(e) 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.

(f) The Internal Revenue Code of 1986, as amended through deleted text begin December 31, 2018 deleted text end new text begin
December 15, 2022 new text end , applies for taxable years beginning after December 31, 1996 deleted text begin , except
the sections of federal law in section 290.0111 shall also apply deleted text end .

(g) 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 the
changes were effective for federal purposes.
new text end

Sec. 4.

Minnesota Statutes 2022, 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 deleted text begin December
31, 2018, except the sections of federal law in section 290.0111 shall also apply deleted text end new text begin December
15, 2022 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.

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 the
changes were effective for federal purposes.
new text end

Sec. 5.

Minnesota Statutes 2022, section 290.01, is amended by adding a subdivision to
read:

new text begin Subd. 33. new text end

new text begin Earned income. new text end

new text begin "Earned income" means earned income, as defined in section
32(c) of the Internal Revenue Code.
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, 2017.
new text end

Sec. 6.

Minnesota Statutes 2022, section 290.0123, subdivision 3, is amended to read:

Subd. 3.

Amount for dependents.

For an individual who is a dependent, as defined in
sections 151 and 152 of the Internal Revenue Code, of another taxpayer for a taxable year
beginning in the calendar year in which the individual's taxable year begins, the standard
deduction for that individual is limited to the greater of:

(1) $1,100; or

(2) the lesser of (i) the sum of $350 and that individual's earned income deleted text begin , as defined in
section 32(c) of the Internal Revenue Code deleted text end new text begin for the taxable year new text end ; or (ii) the standard deduction
amount allowed under subdivision 1, clause (3).

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

Minnesota Statutes 2022, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 19. new text end

new text begin Meal expenses. new text end

new text begin The amount of meal expenses in excess of the 50 percent
limitation under section 274(n)(1) of the Internal Revenue Code allowed under subsection
(n), paragraph (2), subparagraph (D), of that section is an addition.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for amounts paid or incurred
after December 31, 2020.
new text end

Sec. 8.

Minnesota Statutes 2022, section 290.0132, subdivision 18, is amended to read:

Subd. 18.

Net operating losses.

new text begin (a) new text end The amount of the net operating loss allowed under
section 290.095, subdivision 11, paragraph (c), is a subtraction.

new text begin (b) The unused portion of a net operating loss carryover under section 290.095,
subdivision 11, paragraph (d), is a subtraction. The subtraction is the lesser of:
new text end

new text begin (1) the amount carried into the taxable year minus any subtraction made under this
section for prior taxable years; or
new text end

new text begin (2) 80 percent of Minnesota taxable net income in a single taxable year and determined
without regard to this subtraction.
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, 2021.
new text end

Sec. 9.

Minnesota Statutes 2022, section 290.0132, subdivision 24, is amended to read:

Subd. 24.

Discharge of indebtedness; education loans.

(a) The amount equal to the
discharge of indebtedness new text begin of a qualified student loan new text end of the taxpayer is a subtraction deleted text begin if: deleted text end new text begin .
new text end

new text begin (b) For the purposes of this subdivision, "qualified student loan" means:
new text end

new text begin (1) any loan provided expressly for postsecondary educational expenses, regardless of
whether provided through the educational institution or directly to the borrower, if the loan
was made, insured, or guaranteed by:
new text end

new text begin (i) the United States, or an instrumentality or agency thereof;
new text end

new text begin (ii) a state, territory, or possession of the United States, or the District of Columbia, or
any political subdivision thereof; or
new text end

new text begin (iii) an eligible educational institution, as defined in section 25A(f)(2) of the Internal
Revenue Code;
new text end

new text begin (2) any private education loan, as defined in section 140(a)(7) of the federal Truth in
Lending Act;
new text end

new text begin (3) any loan made by any educational organization described in section 170(b)(1)(A)(ii)
of the Internal Revenue Code, if the loan is made:
new text end

new text begin (i) pursuant to an agreement with any entity described in subitem (A) or any private
education lender, as defined in section 140(a) of the Truth in Lending Act, under which the
funds from which the loan was made were provided to the educational organization; or
new text end

new text begin (ii) pursuant to a program of the educational organization that is designed to encourage
its students to serve in occupations with unmet needs or in areas with unmet needs and under
which the services provided by the students or former students are for or under the direction
of a governmental unit or an organization described in section 501(c)(3) of the Internal
Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code; or
new text end

new text begin (4) any loan made by an educational organization described in section 170(b)(1)(A)(ii)
of the Internal Revenue Code or by an organization exempt from tax under section 501(a)
of the Internal Revenue Code to refinance a loan to an individual to assist the individual in
attending the educational organization but only if the refinancing loan is pursuant to a
program of the refinancing organization that is designed as described in clause (3), item
(ii).
new text end

new text begin (c) A discharge of indebtedness is ineligible for the subtraction under paragraph (a) if
the discharge of a loan made by an organization described in paragraph (b), clause (3), or
made by a private education lender as defined in section 140(a)(7) of the Truth in Lending
Act if the discharge is on account of services performed for either the organization or for
the private education lender.
new text end

deleted text begin (1) the indebtedness discharged is a qualified education loan; and
deleted text end

deleted text begin (2) the indebtedness was discharged under section 136A.1791, or following the taxpayer's
completion of an income-driven repayment plan.
deleted text end

deleted text begin (b) For the purposes of this subdivision, "qualified education loan" has the meaning
given in section 221 of the Internal Revenue Code.
deleted text end

deleted text begin (c) For purposes of this subdivision, "income-driven repayment plan" means a payment
plan established by the United States Department of Education that sets monthly student
loan payments based on income and family size under United States Code, title 20, section
1087e, or similar authority and specifically includes, but is not limited to:
deleted text end

new text begin (d) "Qualified student loan" includes but is not limited to a loan discharged under:
new text end

(1) the income-based repayment plan under United States Code, title 20, section 1098e;

(2) the income contingent repayment plan established under United States Code, title
20, section 1087e, subsection (e); deleted text begin and
deleted text end

(3) the PAYE program or REPAYE program established by the Department of Education
under administrative regulations deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) section 136A.1791.
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, 2022.
new text end

Sec. 10.

Minnesota Statutes 2022, section 290.0132, subdivision 24, is amended to read:

Subd. 24.

Discharge of indebtedness; education loans.

(a) The amount equal to the
discharge of indebtedness new text begin of a qualified student loan new text end of the taxpayer is a subtraction deleted text begin if: deleted text end new text begin .
new text end

new text begin (b) For the purposes of this subdivision, "qualified student loan" means a loan eligible
for the exclusion from gross income under section 9675 of Public Law 117-2, the American
Rescue Plan Act, except disregarding the portions of that section limiting the exclusion to
discharges after December 31, 2020, and before January 1, 2026.
new text end

deleted text begin (1) the indebtedness discharged is a qualified education loan; and
deleted text end

deleted text begin (2) the indebtedness was discharged under section 136A.1791, or following the taxpayer's
completion of an income-driven repayment plan.
deleted text end

deleted text begin (b) For the purposes of this subdivision, "qualified education loan" has the meaning
given in section 221 of the Internal Revenue Code.
deleted text end

deleted text begin (c) For purposes of this subdivision, "income-driven repayment plan" means a payment
plan established by the United States Department of Education that sets monthly student
loan payments based on income and family size under United States Code, title 20, section
1087e, or similar authority and specifically includes, but is not limited to:
deleted text end

new text begin (c) "Qualified student loan" includes but is not limited to a loan discharged under:
new text end

(1) the income-based repayment plan under United States Code, title 20, section 1098e;

(2) the income contingent repayment plan established under United States Code, title
20, section 1087e, subsection (e); deleted text begin and
deleted text end

(3) the PAYE program or REPAYE program established by the Department of Education
under administrative regulations deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) section 136A.1791.
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, 2022.
new text end

Sec. 11.

Minnesota Statutes 2022, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 31. new text end

new text begin Delayed business interest. new text end

new text begin For each of the five taxable years beginning after
December 31, 2021, there is allowed a subtraction equal to one-fifth of the adjustment
amount, to the extent not already deducted, for the exclusion under section 18, subdivision
3, clause (10), due to the Coronavirus Aid, Relief and Economic Security Act, Public Law
116-136, section 2306.
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, 2021.
new text end

Sec. 12.

Minnesota Statutes 2022, section 290.0133, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin Meal expenses. new text end

new text begin The amount of meal expenses in excess of the 50 percent
limitation under section 274(n)(1) of the Internal Revenue Code allowed under section
274(n)(2)(D) of the Internal Revenue Code is an addition.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for amounts paid or incurred
after December 31, 2020.
new text end

Sec. 13.

Minnesota Statutes 2022, section 290.0134, is amended by adding a subdivision
to read:

new text begin Subd. 20. new text end

new text begin Delayed business interest. new text end

new text begin For each of the five taxable years beginning after
December 31, 2021, there is allowed a subtraction equal to one-fifth of the adjustment
amount, to the extent not already deducted, for the exclusion under section 18, subdivision
3, clause (10), due to the Coronavirus Aid, Relief and Economic Security Act, Public Law
116-136, section 2306.
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, 2021.
new text end

Sec. 14.

Minnesota Statutes 2022, 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 $38,770, 5.35 percent;

(2) On all over $38,770, but not over $154,020, 6.8 percent;

(3) On all over $154,020, but not over $269,010, 7.85 percent;

(4) On all over $269,010, 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 after the adjustment required in subdivision 2d.

(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 $26,520, 5.35 percent;

(2) On all over $26,520, but not over $87,110, 6.8 percent;

(3) On all over $87,110, but not over $161,720, 7.85 percent;

(4) On all over $161,720, 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 $32,650, 5.35 percent;

(2) On all over $32,650, but not over $131,190, 6.8 percent;

(3) On all over $131,190, but not over $214,980, 7.85 percent;

(4) On all over $214,980, 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:

(i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, deleted text begin and deleted text end
17, new text begin and 19, new text end and 290.0137, paragraph (a); and reduced by

(ii) the Minnesota assignable portion of the subtraction for United States government
interest under section 290.0132, subdivision 2, the subtractions under sections 290.0132,
subdivisions 9, 10, 14, 15, 17, 18, deleted text begin and deleted text end 27, new text begin and 31, new text end and 290.0137, paragraph (c), 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:

(i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, deleted text begin and deleted text end
17, new text begin and 19, new text end and 290.0137, paragraph (a); and reduced by

(ii) the subtractions under sections 290.0132, subdivisions 2, 9, 10, 14, 15, 17, 18, deleted text begin and deleted text end
27, new text begin and 31, new text end and 290.0137, paragraph (c).

(f) If an individual who is not a Minnesota resident for the entire year is a qualifying
owner of a qualifying entity that elects to pay tax as provided in section 289A.08, subdivision
7a, paragraph (b), the individual must compute the individual's Minnesota income tax as
provided in paragraph (e), and also must include, to the extent attributed to the electing
qualifying entity:

(1) in paragraph (e), clause (1), item (i), and paragraph (e), clause (2), item (i), the
addition under section 290.0131, subdivision 5; and

(2) in paragraph (e), clause (1), item (ii), and paragraph (e), clause (2), item (ii), the
subtraction under section 290.0132, subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2021.
new text end

Sec. 15.

Minnesota Statutes 2022, section 290.0671, subdivision 1a, is amended to read:

Subd. 1a.

Definitions.

For purposes of this section, the new text begin following new text end terms deleted text begin "qualifying
child," and "earned income," deleted text end have the meanings given deleted text begin in section 32(c) of the Internal
Revenue Code, and the term "adjusted gross income" has the meaning given in section 62
of the Internal Revenue Code. deleted text end new text begin :
new text end

deleted text begin "Earned income of the lesser-earning spouse" has the meaning given in section 290.0675,
subdivision 1, paragraph (d).
deleted text end

new text begin (1) "qualifying child" has the meaning given in section 32(c)(3) of the Internal Revenue
Code; and
new text end

new text begin (2) "earned income of the lesser earning spouse" has the meaning given in section
290.0675, subdivision 1, paragraph (d).
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, 2017.
new text end

Sec. 16.

Minnesota Statutes 2022, section 290.0675, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section the following terms have
the meanings given.

(b) "Earned income" means the sum of the following, to the extent included in Minnesota
taxable income:

(1) new text begin the taxpayer's new text end earned income deleted text begin as defined in section 32(c)(2) of the Internal Revenue
Code deleted text end new text begin for the taxable year new text end ;

(2) income received from a retirement pension, profit-sharing, stock bonus, or annuity
plan; and

(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue Code.

(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.

(d) "Earned income of lesser-earning spouse" means the earned income of the spouse
with the lesser amount of earned income as defined in paragraph (b) for the taxable year
minus one-half the amount of the standard deduction under section 290.0123, subdivision
1, clause (1).

new text begin EFFECTIVE DATE. new text end

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

Sec. 17.

Minnesota Statutes 2022, 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;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a person with a disability;

(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;

(6) the amount of addition required by section 290.0131, subdivisions 9, 10, deleted text begin and deleted text end 16 new text begin , and
19 new text end ;

(7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
not included in the addition required under clause (6); and

(8) to the extent not included in federal alternative minimum taxable income, the amount
of foreign-derived intangible income deducted under section 250 of the Internal Revenue
Code;

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 or adjusted gross income as provided by
section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, and 26 to deleted text begin 29 deleted text end new text begin 33 new text end ;

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
deleted text begin paragraph deleted text end new text begin paragraphs new text end (c) new text begin and (d) new text end ; and

(vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
subdivision 7.

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, except alternative minimum
taxable income must be increased by the addition in section 290.0131, subdivision 16.

(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, 2021.
new text end

Sec. 18.

Minnesota Statutes 2022, section 290.095, subdivision 11, is amended to read:

Subd. 11.

Carryback or carryover adjustments.

(a) Except as provided in paragraph
(c), for individuals, estates, and trusts the amount of a net operating loss that may be carried
back or carried over shall be the same dollar amount allowable in the determination of
federal taxable income, provided that, notwithstanding any other provision, estates and
trusts must apply the following adjustments to the amount of the net operating loss that may
be carried back or carried over:

(1) Nonassignable income or losses as required by section 290.17.

(2) Deductions not allocable to Minnesota under section 290.17.

(b) The net operating loss carryback or carryover applied as a deduction in the taxable
year to which the net operating loss is carried back or carried over shall be equal to the net
operating loss carryback or carryover applied in the taxable year in arriving at federal taxable
income provided that trusts and estates must apply the following modifications:

(1) Increase the amount of carryback or carryover applied in the taxable year by the
amount of losses and interest, taxes and other expenses not assignable or allowable to
Minnesota incurred in the taxable year.

(2) Decrease the amount of carryback or carryover applied in the taxable year by the
amount of income not assignable to Minnesota earned in the taxable year. For estates and
trusts, the net operating loss carryback or carryover to the next consecutive taxable year
shall be the net operating loss carryback or carryover as calculated in clause (b) less the
amount applied in the earlier taxable year(s). No additional net operating loss carryback or
carryover shall be allowed to estates and trusts if the entire amount has been used to offset
Minnesota income in a year earlier than was possible on the federal return. However, if a
net operating loss carryback or carryover was allowed to offset federal income in a year
earlier than was possible on the Minnesota return, an estate or trust shall still be allowed to
offset Minnesota income but only if the loss was assignable to Minnesota in the year the
loss occurred.

(c) This paragraph does not apply to eligible small businesses that make a valid election
to carry back their losses for federal purposes under section 172(b)(1)(H) of the Internal
Revenue Code as amended through March 31, 2009.

(1) A net operating loss of an individual, estate, or trust that is allowed under this
subdivision and for which the taxpayer elects to carry back for more than two years under
section 172(b)(1)(H) of the Internal Revenue Code is a net operating loss carryback to each
of the two taxable years preceding the loss, and unused portions may be carried forward for
20 taxable years after the loss.

(2) The entire amount of the net operating loss for any taxable year must be carried to
the earliest of the taxable years to which the loss may be carried. The portion of the loss
deleted text begin which deleted text end new text begin that new text end may be carried to each of the other taxable years is the excess, if any, of the
amount of the loss over the greater of the taxable net income or alternative minimum taxable
income for each of the taxable years to which the loss may be carried.

new text begin (d) For net operating loss carryovers or carrybacks arising in taxable years beginning
after December 31, 2017, and before January 1, 2021, a net operating loss carryover or
carryback is allowed as provided in the Internal Revenue Code as amended through December
31, 2018, as follows:
new text end

new text begin (1) the entire amount of the net operating loss, to the extent not already deducted, must
be carried to the earliest taxable year and any unused portion may be carried forward for
20 taxable years after the loss; and
new text end

new text begin (2) the portion of the loss that may be carried to each of the other taxable years is the
excess, if any, of the amount of the loss over the greater of the taxable net income or
alternative minimum taxable income for each of the taxable years to which the loss may be
carried.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for losses arising in taxable
years beginning after December 31, 2017, and before January 1, 2021.
new text end

Sec. 19.

Minnesota Statutes 2022, 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 deleted text begin December 31, 2018 deleted text end new text begin December 15, 2022 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 in 2023 and rent paid in 2022 and thereafter.
new text end

Sec. 20.

Minnesota Statutes 2022, 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 deleted text begin December 31, 2018 deleted text end new text begin March 15, 2022 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 deleted text begin which deleted text end new text begin that new text end has its situs outside
Minnesota, and (b) including any property omitted from the federal gross estate deleted text begin which deleted text end new text begin that new text end
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 deleted text begin which deleted text end new text begin
that new text end 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 includable 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 the day following final enactment, except
the changes incorporated by federal changes are effective retroactively at the same time the
changes were effective for federal purposes.
new text end

Sec. 21. new text begin LIMITATION ON RETROACTIVITY.
new text end

new text begin (a) The definitions in Minnesota Statutes, section 290.01, apply to this section.
new text end

new text begin (b) Notwithstanding any law to the contrary, for a taxable year beginning before January
1, 2022, a taxpayer's liability for tax under Minnesota Statutes, chapters 289A and 290,
must not change as a result of this act's adoption of the following sections of federal law,
which are incorporated as part of the Internal Revenue Code, as amended through December
15, 2022:
new text end

new text begin (1) Taxpayer Certainty and Disaster Tax Relief Act of 2019, Public Law 116-94, section
104, deduction of qualified tuition and related expenses;
new text end

new text begin (2) Taxpayer Certainty and Disaster Tax Relief Act of 2019, Public Law 116-94, section
203, employee retention credit for employers affected by qualified disasters;
new text end

new text begin (3) Families First Coronavirus Response Act, Public Law 116-127, section 7001, payroll
credit for required paid sick leave;
new text end

new text begin (4) Families First Coronavirus Response Act, Public Law 116-127, section 7003, payroll
credit for required paid family leave;
new text end

new text begin (5) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
2204, allowance of partial above the line deduction for charitable contributions;
new text end

new text begin (6) for individuals, Coronavirus Aid, Relief and Economic Security Act, Public Law
116-136, section 2205(a), modification of limitations on charitable contributions during
2020;
new text end

new text begin (7) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
2301, employee retention credit for employers subject to closure due to COVID-19;
new text end

new text begin (8) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
2303, modifications for net operating losses;
new text end

new text begin (9) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
2304, modification of limitation on losses for taxpayers other than corporations;
new text end

new text begin (10) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
2306, limitation on business interest;
new text end

new text begin (11) Taxpayer Certainty and Disaster Tax Relief Act of 2020, Public Law 116-260,
section 207, extension and modification of employee retention and rehiring credit;
new text end

new text begin (12) Taxpayer Certainty and Disaster Tax Relief Act of 2020, Public Law 116-260,
section 210, temporary allowance of full deduction for business meals;
new text end

new text begin (13) Taxpayer Certainty and Disaster Tax Relief Act of 2020, Public Law 116-260,
section 303, employee retention credit for employers affected by qualified disasters;
new text end

new text begin (14) American Rescue Plan Act, Public Law 117-2, section 9501(b), preserving health
benefits for workers;
new text end

new text begin (15) American Rescue Plan Act, Public Law 117-2, section 9631, refundability and
enhancement of child and dependent care tax credit;
new text end

new text begin (16) American Rescue Plan Act, Public Law 117-2, section 9641, payroll sick and family
leave credits; and
new text end

new text begin (17) American Rescue Plan Act, Public Law 117-2, section 9651, extension of employee
retention credit.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment, except
the limitation on retroactivity for federal changes is effective retroactively at the same time
the changes were effective for federal purposes.
new text end