HF 3669

2nd Unofficial Engrossment - 92nd Legislature (2021 - 2022) Posted on 05/11/2022 06:45pm

A bill for an act
relating to taxation; modifying provisions governing individual income and
corporate franchise taxes, sales and use taxes, property taxes, certain state aid
programs, certain local taxes, tax increment financing, and various other taxes and
tax-related provisions; providing for certain federal tax conformity; modifying
and proposing certain income tax credits and subtractions; providing for certain
sales tax exemptions; modifying property tax programs; proposing additional local
government aid programs; authorizing certain tax increment financing; authorizing
certain local taxes; requiring reports; appropriating money; amending Minnesota
Statutes 2020, sections 6.495, subdivision 3; 41B.0391, subdivision 6; 123B.61;
270C.11, by adding a subdivision; 272.01, subdivision 2; 272.02, subdivision 98,
by adding a subdivision; 272.025, subdivision 1; 273.032; 273.11, subdivision 23;
273.128, subdivision 2, by adding a subdivision; 273.13, subdivisions 22, 35, by
adding a subdivision; 273.1392; 273.1393; 273.41; 276.04, subdivision 2; 279.03,
subdivision 1a; 282.261, subdivision 2; 289A.02, subdivision 7; 289A.10,
subdivision 1; 290.0123, subdivision 3; 290.0131, by adding subdivisions;
290.0132, subdivisions 4, 18, 26, by adding subdivisions; 290.0133, by adding
subdivisions; 290.0134, by adding subdivisions; 290.05, subdivision 1; 290.06,
subdivision 2d; 290.067, subdivision 1; 290.0671, subdivision 1a; 290.0674,
subdivision 2; 290.0675, subdivision 1; 290.068, subdivision 1; 290.0681,
subdivision 4; 290.091, subdivision 2; 290.095, subdivision 11; 290A.03,
subdivisions 13, 15; 290A.04, subdivision 2h; 290A.19; 290B.03, subdivision 1;
290B.04, subdivisions 3, 4; 290B.05, subdivision 1; 291.005, subdivision 1;
291.016, subdivision 3; 291.03, subdivision 1, by adding a subdivision; 296A.083,
subdivision 3; 297A.61, subdivision 29; 297A.67, subdivision 35; 297A.68, by
adding a subdivision; 297A.69, subdivision 4; 297A.70, by adding a subdivision;
297A.71, by adding subdivisions; 297A.99, subdivision 3; 297E.02, subdivision
6; 297E.021, subdivision 2; 297I.20, by adding a subdivision; 298.28, subdivisions
5, 7a, 9b; 366.095, subdivision 1; 373.01, subdivision 3; 383B.117, subdivision
2; 410.32; 412.301; 469.174, subdivision 14, by adding a subdivision; 469.176,
subdivisions 3, 4, 4c; 469.1763, subdivision 6; 469.1771, subdivisions 2, 2a, 3;
469.190, subdivision 7; 477B.01, subdivisions 5, 10, 11, by adding subdivisions;
477B.02, subdivisions 2, 3, 5, 8, 9, by adding a subdivision; 477B.03, subdivisions
2, 3, 4, 5, 7; 477B.04, subdivision 1, by adding a subdivision; 477C.03, subdivisions
2, 5; 477C.04, by adding a subdivision; Minnesota Statutes 2021 Supplement,
sections 3.192; 116J.8737, subdivision 5; 273.13, subdivisions 25, 34; 275.025,
subdivision 1; 275.065, subdivision 3; 289A.08, subdivisions 7, 7a; 289A.382,
subdivision 2; 290.01, subdivisions 19, 31; 290.06, subdivision 2c; 290.92,
subdivision 20; 290.993; 297A.67, subdivision 38; 297A.71, subdivision 52;
297A.75, subdivisions 1, 2, 3; 297E.02, subdivision 3; 469.1763, subdivisions 2,
3, 4; Laws 1998, chapter 389, article 8, section 43, as amended; Laws 2008, chapter
366, article 7, section 17; Laws 2011, First Special Session chapter 7, article 4,
section 14; Laws 2014, chapter 308, article 6, section 12, subdivision 2; Laws
2021, First Special Session chapter 14, article 8, sections 14, subdivision 4; 15;
20, subdivisions 2, 3, 4; proposing coding for new law in Minnesota Statutes,
chapters 273; 290; 477A; proposing coding for new law as Minnesota Statutes,
chapter 116X; repealing Minnesota Statutes 2020, sections 290.0131, subdivision
15; 290.0674, subdivision 2a; 477B.02, subdivision 4; 477B.03, subdivision 6;
Minnesota Statutes 2021 Supplement, section 290.0681, subdivision 10.

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

ARTICLE 1

FEDERAL UPDATE

Section 1.

Minnesota Statutes 2020, 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 November 15, 2021 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, but are subject to the application of Minnesota
Statutes, section 290.993, subdivision 2.
new text end

Sec. 2.

Minnesota Statutes 2021 Supplement, 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 19, and 20, 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, subdivision 14 new text begin , 31,
and 32 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 2021 Supplement, 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 which 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
November 15, 2021 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, but are subject to the application of Minnesota
Statutes, section 290.993, subdivision 2.
new text end

Sec. 4.

Minnesota Statutes 2021 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 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 November
15, 2021 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, but are subject to the application of Minnesota
Statutes, section 290.993, subdivision 2.
new text end

Sec. 5.

Minnesota Statutes 2020, 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, as defined in
section 32(c) of the Internal Revenue Code new text begin , except that a taxpayer must use earned income
from the current 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. 6.

Minnesota Statutes 2020, 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 for taxable years beginning after December
31, 2021.
new text end

Sec. 7.

Minnesota Statutes 2020, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 20. new text end

new text begin Special limited adjustment. new text end

new text begin (a) For taxable years beginning after December
31, 2021, and before January 1, 2023, the amount calculated under section 290.993,
subdivision 2, paragraph (c), that increases net income for the taxable year is an addition.
new text end

new text begin (b) Partners, shareholders, or beneficiaries who file their returns on a calendar year basis,
and who received an addition from a pass-through entity filing their return on a fiscal year
basis, must make the addition in the taxable year it is received as required for federal income
tax purposes.
new text end

new text begin (c) This subdivision expires for taxable years beginning after December 31, 2023.
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, and before January 1, 2024.
new text end

Sec. 8.

Minnesota Statutes 2020, 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 2020, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 31. new text end

new text begin Special Limited Adjustment. new text end

new text begin (a) For taxable years beginning after December
31, 2021, and before January 1, 2023, the amount calculated under section 290.993,
subdivision 2, paragraph (c), that decreases net income for the taxable year is a subtraction.
new text end

new text begin (b) Partners, shareholders, or beneficiaries who file their returns on a calendar year basis,
and who received a subtraction from a pass-through entity filing their return on a fiscal year
basis, must make the subtraction in the taxable year it is received as required for federal
income tax purposes.
new text end

new text begin (c) This subdivision expires for taxable years beginning after December 31, 2023.
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, and before January 1, 2024.
new text end

Sec. 10.

Minnesota Statutes 2020, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 32. 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 290.993,
subdivision 2, paragraph (c), clause (11), 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. 11.

Minnesota Statutes 2020, 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 for taxable years beginning after December
31, 2021.
new text end

Sec. 12.

Minnesota Statutes 2020, section 290.0133, is amended by adding a subdivision
to read:

new text begin Subd. 16. new text end

new text begin Special Limited Adjustment. new text end

new text begin (a) For taxable years beginning after December
31, 2021, and before January 1, 2023, the amount calculated under section 290.993,
subdivision 2, paragraph (c), that increases net income for the taxable year is an addition.
new text end

new text begin (b) Partners, shareholders, or beneficiaries who file their returns on a calendar year basis,
and who received an addition from a pass-through entity filing their return on a fiscal year
basis, must make the addition in the taxable year it is received as required for federal income
tax purposes.
new text end

new text begin (c) This subdivision expires for taxable years beginning after December 31, 2023.
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, and before January 1, 2024.
new text end

Sec. 13.

Minnesota Statutes 2020, section 290.0134, is amended by adding a subdivision
to read:

new text begin Subd. 20. new text end

new text begin Special Limited Adjustment. new text end

new text begin (a) For taxable years beginning after December
31, 2021, and before January 1, 2023, the amount calculated under section 290.993,
subdivision 2, paragraph (c), that decreases net income for the taxable year is a subtraction.
new text end

new text begin (b) Partners, shareholders, or beneficiaries who file their returns on a calendar year basis,
and who received a subtraction from a pass-through entity filing their return on a fiscal year
basis, must make the subtraction in the taxable year it is received as required for federal
income tax purposes.
new text end

new text begin (c) This subdivision expires for taxable years beginning after December 31, 2023.
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, and before January 1, 2024.
new text end

Sec. 14.

Minnesota Statutes 2020, section 290.0134, is amended by adding a subdivision
to read:

new text begin Subd. 21. 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 290.993,
subdivision 2, paragraph (c), clause (11), 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. 15.

Minnesota Statutes 2021 Supplement, 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 19, and 20, 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 31, and 32, 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 19, and 20, 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 31, and 32, 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. 16.

Minnesota Statutes 2020, 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;
new text end

new text begin (2) "earned income" has the meaning given in section 32(c)(2) of the Internal Revenue
Code, except that a taxpayer must use earned income from the current taxable year;
new text end

new text begin (3) "adjusted gross income" has the meaning given in section 62 of the Internal Revenue
Code; and
new text end

new text begin (4) "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. 17.

Minnesota Statutes 2020, 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) earned income as defined in section 32(c)(2) of the Internal Revenue Code new text begin , except
that a taxpayer must use earned income from the current 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. 18.

Minnesota Statutes 2020, 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
20 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 31 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. 19.

Minnesota Statutes 2020, 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
which 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 December 31, 2020, 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 which 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 December 31, 2020.
new text end

Sec. 20.

Minnesota Statutes 2021 Supplement, section 290.993, is amended to read:

290.993 SPECIAL LIMITED ADJUSTMENT.

new text begin Subdivision 1. new text end

new text begin Tax year 2018. new text end

(a) For an individual, estate, or trust, or a partnership
that elects to file a composite return under section 289A.08, subdivision 7, for taxable years
beginning after December 31, 2017, and before January 1, 2019, the following special rules
apply:

(1) an individual income taxpayer may: (i) take the standard deduction; or (ii) make an
election under section 63(e) of the Internal Revenue Code to itemize, for Minnesota individual
income tax purposes, regardless of the choice made on their federal return; and

(2) there is an adjustment to tax equal to the difference between the tax calculated under
this chapter using the Internal Revenue Code as amended through December 16, 2016, and
the tax calculated under this chapter using the Internal Revenue Code amended through
December 31, 2018, before the application of credits. The end result must be zero additional
tax due or refund.

(b) The adjustment in deleted text begin paragraph (a), clause (2) deleted text end new text begin this subdivision new text end , does not apply to any
changes due to sections 11012, 13101, 13201, 13202, 13203, 13204, 13205, 13207, 13301,
13302, 13303, 13313, 13502, 13503, 13801, 14101, 14102, 14211 through 14215, and
14501 of Public Law 115-97; and section 40411 of Public Law 115-123.

new text begin Subd. 2. new text end

new text begin Tax years 2017 to 2021. new text end

new text begin (a) For all taxpayers, including an entity that elects
to file a composite return under section 289A.08, subdivision 7, and an entity that elects to
pay the pass-through entity tax under section 289A.08, subdivision 7a; for taxable years
beginning after December 31, 2016, and before January 1, 2022, the following rules apply.
new text end

new text begin (b) There is an adjustment to net income equal to the difference between the amount
calculated and reported under this chapter incorporating the Internal Revenue Code as
amended through Minnesota Laws 2021, First Special Session chapter 14, and the amount
calculated under this chapter incorporating the Internal Revenue Code as amended through
November 15, 2021. This adjustment is only allowed as provided in paragraph (c) and to
the extent the taxpayer reported a related nonconformity adjustment on their return for
taxable years beginning after December 31, 2016, and before January 1, 2022. This
adjustment does not include the changes due to the:
new text end

new text begin (1) Taxpayer Certainty and Disaster Relief Act of 2020, Public Law 116-260, section
114, exclusion of gross income of discharge of qualified principal residence indebtedness;
new text end

new text begin (2) Taxpayer Certainty and Disaster Relief Act of 2020, Public Law 116-260, section
304(b), special rules for disaster-related personal casualty losses; and
new text end

new text begin (3) American Rescue Plan Act, Public Law 117-2, section 9675, modification of treatment
of student loan forgiveness.
new text end

new text begin (c) For purposes of this subdivision, the term "nonconformity adjustment" means the
difference between adjusted gross income as defined under section 62 of the Internal Revenue
Code for individuals, and federal taxable income as defined under section 63 of the Internal
Revenue Code for all other taxpayers incorporating the Internal Revenue Code as amended
through Minnesota Laws 2021, First Special Session chapter 14, and the amount calculated
under this chapter incorporating the Internal Revenue Code as amended through November
15, 2021, but does not include impacts to state tax credits. The nonconformity adjustment
is an addition or subtraction to net income but does not include the following federal law
changes:
new text end

new text begin (1) Taxpayer Certainty and Disaster 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 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) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
2205, excluding subsection (a), paragraph (B), temporary modification of limitations on
charitable contributions as it applies to individual taxpayers only and including carryovers;
new text end

new text begin (7) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
2206, exclusion of certain employer payment of student loans;
new text end

new text begin (8) 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 (9) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
2303, modifications for net operating losses;
new text end

new text begin (10) 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 (11) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
2306, limitation on business interest;
new text end

new text begin (12) Taxpayer Certainty and Disaster 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 (13) Taxpayer Certainty and Disaster Relief Act of 2020, Public Law 116-260, section
210, temporary allowance of full deduction for business meals;
new text end

new text begin (14) Taxpayer Certainty and Disaster 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 (15) American Rescue Plan Act, Public Law 117-2, section 9501(b), preserving health
benefits for workers;
new text end

new text begin (16) 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 (17) American Rescue Plan Act, Public Law 117-2, section 9641, payroll sick and family
leave credits; and
new text end

new text begin (18) American Rescue Plan Act, Public Law, 117-2, section 9651, extension of employee
retention credit.
new text end

new text begin The addition or subtraction required must only be made in taxable years beginning after
December 31, 2021, and before January 1, 2023. Except partners, shareholders, or
beneficiaries who file their returns on a calendar year basis, and who received an addition
or subtraction from a pass-through entity filing their return on a fiscal year basis, must make
the addition or subtraction in the taxable year it is received as required for federal income
tax purposes. For purposes of this subdivision, a pass-through entity is defined as an entity
that is not subject to the tax imposed under section 290.02, including but not limited to S
corporations, partnerships, estates, and trusts other than grantor trusts.
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, and before January 1, 2024.
new text end

Sec. 21.

Minnesota Statutes 2020, 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 November 15, 2021 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 2022 and rent paid in 2021 and thereafter.
new text end

Sec. 22.

Minnesota Statutes 2020, 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 November 15, 2021 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 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

ARTICLE 2

INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

Section 1.

Minnesota Statutes 2020, section 41B.0391, subdivision 6, is amended to read:

Subd. 6.

Report to legislature.

(a) No later than February 1, deleted text begin 2022 deleted text end new text begin 2023 new text end , the Rural
Finance Authority, in consultation with the commissioner of revenue, must provide a report
to the chairs and ranking minority members of the legislative committees having jurisdiction
over agriculture, economic development, rural development, and taxes, in compliance with
sections 3.195 and 3.197, on the beginning farmer tax credits under this section issued in
tax years beginning after December 31, 2017, and before January 1, deleted text begin 2022 deleted text end new text begin 2023 new text end .

(b) The report must include background information on beginning farmers in Minnesota
and any other information the commissioner and authority find relevant to evaluating the
effect of the credits on increasing opportunities for and the number of beginning farmers.

(c) For credits issued under subdivision 2, paragraph (a), clauses (1) to (3), the report
must include:

(1) the number and amount of credits issued under each clause;

(2) the geographic distribution of credits issued under each clause;

(3) the type of agricultural assets for which credits were issued under clause (1);

(4) the number and geographic distribution of beginning farmers whose purchase or
rental of assets resulted in credits for the seller or owner of the asset;

(5) the number and amount of credits disallowed under subdivision 2, paragraph (d);

(6) data on the number of beginning farmers by geographic region in calendar years
2017 through deleted text begin 2021 deleted text end new text begin 2022, including:
new text end

new text begin (i) the number of beginning farmers by race and ethnicity, as those terms are applied in
the 2020 United States Census; and
new text end

new text begin (ii) to the extent available, the number of beginning farmers who are members of a
socially disadvantaged group, as defined in United States Code, title 7, section 2279(a)(6) new text end ;
and

(7) the number and amount of credit applications that exceeded the allocation available
in each year.

(d) For credits issued under subdivision 3, the report must include:

(1) the number and amount of credits issued;

(2) the geographic distribution of credits;

(3) a listing and description of each approved financial management program for which
credits were issued; and

(4) a description of the approval procedure for financial management programs not on
the list maintained by the authority, as provided in subdivision 3, paragraph (a).

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 2021 Supplement, section 116J.8737, subdivision 5, is amended
to read:

Subd. 5.

Credit allowed.

(a) A qualified investor or qualified fund is eligible for a credit
equal to 25 percent of the qualified investment in a qualified small business. Investments
made by a pass-through entity qualify for a credit only if the entity is a qualified fund. The
commissioner must not allocate to qualified investors or qualified funds more than the dollar
amount in credits allowed for the taxable years listed in paragraph (i). For each taxable year,
50 percent must be allocated to credits for qualified investments in qualified greater
Minnesota businesses and minority-owned, women-owned, or veteran-owned qualified
small businesses in Minnesota. Any portion of a taxable year's credits that is reserved for
qualified investments in greater Minnesota businesses and minority-owned, women-owned,
or veteran-owned qualified small businesses in Minnesota that is not allocated by September
30 of the taxable year is available for allocation to other credit applications beginning on
October 1. Any portion of a taxable year's credits that is not allocated by the commissioner
does not cancel and may be carried forward to subsequent taxable years until all credits
have been allocated.

(b) The commissioner may not allocate more than a total maximum amount in credits
for a taxable year to a qualified investor for the investor's cumulative qualified investments
as an individual qualified investor and as an investor in a qualified fund; for married couples
filing joint returns the maximum is $250,000, and for all other filers the maximum is
$125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
over all taxable years for qualified investments in any one qualified small business.

(c) The commissioner may not allocate a credit to a qualified investor either as an
individual qualified investor or as an investor in a qualified fund if, at the time the investment
is proposed:

(1) the investor is an officer or principal of the qualified small business; or

(2) the investor, either individually or in combination with one or more members of the
investor's family, owns, controls, or holds the power to vote 20 percent or more of the
outstanding securities of the qualified small business.

A member of the family of an individual disqualified by this paragraph is not eligible for a
credit under this section. For a married couple filing a joint return, the limitations in this
paragraph apply collectively to the investor and spouse. For purposes of determining the
ownership interest of an investor under this paragraph, the rules under section 267(c) and
267(e) of the Internal Revenue Code apply.

(d) Applications for tax credits must be made available on the department's website by
November 1 of the preceding year.

(e) Qualified investors and qualified funds must apply to the commissioner for tax credits.
Tax credits must be allocated to qualified investors or qualified funds in the order that the
tax credit request applications are filed with the department. The commissioner must approve
or reject tax credit request applications within 15 days of receiving the application. The
investment specified in the application must be made within 60 days of the allocation of
the credits. If the investment is not made within 60 days, the credit allocation is canceled
and available for reallocation. A qualified investor or qualified fund that fails to invest as
specified in the application, within 60 days of allocation of the credits, must notify the
commissioner of the failure to invest within five business days of the expiration of the
60-day investment period.

(f) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified investors or
qualified funds file tax credit request applications on the same day, and the aggregate amount
of credit allocation claims exceeds the aggregate limit of credits under this section or the
lesser amount of credits that remain unallocated on that day, then the credits must be allocated
among the qualified investors or qualified funds who filed on that day on a pro rata basis
with respect to the amounts claimed. The pro rata allocation for any one qualified investor
or qualified fund is the product obtained by multiplying a fraction, the numerator of which
is the amount of the credit allocation claim filed on behalf of a qualified investor and the
denominator of which is the total of all credit allocation claims filed on behalf of all
applicants on that day, by the amount of credits that remain unallocated on that day for the
taxable year.

(g) A qualified investor or qualified fund, or a qualified small business acting on their
behalf, must notify the commissioner when an investment for which credits were allocated
has been made, and the taxable year in which the investment was made. A qualified fund
must also provide the commissioner with a statement indicating the amount invested by
each investor in the qualified fund based on each investor's share of the assets of the qualified
fund at the time of the qualified investment. After receiving notification that the investment
was made, the commissioner must issue credit certificates for the taxable year in which the
investment was made to the qualified investor or, for an investment made by a qualified
fund, to each qualified investor who is an investor in the fund. The certificate must state
that the credit is subject to revocation if the qualified investor or qualified fund does not
hold the investment in the qualified small business for at least three years, consisting of the
calendar year in which the investment was made and the two following years. The three-year
holding period does not apply if:

(1) the investment by the qualified investor or qualified fund becomes worthless before
the end of the three-year period;

(2) 80 percent or more of the assets of the qualified small business is sold before the end
of the three-year period;

(3) the qualified small business is sold before the end of the three-year period;

(4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period; or

(5) the qualified investor dies before the end of the three-year period.

(h) The commissioner must notify the commissioner of revenue of credit certificates
issued under this section.

(i) The credit allowed under this subdivision is effective as follows:

(1) $10,000,000 for taxable years beginning after December 31, 2020, and before January
1, 2022; and

(2) deleted text begin $5,000,000 deleted text end new text begin $12,000,000 new text end for taxable years beginning after December 31, 2021, and
before January 1, 2023.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

new text begin [116X.01] NEW MARKETS TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Applicable percentage" means zero percent for each of the first two credit allowance
dates and ten percent for each of the final five credit allowance dates.
new text end

new text begin (c) "CDFI fund" means the Community Development Financial Institutions fund of the
United States Department of the Treasury.
new text end

new text begin (d) "Commissioner" means the commissioner of employment and economic development.
new text end

new text begin (e) "Credit allowance date" means:
new text end

new text begin (1) the date on which a qualified equity investment is initially made; and
new text end

new text begin (2) each of the six anniversary dates thereafter.
new text end

new text begin (f) "Greater Minnesota aggregate credit amount" means $50,000,000 of credits allowed
to all certified qualified equity investments in greater Minnesota counties.
new text end

new text begin (g) "Greater Minnesota allocation" means $100,000,000 in qualified equity investment
authority to be awarded for investment in qualified active low-income community businesses
with principal business operations in a greater Minnesota county.
new text end

new text begin (h) "Greater Minnesota county" means any county that is not a metropolitan county.
new text end

new text begin (i) "Metropolitan aggregate credit amount" means $50,000,000 of credits allowed to all
certified qualified equity investments in metropolitan counties.
new text end

new text begin (j) "Metropolitan allocation" means $100,000,000 in qualified equity investment authority
to be awarded for investment in qualified active low-income community businesses with
principal business operations in a metropolitan county.
new text end

new text begin (k) "Metropolitan county" has the meaning given in section 473.121, subdivision 4.
new text end

new text begin (l) "Minnesota qualified community development entity" means a qualified community
development entity that is or whose controlling entity is headquartered in this state.
new text end

new text begin (m) "Internal Revenue Code" has the meaning given in section 290.01, subdivision 31.
new text end

new text begin (n) "Principal business operations" means the physical location of a business where at
least 60 percent of a qualified active low-income community business' employees work or
where employees that are paid at least 60 percent of the business' payroll work. An
out-of-state business that has agreed to relocate employees or a Minnesota business that has
agreed to hire employees using the proceeds of a qualified low-income community investment
to establish principal business operations in Minnesota is deemed to have principal business
operations in Minnesota if the business satisfies the requirements of this paragraph within
180 days of receiving the qualified low-income community investment or another date as
agreed by the business and the commissioner.
new text end

new text begin (o) "Purchase price" means the amount paid to the qualified community development
entity for a qualified equity investment.
new text end

new text begin (p) "Qualified active low-income community business" has the meaning given in section
45D of the Internal Revenue Code, except that any business that derives or projects to derive
15 percent or more of its annual revenue from the rental or sale of real estate is not considered
to be a qualified active low-income community business. This exception does not apply to
a business that is controlled by or under common control with another business if the second
business:
new text end

new text begin (1) does not derive or project to derive 15 percent or more of its annual revenue from
the rental or sale of real estate; and
new text end

new text begin (2) is the primary tenant of the real estate leased from the initial business.
new text end

new text begin A business is deemed a qualified active low-income community business for the duration
of a qualified low-income community investment if the qualified community development
entity reasonably expects, at the time it makes the qualified low-income community
investment, that the business will continue to satisfy the requirements for being a qualified
active low-income community business throughout the entire period of the qualified
low-income community investment.
new text end

new text begin (q) "Qualified community development entity" has the meaning given in section 45D
of the Internal Revenue Code, provided that the entity:
new text end

new text begin (1) has previously entered into an allocation agreement with the CDFI fund with respect
to credits authorized by section 45D of the Internal Revenue Code; and
new text end

new text begin (2) includes the state within the service area set forth in the allocation agreement.
new text end

new text begin (r) "Qualified equity investment" means an equity investment in a qualified community
development entity, if the equity investment:
new text end

new text begin (1) is acquired after the effective date of this section at its original issuance solely in
exchange for cash;
new text end

new text begin (2) has at least 100 percent of its cash purchase price used by the qualified community
development entity to make qualified low-income community investments in qualified
active low-income community businesses that have their principal business operations in
the state of Minnesota; and
new text end

new text begin (3) is:
new text end

new text begin (i) designated by the qualified community development entity as a qualified equity
investment under this section; and
new text end

new text begin (ii) except for a Minnesota qualified community development entity, is at least 50 percent
designated by the qualified community development entity as a qualified equity investment
under section 45D of the Internal Revenue Code.
new text end

new text begin An investment that does not qualify under clause (1) is a qualified equity investment if the
investment met the requirements of this paragraph while under possession of a prior holder.
new text end

new text begin (s) "Qualified low-income community investment" means any capital or equity investment
in, or loan to, any qualified active low-income community business.
new text end

new text begin (t) "Tax credit" or "credit" means a credit against the tax imposed by chapter 290 or
297I.
new text end

new text begin (u) "Taxpayer" means a taxpayer as defined in section 290.01, subdivision 6, or a taxpayer
as defined in section 297I.01, subdivision 16.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed; qualification; limitation. new text end

new text begin (a) An entity earns a vested right
to a credit against the tax imposed under chapter 290 or 297I, subject to the requirements
of this subdivision. The credit may be claimed against the tax imposed by chapter 290 or
297I, but not both.
new text end

new text begin (b) The credit equals the applicable percentage for each credit allowance date multiplied
by the purchase price paid to the qualified community development entity for the qualified
equity investment.
new text end

new text begin Subd. 3. new text end

new text begin Application. new text end

new text begin (a) A qualified community development entity that seeks to have
an equity investment designated as a qualified equity investment and eligible for the credit
under this section shall apply to the commissioner on a form provided by the commissioner
that includes:
new text end

new text begin (1) the name, address, and tax identification number of the applicant, and evidence of
the applicant's certification as a qualified community development entity by the CDFI fund;
new text end

new text begin (2) a copy of the allocation agreement executed by the applicant or its controlling entity,
and the CDFI fund;
new text end

new text begin (3) a certificate executed by an executive officer of the applicant attesting that the
allocation agreement remains in effect and has not been revoked or canceled by the CDFI
fund;
new text end

new text begin (4) a description of the proposed amount, structure, and purchaser of the equity
investment;
new text end

new text begin (5) the amount of qualified equity investment authority sought under the greater
Minnesota allocation or the metropolitan allocation, as applicable, which collectively may
not exceed the applicant or its controlling entity's available qualified equity investment
authority under section 45D of the Internal Revenue Code multiplied by two, provided this
limitation does not apply to a Minnesota qualified community development entity;
new text end

new text begin (6) if required by clause (5), evidence of the applicant or its controlling entity's available
qualified equity investment authority under section 45D of the Internal Revenue Code; and
new text end

new text begin (7) a nonrefundable application fee of $5,000 paid to the commissioner to offset costs
associated with personnel and administrative expenses related to administering the credit.
new text end

new text begin (b) The commissioner shall set a date to accept applications not less than 30 days but
not more than 45 days after the CDFI fund announces allocation awards under a notice of
funding availability that was published in the Federal Register in November 2021.
new text end

new text begin (c) A qualified community development entity may apply for both a greater Minnesota
allocation and a metropolitan allocation.
new text end

new text begin Subd. 4. new text end

new text begin Certification of qualified equity investments. new text end

new text begin (a) Within 30 days after receipt
of an application, the commissioner shall grant or deny the application in full or in part. If
the commissioner denies any part of the application, the commissioner shall inform the
applicant of the grounds for the denial. If the applicant provides the information required
by the commissioner or otherwise completes its application within 15 days of the notice of
denial, the application is deemed complete as of the original date of submission. If the
applicant fails to provide the requested information or complete its application within the
15-day period, the applicant must submit a new application.
new text end

new text begin (b) If the application is deemed complete, the commissioner shall certify the proposed
equity investment as a qualified equity investment eligible for a credit under this section.
The commissioner shall provide written notice of the certification to the qualified community
development entity. Once the qualified community development entity identifies the
taxpayers who are allocated credits and their respective credit amounts, the qualified
community development entity shall provide a notice of allocation to the commissioner,
and the commissioner shall provide a certification to the qualified community development
entity and each taxpayer containing the credit amount and utilization schedule for which
the taxpayer is eligible. If the taxpayer is eligible to utilize the credits change due to a transfer
of a qualified equity investment or a change in allocation pursuant to paragraph (c), the
qualified community development entity shall notify the commissioner of the change.
new text end

new text begin (c) The commissioner shall certify applications for the greater Minnesota allocation and
the metropolitan allocation in proportionate percentages based upon the ratio of the amount
of qualified equity investments requested in applications for each allocation to the total
amount of qualified equity investments requested in all applications for each allocation
received on the same day.
new text end

new text begin (d) If a pending request cannot be fully certified, the commissioner shall certify the
portion that may be certified unless the qualified community development entity elects to
withdraw its request rather than receive a partial award of qualified equity investment
authority.
new text end

new text begin (e) An approved applicant may transfer all or a portion of its certified qualified equity
investment authority to its controlling entity or any affiliate or partner of the controlling
entity that is also a qualified community development entity if the applicant provides the
information required in the application with respect to the transferee and the applicant
notifies the commissioner in the notice required by paragraph (f). Within 30 days after
receiving notice of certification under paragraph (b), the applicant or transferee shall:
new text end

new text begin (1) issue qualified equity investments in an amount equal to the total amount of certified
qualified equity investment authority;
new text end

new text begin (2) receive cash in the amount of the certified qualified equity investment; and
new text end

new text begin (3) if the applicant or transferee is not a Minnesota qualified community development
entity, designate 50 percent of the qualified equity investment authority as a qualified equity
investment under section 45D of the Internal Revenue Code.
new text end

new text begin (f) The qualified community development entity must provide the commissioner with
evidence of the receipt of the cash investment and, if the qualified community development
entity is not a Minnesota qualified community development entity, the designation of 50
percent of the qualified equity investment as a qualified equity investment under section
45D of the Internal Revenue Code within 35 days after receiving notice of certification. If
the qualified community development entity does not receive the cash investment, issue the
qualified equity investment within 30 days following receipt of the certification notice, and
comply with paragraph (e), clause (3), if applicable, the certification is void. A voided
certification must be returned to the commissioner and must first be awarded pro rata to
applicants that received awards of qualified equity investment authority and complied with
paragraph (e).
new text end

new text begin (g) The commissioner shall notify the commissioner of revenue of credits approved
under this subdivision within 15 days of granting an application.
new text end

new text begin Subd. 5. new text end

new text begin Credit recapture. new text end

new text begin (a) The commissioner shall recapture credits allowed under
this act and future credits are forfeited if:
new text end

new text begin (1) any amount of the federal tax credit available with respect to a qualified equity
investment that is eligible for a credit under this section is recaptured under section 45D of
the Internal Revenue Code. In that case, the commissioner's recapture shall be proportionate
to the federal recapture with respect to that qualified equity investment;
new text end

new text begin (2) the qualified community development entity redeems or makes principal repayment
with respect to a qualified equity investment prior to seven years after the date of issuance
of the qualified equity investment. In that case, the commissioner's recapture shall be
proportionate to the amount of the redemption or repayment with respect to the qualified
equity investment; or
new text end

new text begin (3) the qualified community development entity fails to invest at least 100 percent of
the cash purchase price of the qualified equity investment in qualified low-income community
investments in greater Minnesota counties or metropolitan counties, as applicable, within
12 months of the issuance of the qualified equity investment and maintains the investment
in qualified low-income community investments in greater Minnesota counties or
metropolitan counties, as applicable, until the last credit allowance date for the qualified
equity investment. A qualified community development entity must use the proceeds of
qualified equity investments awarded under the greater Minnesota allocation to make
qualified low-income community investments in qualified active low-income community
businesses with principal business operations in greater Minnesota counties.
new text end

new text begin (b) For purposes of paragraph (a), clause (3), an investment is considered maintained
by a qualified community development entity even if the investment has been sold or repaid,
provided that the qualified community development entity reinvests an amount equal to the
capital returned to or recovered by the qualified community development entity from the
original investment, exclusive of any profits realized, in another qualified low-income
community investment in this state as required under the greater Minnesota allocation or
metropolitan allocation within 12 months after the receipt of that capital. Periodic loan
repayments received by a qualified community development entity from a qualified active
low-income community business within a calendar year must be treated as maintained in
qualified low-income community investments if a qualified community development entity
reinvests the repayments in qualified low-income community investments by the end of the
following calendar year.
new text end

new text begin (c) A qualified community development entity is not required to reinvest capital returned
from qualified low-income community investments after the sixth anniversary of the issuance
of the qualified equity investment, the proceeds of which were used to make the qualified
low-income community investment, and the qualified low-income community investment
is considered held by the qualified community development entity through the seventh
anniversary of the qualified equity investment's issuance.
new text end

new text begin (d) With respect to any one qualified active low-income community business, the
maximum amount of qualified low-income community investments made in that business
in aggregate with all of its affiliates that may be counted toward the satisfaction of paragraph
(a), clause (3), is $10,000,000, whether made by one or several qualified community
development entities but exclusive of redeemed or repaid qualified low-income community
investment by the qualified active low-income community business.
new text end

new text begin (e) The commissioner shall provide notice to the qualified community development
entity of any proposed recapture of credits pursuant to this subdivision. The notice must
specify the conditions under which the deficiency resulting in the proposed recapture occurred
and state that the credits will be recaptured within 90 days unless the qualified community
development entity complies with the conditions identified in the notice. If the entity fails
or is unable to cure the deficiency within the 90-day period, the commissioner shall provide
the entity and the taxpayer from whom the credit is to be recaptured with a final order of
recapture. Any credit for which a final recapture order has been issued must be recaptured
by the commissioner from the taxpayer who claimed the credit on a tax return. The qualified
equity investment authority of the recaptured credits must be returned to the commissioner
and must first be awarded pro rata to applicants that have received awards of qualified equity
investment authority and complied with this subdivision.
new text end

new text begin Subd. 6. new text end

new text begin Examination and rulemaking. new text end

new text begin (a) The commissioner may conduct examinations
to verify that the credits under this section have been received and applied according to the
requirements of this section and to verify that no event has occurred that would result in a
recapture of credits under subdivision 5.
new text end

new text begin (b) The commissioner may issue advisory letters to individual qualified community
development entities and their investors that are limited to the specific facts outlined in an
advisory letter request from a qualified community development entity. The rulings cannot
be relied upon by any person or entity other than the qualified community development
entity that requested the letter and the taxpayers that are entitled to any tax credits generated
from investments in the entity.
new text end

new text begin (c) In rendering advisory letters and making other determinations under this section, to
the extent applicable, the commissioner shall rely upon guidance to section 45D of the
Internal Revenue Code and the rules and regulations issued thereunder.
new text end

new text begin Subd. 7. new text end

new text begin Annual reporting by community development entities. new text end

new text begin (a) Each qualified
community development entity shall submit an annual report to the commissioner within
120 days after the beginning of each calendar year during the compliance period. No annual
report is due prior to the first anniversary of the initial credit allowance date. The report
must include but is not limited to information with respect to all qualified low-income
community investments made by the qualified community development entity, including:
new text end

new text begin (1) the date and amount of, and bank statements or wire transfer reports documenting,
qualified low-income community investments;
new text end

new text begin (2) the name and address of each qualified active low-income community business
funded by the qualified community development entity, the number of persons employed
by the business at the time of the initial qualified low-income community investment, and
a brief description of the business and its financing;
new text end

new text begin (3) the number of employment positions maintained by each qualified active low-income
community business as of the date of the report or the end of the preceding calendar year
and the average annual salaries of those positions;
new text end

new text begin (4) the total number of employment positions created and retained as a result of qualified
low-income community investments and the average annual salaries of those positions;
new text end

new text begin (5) a certification by its chief executive officer or similar officer that no credits have
been subject to recapture under subdivision 5; and
new text end

new text begin (6) any changes with respect to the taxpayers entitled to claim credits with respect to
qualified equity investments issued by the qualified community development entity since
its last report pursuant to this section.
new text end

new text begin (b) The qualified community development entity is not required to provide the annual
report set forth in this section for qualified low-income community investments that have
been redeemed or repaid.
new text end

new text begin Subd. 8. new text end

new text begin Program report. new text end

new text begin If the credit under this section has not been reviewed under
the provisions of section 3.8855 by December 15, 2031, the commissioner shall report to
the legislature no later than December 31, 2031, regarding the implementation of the credit
under this section, including an evaluation of the credit using the components listed in
section 3.885, subdivision 5.
new text end

new text begin Subd. 9. new text end

new text begin Expiration. new text end

new text begin This section expires for taxable years beginning after December
31, 2030, except that the commissioner's authority to allow the credit under subdivision 2
based on certificates that were issued under subdivision 4 before expiration remains in effect
through the year following the year in which all certificates have either been canceled or
resulted in issuance of credit certificates, or 2033, whichever is earlier.
new text end

new text begin Subd. 10. new text end

new text begin Account created; appropriation. new text end

new text begin The Minnesota new markets tax credit
account is created in the special revenue fund in the state treasury. The account is
administered by the commissioner. Application fees required under subdivision 3, paragraph
(a), clause (7), are appropriated to the commissioner for costs associated with certifying
applications and for personnel and administrative expenses related to administering the
credit 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, 2022, and before January 1, 2031.
new text end

Sec. 4.

Minnesota Statutes 2021 Supplement, section 289A.08, subdivision 7a, is amended
to read:

Subd. 7a.

Pass-through entity tax.

(a) For the purposes of this subdivision, the following
terms have the meanings given:

(1) "income" has the meaning given in subdivision 7, paragraph (j), modified by the
addition provided in section 290.0131, subdivision 5, and the subtraction provided in section
290.0132, subdivision 3, except that the provisions that apply to a partnership apply to a
qualifying entity and the provisions that apply to a partner apply to a qualifying owner. The
income of deleted text begin both deleted text end a resident deleted text begin and deleted text end new text begin qualifying owner of an entity taxed as a partnership under
the Internal Revenue Code is not subject to allocation outside this state as provided for
resident individuals under section 290.17, subdivision 1, paragraph (a). The income of a new text end
nonresident qualifying owner new text begin or the income of a qualifying owner of an entity taxed as an
S corporation including a qualified subchapter S subsidiary organized under section
1361(b)(3)(B) of the Internal Revenue Code new text end is allocated and assigned to this state as provided
for nonresident partners and shareholders under sections 290.17, 290.191, and 290.20;

(2) "qualifying entity" means a partnership, limited liability company new text begin taxed as a
partnership or S corporation new text end , or S corporation including a qualified subchapter S subsidiary
organized under section 1361(b)(3)(B) of the Internal Revenue Code. Qualifying entity deleted text begin does
deleted text end deleted text begin not deleted text end new text begin may new text end include a partnership, limited liability company, or corporation that has a deleted text begin partnership,
limited liability company other than a disregarded entity, or deleted text end corporation as a partner, member,
or shareholder new text begin , provided those entities are excluded from the qualifying entity's tax return;
the entity is taxed as a partnership, limited liability company, or S corporation; and is not
a publicly traded partnership, as defined in section 7704 of the Internal Revenue Code, as
amended through January 1, 2021 new text end ; and

(3) "qualifying owner" means:

(i) a resident or nonresident individual new text begin , new text end new text begin trust, new text end or estate new text begin , new text end that is a partner, member, or
shareholder of a qualifying entity; deleted text begin or
deleted text end

(ii) deleted text begin a resident or nonresident trust that is a shareholder of a qualifying entity that is an
S corporation deleted text end new text begin an entity taxed as a partnership under the Internal Revenue Code; or
new text end

new text begin (iii) a disregarded entity that has a qualifying owner as its single owner new text end .

(b) For taxable years beginning after December 31, 2020, in which the taxes of a
qualifying owner are limited under section 164(b)(6)(B) of the Internal Revenue Code, a
qualifying entity may elect to file a return and pay the pass-through entity tax imposed under
paragraph (c). The election:

(1) must be made on or before the due date or extended due date of the qualifying entity's
pass-through entity tax return;

(2) may only be made by qualifying owners who collectively hold more than a 50 percent
ownership interest in the qualifying entity;

(3) is binding on all qualifying owners who have an ownership interest in the qualifying
entity; and

(4) once made is irrevocable for the taxable year.

(c) Subject to the election in paragraph (b), a pass-through entity tax is imposed on a
qualifying entity in an amount equal to the sum of the tax liability of each qualifying owner.

(d) The amount of a qualifying owner's tax liability under paragraph (c) is the amount
of the qualifying owner's income multiplied by the highest tax rate for individuals under
section 290.06, subdivision 2c. When making this determination:

(1) nonbusiness deductions, standard deductions, or personal exemptions are not allowed;
and

(2) a credit or deduction is allowed only to the extent allowed to the qualifying owner.

(e) The amount of each credit and deduction used to determine a qualifying owner's tax
liability under paragraph (d) must also be used to determine that qualifying owner's income
tax liability under chapter 290.

(f) This subdivision does not negate the requirement that a qualifying owner pay estimated
tax if the qualifying owner's tax liability would exceed the requirements set forth in section
289A.25. The qualifying owner's liability to pay estimated tax on the qualifying owner's
tax liability as determined under paragraph (d) is, however, satisfied when the qualifying
entity pays estimated tax in the manner prescribed in section 289A.25 for composite estimated
tax.

(g) A qualifying owner's adjusted basis in the interest in the qualifying entity, and the
treatment of distributions, is determined as if the election to pay the pass-through entity tax
under paragraph (b) is not made.

(h) To the extent not inconsistent with this subdivision, for purposes of this chapter, a
pass-through entity tax return must be treated as a composite return and a qualifying entity
filing a pass-through entity tax return must be treated as a partnership filing a composite
return.

(i) The provisions of subdivision 17 apply to the election to pay the pass-through entity
tax under this subdivision.

(j) If a nonresident qualifying owner of a qualifying entity making the election to file
and pay the tax under this subdivision has no other Minnesota source income, filing of the
pass-through entity tax return is a return for purposes of subdivision 1, provided that the
nonresident qualifying owner must not have any Minnesota source income other than the
income from the qualifying entity, other electing qualifying entities, and other partnerships
electing to file a composite return under subdivision 7. If it is determined that the nonresident
qualifying owner has other Minnesota source income, the inclusion of the income and tax
liability for that owner under this provision will not constitute a return to satisfy the
requirements of subdivision 1. The tax paid for the qualifying owner as part of the
pass-through entity tax return is allowed as a payment of the tax by the qualifying owner
on the date on which the pass-through entity tax return payment was made.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2020.
new text end

Sec. 5.

Minnesota Statutes 2020, section 289A.10, subdivision 1, is amended to read:

Subdivision 1.

Return required.

new text begin (a) new text end In the case of a decedent who has an interest in
property with a situs in Minnesota, the personal representative must submit a Minnesota
estate tax return to the commissioner, on a form prescribed by the commissioner, if:

(1) a federal estate tax return is required to be filed; or

(2) the sum of the federal gross estate and federal adjusted taxable gifts, as defined in
section 2001(b) of the Internal Revenue Code, made within three years of the date of the
decedent's death exceeds deleted text begin $1,200,000 for estates of decedents dying in 2014; $1,400,000 for
deleted text end deleted text begin estates of decedents dying in 2015; $1,600,000 for estates of decedents dying in 2016;
$2,100,000 for estates of decedents dying in 2017; $2,400,000 for estates of decedents dying
in 2018; $2,700,000 for estates of decedents dying in 2019; and deleted text end $3,000,000 deleted text begin for estates of
decedents dying in 2020 and thereafter deleted text end .

new text begin (b) new text end The return must contain a computation of the Minnesota estate tax due. The return
must be signed by the personal representative.

new text begin (c) The return may include an election, as provided in section 291.03, subdivision 1e,
to allow a decedent's surviving spouse to take into account the decedent's deceased spousal
unused exclusion amount.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after June
30, 2022.
new text end

Sec. 6.

Minnesota Statutes 2021 Supplement, section 289A.382, subdivision 2, is amended
to read:

Subd. 2.

Reporting and payment requirements for partnerships and tiered
partners.

(a) Except for when an audited partnership makes the election in subdivision 3,
and except for negative federal adjustments required under federal law taken into account
by the partnership in the partnership return for the adjustment or other year, all final federal
adjustments of an audited partnership must comply with paragraph (b) and each direct
partner of the audited partnership, other than a tiered partner, must comply with paragraph
(c).

(b) No later than 90 days after the final determination date, the audited partnership must:

(1) file a completed federal adjustments report, including all partner-level information
required under section 289A.12, subdivision 3, with the commissioner;

(2) notify each of its direct partners of their distributive share of the final federal
adjustments;

(3) file an amended composite report for all direct partners who were included in a
composite return under section 289A.08, subdivision 7, in the reviewed year, and pay the
additional amount that would have been due had the federal adjustments been reported
properly as required; deleted text begin and
deleted text end

(4) file amended withholding reports for all direct partners who were or should have
been subject to nonresident withholding under section 290.92, subdivision 4b, in the reviewed
year, and pay the additional amount that would have been due had the federal adjustments
been reported properly as required deleted text begin . deleted text end new text begin ; and
new text end

new text begin (5) file an amended pass-through entity tax report for all direct partners who were
included in a pass-through entity tax return under section 289A.08, subdivision 7a, in the
reviewed year, and pay the additional amount that would have been due had the federal
adjustments been reported properly as required.
new text end

(c) No later than 180 days after the final determination date, each direct partner, other
than a tiered partner, that is subject to a tax administered under this chapter, other than the
sales tax, must:

(1) file a federal adjustments report reporting their distributive share of the adjustments
reported to them under paragraph (b), clause (2); and

(2) pay any additional amount of tax due as if the final federal adjustment had been
properly reported, plus any penalty and interest due under this chapter, and less any credit
for related amounts paid or withheld and remitted on behalf of the direct partner under
paragraph (b), clauses (3) and (4).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2020.
new text end

Sec. 7.

Minnesota Statutes 2020, section 290.0132, subdivision 4, is amended to read:

Subd. 4.

Education expenses.

(a) Subject to the limits in paragraph (b), the following
amounts paid to others for each qualifying child are a subtraction:

(1) education-related expenses; plus

(2) tuition and fees paid to attend a school described in section 290.0674, subdivision
1, clause (4), that are not included in education-related expenses; less

(3) any amount used to claim the credit under section 290.0674.

(b) The maximum subtraction allowed under this subdivision is:

(1) deleted text begin $1,625 deleted text end new text begin $3,250 new text end for each qualifying child in kindergarten through grade 6; and

(2) deleted text begin $2,500 deleted text end new text begin $5,000 new text end for each qualifying child in grades 7 through 12.

(c) The definitions in section 290.0674, subdivision 1, apply to this subdivision.

new text begin (d) The commissioner shall annually adjust the subtraction amounts in paragraph (b) as
provided in section 270C.22. The statutory year is 2022.
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. 8.

Minnesota Statutes 2020, section 290.0132, subdivision 26, is amended to read:

Subd. 26.

Social Security benefits.

deleted text begin (a) A portion deleted text end new text begin The amount new text end of deleted text begin taxable deleted text end Social Security
benefits new text begin received by a taxpayer in the taxable year new text end is allowed as a subtraction. deleted text begin The subtraction
equals the lesser of taxable Social Security benefits or a maximum subtraction subject to
the limits under paragraphs (b), (c), and (d).
deleted text end

deleted text begin (b) For married taxpayers filing a joint return and surviving spouses, the maximum
subtraction equals $5,150. The maximum subtraction is reduced by 20 percent of provisional
income over $78,180. In no case is the subtraction less than zero.
deleted text end

deleted text begin (c) For single or head-of-household taxpayers, the maximum subtraction equals $4,020.
The maximum subtraction is reduced by 20 percent of provisional income over $61,080.
In no case is the subtraction less than zero.
deleted text end

deleted text begin (d) For married taxpayers filing separate returns, the maximum subtraction equals
one-half the maximum subtraction for joint returns under paragraph (b). The maximum
subtraction is reduced by 20 percent of provisional income over one-half the threshold
amount specified in paragraph (b). In no case is the subtraction less than zero.
deleted text end

deleted text begin (e) For purposes of this subdivision, "provisional income" means modified adjusted
gross income as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of
the taxable Social Security benefits received during the taxable year, and "Social Security
benefits" has the meaning given in section 86(d)(1) of the Internal Revenue Code.
deleted text end

deleted text begin (f) The commissioner shall adjust the maximum subtraction and threshold amounts in
paragraphs (b) to (d) as provided in section 270C.22. The statutory year is taxable year
2019. The maximum subtraction and threshold amounts as adjusted must be rounded to the
nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest $10
amount.
deleted 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 2020, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 31. new text end

new text begin Pension income; public safety officers and firefighters. new text end

new text begin (a) Income received
from the following pension plans, excluding disability income, is a subtraction:
new text end

new text begin (1) the police and fire plan governed by sections 353.63 to 353.68;
new text end

new text begin (2) the local government correctional service retirement plan under chapter 353E;
new text end

new text begin (3) the state patrol retirement plan under chapter 352B;
new text end

new text begin (4) the state correctional employees retirement plan under sections 352.90 to 352.955;
or
new text end

new text begin (5) any similar annuity or benefit from a retirement system administered by the federal
government.
new text end

new text begin (b) The subtraction applies to individuals who have attained at least 20 years of service
as a public official or employee and a member of a plan listed under paragraph (a), and have
not attained age 55 before December 31, 2022, and their surviving spouses.
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 2020, section 290.05, subdivision 1, is amended to read:

Subdivision 1.

Exempt entities.

The following corporations, individuals, estates, trusts,
and organizations shall be exempted from taxation under this chapter, provided that every
such person or corporation claiming exemption under this chapter, in whole or in part, must
establish to the satisfaction of the commissioner the taxable status of any income or activity:

(a) corporations, individuals, estates, and trusts engaged in the business of mining or
producing iron ore and mining, producing, or refining other ores, metals, and minerals, the
mining, production, or refining of which is subject to the occupation tax imposed by section
298.01; but if any such corporation, individual, estate, or trust engages in any other business
or activity or has income from any property not used in such business it shall be subject to
this tax computed on the net income from such property or such other business or activity.
Royalty shall not be considered as income from the business of mining or producing iron
ore within the meaning of this section;

(b) the United States of America, the state of Minnesota or any political subdivision of
either agencies or instrumentalities, whether engaged in the discharge of governmental or
proprietary functions; deleted text begin and
deleted text end

(c) any insurance company, other than a disqualified captive insurance company deleted text begin . deleted text end new text begin ; and
new text end

new text begin (d) a Nuclear Decommissioning Reserve Fund, as defined in section 468A 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, 2024.
new text end

Sec. 11.

Minnesota Statutes 2021 Supplement, section 290.06, subdivision 2c, is amended
to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income taxes
imposed by this chapter upon married individuals filing joint returns and surviving spouses
as defined in section 2(a) of the Internal Revenue Code must be computed by applying to
their taxable net income the following schedule of rates:

(1) On the first deleted text begin $38,770 deleted text end new text begin $41,050 new text end , deleted text begin 5.35 deleted text end new text begin 2.8 new text end percent;

(2) On all over deleted text begin $38,770 deleted text end new text begin $41,050 new text end , but not over deleted text begin $154,020 deleted text end new text begin $163,060 new text end , 6.8 percent;

(3) On all over deleted text begin $154,020 deleted text end new text begin $163,060 new text end , but not over deleted text begin $269,010 deleted text end new text begin $284,810 new text end , 7.85 percent;

(4) On all over deleted text begin $269,010 deleted text end new text begin $284,810 new text end , 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 deleted text begin $26,520 deleted text end new text begin $28,080 new text end , deleted text begin 5.35 deleted text end new text begin 2.8 new text end percent;

(2) On all over deleted text begin $26,520 deleted text end new text begin $28,080 new text end , but not over deleted text begin $87,110 deleted text end new text begin $92,230 new text end , 6.8 percent;

(3) On all over deleted text begin $87,110 deleted text end new text begin $92,230 new text end , but not over deleted text begin $161,720 deleted text end new text begin $171,220 new text end , 7.85 percent;

(4) On all over deleted text begin $161,720 deleted text end new text begin $171,220 new text end , 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 deleted text begin $32,650 deleted text end new text begin $34,570 new text end , deleted text begin 5.35 deleted text end new text begin 2.8 new text end percent;

(2) On all over deleted text begin $32,650 deleted text end new text begin $34,570 new text end , but not over deleted text begin $131,190 deleted text end new text begin $138,890 new text end , 6.8 percent;

(3) On all over deleted text begin $131,190 deleted text end new text begin $138,890 new text end , but not over deleted text begin $214,980 deleted text end new text begin $227,600 new text end , 7.85 percent;

(4) On all over deleted text begin $214,980 deleted text end new text begin $227,600 new text end , 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, and
17, 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, and 27, 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, and
17, and 290.0137, paragraph (a); and reduced by

(ii) the subtractions under sections 290.0132, subdivisions 2, 9, 10, 14, 15, 17, 18, and
27, 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. 12.

Minnesota Statutes 2020, section 290.06, subdivision 2d, is amended to read:

Subd. 2d.

Inflation adjustment of brackets.

The commissioner shall annually adjust
the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed
in subdivision 2c as provided in section 270C.22. The statutory year is taxable year deleted text begin 2019 deleted text end new text begin
2022 new text end . The rate applicable to any rate bracket must not be changed. The dollar amounts
setting forth the tax shall be adjusted to reflect the changes in the rate brackets. The rate
brackets as adjusted must be rounded to the nearest $10 amount. If the rate bracket ends in
$5, it must be rounded up to the nearest $10 amount. The commissioner shall determine the
rate bracket for married filing separate returns after this adjustment is done. The rate bracket
for married filing separate must be one-half of the rate bracket for married filing joint.

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. 13.

Minnesota Statutes 2020, section 290.067, subdivision 1, is amended to read:

Subdivision 1.

Amount of credit.

(a) A taxpayer may take as a credit against the tax
due from the taxpayer and a spouse, if any, under this chapter an amount equal to the
dependent care credit for which the taxpayer is eligible pursuant to the provisions of section
21 of the Internal Revenue Code except that in determining whether the child qualified as
a dependent, income received as a Minnesota family investment program grant or allowance
to or on behalf of the child must not be taken into account in determining whether the child
received more than half of the child's support from the taxpayer.

(b) If a child who has not attained the age of six years at the close of the taxable year is
cared for at a licensed family day care home operated by the child's parent, the taxpayer is
deemed to have paid employment-related expenses. If the child is 16 months old or younger
at the close of the taxable year, the amount of expenses deemed to have been paid equals
the maximum limit for one qualified individual under section 21(c) and (d) of the Internal
Revenue Code. If the child is older than 16 months of age but has not attained the age of
six years at the close of the taxable year, the amount of expenses deemed to have been paid
equals the amount the licensee would charge for the care of a child of the same age for the
same number of hours of care.

(c) If a married couple:

(1) has a child who has not attained the age of one year at the close of the taxable year;

(2) files a joint tax return for the taxable year; and

(3) does not participate in a dependent care assistance program as defined in section 129
of the Internal Revenue Code, in lieu of the actual employment related expenses paid for
that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of (i)
the combined earned income of the couple or (ii) the amount of the maximum limit for one
qualified individual under section 21(c) and (d) of the Internal Revenue Code will be deemed
to be the employment related expense paid for that child. The earned income limitation of
section 21(d) of the Internal Revenue Code shall not apply to this deemed amount. These
deemed amounts apply regardless of whether any employment-related expenses have been
paid.

(d) If the taxpayer is not required and does not file a federal individual income tax return
for the tax year, no credit is allowed for any amount paid to any person unless:

(1) the name, address, and taxpayer identification number of the person are included on
the return claiming the credit; or

(2) if the person is 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, the name
and address of the person are included on the return claiming the credit.

In the case of a failure to provide the information required under the preceding sentence,
the preceding sentence does not apply if it is shown that the taxpayer exercised due diligence
in attempting to provide the information required.

(e) In the case of a nonresident, part-year resident, or a person who has earned income
not subject to tax under this chapter including earned income excluded pursuant to section
290.0132, subdivision 10, the credit determined under section 21 of the Internal Revenue
Code must be allocated based on the ratio by which the earned income of the claimant and
the claimant's spouse from Minnesota sources bears to the total earned income of the claimant
and the claimant's spouse.

(f) For residents of Minnesota, the subtractions for military pay under section 290.0132,
subdivisions 11 and 12, are not considered "earned income not subject to tax under this
chapter."

(g) For residents of Minnesota, the exclusion of combat pay under section 112 of the
Internal Revenue Code is not considered "earned income not subject to tax under this
chapter."

(h) For taxpayers with federal adjusted gross income in excess of deleted text begin $52,230 deleted text end new text begin $70,000 new text end , the
credit is equal to the lesser of the credit otherwise calculated under this subdivision, or the
amount equal to $600 minus five percent of federal adjusted gross income in excess of
deleted text begin $52,230 deleted text end new text begin $70,000 new text end for taxpayers with one qualified individual, or $1,200 minus five percent
of federal adjusted gross income in excess of deleted text begin $52,230 deleted text end new text begin $70,000 new text end for taxpayers with two or
more qualified individuals, but in no case is the credit less than zero.

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 2020, section 290.0674, subdivision 2, is amended to read:

Subd. 2.

Limitations.

(a) For claimants with new text begin adjusted gross new text end income not greater than
$33,500, the maximum credit allowed for a family is $1,000 multiplied by the number of
qualifying children in kindergarten through grade 12 in the family. The maximum credit
for families with one qualifying child in kindergarten through grade 12 is reduced by $1
for each $4 of deleted text begin household deleted text end new text begin adjusted gross new text end income over deleted text begin $33,500 deleted text end new text begin $50,000 new text end , and the maximum
credit for families with two or more qualifying children in kindergarten through grade 12
is reduced by $2 for each $4 of deleted text begin household deleted text end new text begin adjusted gross new text end income over deleted text begin $33,500 deleted text end new text begin $50,000 new text end ,
but in no case is the credit less than zero. new text begin In the case of an individual who files an income
tax return on a fiscal year basis, the term "federal adjusted gross income" means federal
adjusted gross income reflected in the fiscal year ending in the next calendar year. Federal
adjusted gross income may 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.
new text end

(b) In the case of a married claimant, a credit is not allowed unless a joint income tax
return is filed.

(c) For a nonresident or part-year resident, the credit determined under subdivision 1
and the maximum credit amount in paragraph (a) must be allocated using the percentage
calculated in section 290.06, subdivision 2c, paragraph (e).

new text begin (d) The commissioner shall annually adjust the income amount in paragraph (a) as
provided in section 270C.22. The statutory year is 2022.
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. 15.

Minnesota Statutes 2020, section 290.068, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

A corporation, partners in a partnership, or shareholders
in a corporation treated as an "S" corporation under section 290.9725 are allowed a credit
against the tax computed under this chapter for the taxable year equal to:

(a) ten percent of the first $2,000,000 of the excess (if any) of

(1) the qualified research expenses for the taxable year, over

(2) the base amount; and

(b) deleted text begin four deleted text end new text begin 4.25 new text end percent on all of such excess expenses over $2,000,000.

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. 16.

Minnesota Statutes 2020, section 290.0681, subdivision 4, is amended to read:

Subd. 4.

Credit certificates; grants.

(a)(1) The developer of a project for which the
office has issued an allocation certificate must notify the office when the project is placed
in service. Upon verifying that the project has been placed in service, and was allowed a
federal credit, the office must issue a credit certificate to the taxpayer designated in the
application or must issue a grant to the recipient designated in the application. The credit
certificate must state the amount of the credit.

(2) The credit amount equals the federal credit allowed for the project.

(3) The grant amount equals 90 percent of the federal credit allowed for the project.

(b) The recipient of a credit certificate may assign the certificate to another taxpayer
before the first one-fifth payment is claimed, which is then allowed the credit under this
section or section 297I.20, subdivision 3. new text begin The first assignee may subsequently assign the
certificate in whole, but not in part, to a second assignee. new text end An assignment is not valid unless
the assignee notifies the commissioner within 30 days of the date that the assignment is
made. The commissioner shall prescribe the forms necessary for notifying the commissioner
of the assignment of a credit certificate and for claiming a credit by assignment.

(c) Credits passed through to partners, members, shareholders, or owners pursuant to
subdivision 5 are not an assignment of a credit certificate under this subdivision.

(d) A grant agreement between the office and the recipient of a grant may allow the
grant to be issued to another individual or entity.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property placed in service after June
30, 2022.
new text end

Sec. 17.

new text begin [290.0687] SMALL BUSINESS TAX CREDITS FOR PAID FAMILY LEAVE
BENEFITS.
new text end

new text begin Subdivision 1. new text end

new text begin Employer tax credit. new text end

new text begin (a) A qualified employer is allowed a credit against
the taxes imposed under this chapter equal to the amount paid:
new text end

new text begin (1) directly by the qualified employer for paid family leave benefits on behalf of a
qualified employee; or
new text end

new text begin (2) to an insurance company to provide paid family leave insurance benefits to a qualified
employee.
new text end

new text begin (b) The credit allowed to an employer under this subdivision for a qualified employee
for a taxable year is limited to the lesser of the amounts listed in clauses (1) to (3), to the
extent not deducted in determining federal taxable income for corporate filers, estates, or
trusts, or federal adjusted gross income for individual filers:
new text end

new text begin (1) $3,000; or
new text end

new text begin (2) 100 percent of the amount paid directly by the qualified employer for paid family
leave benefits on behalf of a qualified employee; or
new text end

new text begin (3) 50 percent of the amount paid to an insurance company to provide paid family leave
insurance benefits to a qualified employee.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

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

new text begin (b) "Armed forces" means members of the National Guard and Reserves;
new text end

new text begin (c) "Child" means a person who is:
new text end

new text begin (1) under 18 years of age, or 18 years of age or older and incapable of self-care because
of a mental or physical disability; and
new text end

new text begin (2) a biological, adopted, or foster son or daughter; a stepson or stepdaughter; a legal
ward; a son or daughter of a domestic partner; or a son or daughter of a person to whom the
employee stands in loco parentis.
new text end

new text begin (d) "Employee" has the meaning given in section 290.92, subdivision 1, clause (3).
new text end

new text begin (e) "Family leave" means leave for any of the following purposes:
new text end

new text begin (1) participating in providing care, including physical or psychological care, for a family
member of the employee made necessary by the family member's serious health condition;
new text end

new text begin (2) bonding with the employee's child during the first 12 months after the child's birth,
or the first 12 months after the placement of the child for adoption or foster care with the
employee; or
new text end

new text begin (3) addressing a qualifying exigency, as interpreted under the Family and Medical Leave
Act, United States Code, title 29, section 2612(a)(1)(e), and Code of Federal Regulations,
title 29, sections 825.126(a)(1) to (8), arising from the fact that the spouse, child, or parent
of the employee is on active duty or has been notified of an impending call or order to active
duty in the armed forces of the United States.
new text end

new text begin (f) "Family member" means a child, spouse, parent, or grandparent as defined in this
chapter.
new text end

new text begin (g) "Parent" means a biological, foster, or adoptive parent; a stepparent; a legal guardian;
or another person who stood in loco parentis to the employee when the employee was a
child.
new text end

new text begin (h) "Qualified employee" means an employee who has been employed by the qualified
employer for one year or more.
new text end

new text begin (i) "Qualified employer" means an employer subject to the withholding requirements
under section 290.92, including a taxpaying employer referenced in section 268.046, who:
new text end

new text begin (1) employs 50 or fewer employees in Minnesota; and
new text end

new text begin (2) pays family leave benefits for one or more qualified employees.
new text end

new text begin (j) "Serious health condition" means an illness, injury, impairment, or physical or mental
condition, including organ or tissue transplant or donation, that involves inpatient care in a
hospital, hospice, or residential health care facility, continuing treatment, or continuing
supervision by a health care provider as defined in an insurance policy. Continuing
supervision by a health care provider includes a period of incapacity that is permanent or
long term due to a condition for which treatment may not be effective and where the family
member is not receiving active treatment by a health care provider.
new text end

new text begin Subd. 3. new text end

new text begin Nonresidents and part-year residents. new text end

new text begin For a nonresident or part-year resident,
the credit must be allocated using the percentage calculated in section 290.06, subdivision
2c, paragraph (e).
new text end

new text begin Subd. 4. new text end

new text begin Partnerships; multiple owners. new text end

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

new text begin Subd. 5. new text end

new text begin Carryover. new text end

new text begin If the credit allowed under subdivision 1 exceeds the tax imposed
under this chapter, the excess is a credit carryover to each of the five succeeding taxable
years. The entire amount of the excess unused credit must be carried first to the earliest
taxable year to which the amount may be carried. The unused portion of the credit must be
carried to the following taxable year. No credit may be carried to a taxable year more than
five years after the taxable year in which the credit was earned.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2023, and before January 1, 2027.
new text end

Sec. 18.

new text begin [290.0693] NEW MARKETS TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, terms defined in section 116X.01
have the meanings given in that section.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An entity that makes or is transferred a qualified equity
investment is allowed a credit against the tax imposed under this chapter equal to the amount
calculated under section 116X.01, subdivision 2.
new text end

new text begin (b) Tax credits earned by or allocated to a partnership, a limited liability company taxed
as a partnership, or an S corporation are passed through to the partners, members,
shareholders, or owners, respectively, in accordance with the provisions of any agreement
among such partners, members, shareholders, or owners, or, in the absence of such agreement,
pro rata to each partner, member, shareholder, or owner based on their share of the entity's
assets as of the last day of the taxable year. A pass-through of a credit is not considered a
sale for the purposes of section 116X.01.
new text end

new text begin (c) If the amount of the credit under this section exceeds the taxpayer's liability for tax
under this chapter, the excess is a credit carryover to each of the five succeeding taxable
years. The entire amount of the excess unused credit for the taxable year must be carried
first to the earliest of the taxable years to which the credit may be carried and then to each
successive year to which the credit may be carried. The amount of the unused credit that
may be added under this paragraph may not exceed the taxpayer's liability for tax, less any
credit for the current taxable year.
new text end

new text begin Subd. 3. new text end

new text begin Audit powers. new text end

new text begin Notwithstanding the certification eligibility issued by the
commissioner of employment and economic development under section 116X.01, subdivision
4, the commissioner may utilize any audit and examination powers under chapter 270C or
289A to the extent necessary to verify that the taxpayer is eligible for the credit and to assess
for the amount of any improperly claimed credit.
new text end

new text begin Subd. 4. new text end

new text begin Sunset. new text end

new text begin This section expires at the same time and on the same terms as section
116X.01, except that the expiration of this section does not affect the commissioner of
revenue's authority to audit or power of examination and assessment for credits claimed
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, 2022, and before January 1, 2031.
new text end

Sec. 19.

Minnesota Statutes 2020, 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, and 16;

(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, deleted text begin and deleted text end 26 to 29 new text begin , and 31 new text end ;

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c); 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, 2022.
new text end

Sec. 20.

Minnesota Statutes 2020, section 291.016, subdivision 3, is amended to read:

Subd. 3.

Subtraction.

(a) deleted text begin For estates of decedents dying after December 31, 2016, deleted text end A
subtraction is allowed in computing the Minnesota taxable estate, equal to the sum of:

(1) deleted text begin the deleted text end new text begin an new text end exclusion amount deleted text begin for the year of death under paragraph (b) deleted text end new text begin of $3,000,000 new text end ;
and

deleted text begin (2) the lesser of:
deleted text end

deleted text begin (i) deleted text end new text begin (2) new text end the value of qualified small business property under section 291.03, subdivision
9, and the value of qualified farm property under section 291.03, subdivision 10 deleted text begin ; or deleted text end new text begin , up to
$2,000,000.
new text end

deleted text begin (ii) $5,000,000 minus the exclusion amount for the year of death under paragraph (b).
deleted text end

deleted text begin (b) The following exclusion amounts apply for the year of death:
deleted text end

deleted text begin (1) $2,100,000 for decedents dying in 2017;
deleted text end

deleted text begin (2) $2,400,000 for decedents dying in 2018;
deleted text end

deleted text begin (3) $2,700,000 for decedents dying in 2019; and
deleted text end

deleted text begin (4) $3,000,000 for decedents dying in 2020 and thereafter.
deleted text end

new text begin (b) In the case of a decedent that is a surviving spouse there is an additional subtraction
allowed in computing the Minnesota taxable estate, a deceased spousal unused exclusion
amount, which is equal to the lesser of:
new text end

new text begin (1) $3,000,000; or
new text end

new text begin (2) the excess of $3,000,000 over the amount of the Minnesota taxable estate of the last
predeceased spouse of the decedent, but not including in the taxable estate property described
in section 291.03, subdivisions 9 and 10, but in no case less than zero.
new text end

(c) The subtraction under this subdivision must not reduce the Minnesota taxable estate
to less than zero.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after June
30, 2022.
new text end

Sec. 21.

Minnesota Statutes 2020, section 291.03, subdivision 1, is amended to read:

Subdivision 1.

Tax amount.

The tax imposed must be computed by applying to the
Minnesota taxable estate the following schedule of rates and then new text begin multiplying new text end the resulting
amount deleted text begin multiplied deleted text end by a fraction, not greater than one, the numerator of which is the value
of the Minnesota gross estate plus the value of gifts under section 291.016, subdivision 2,
clause (3), with a Minnesota situs, and the denominator of which is the federal gross estate
plus the value of gifts under section 291.016, subdivision 2, clause (3):

deleted text begin (a) For estates of decedents dying in 2017:
deleted text end

deleted text begin Amount of Minnesota Taxable Estate deleted text end	deleted text begin Rate of Tax deleted text end
deleted text begin Not over $5,100,000 deleted text end	deleted text begin 12 percent deleted text end
deleted text begin Over $5,100,000 but not over $7,100,000 deleted text end	deleted text begin $612,000 plus 12.8 percent of the excess over $5,100,000 deleted text end
deleted text begin Over $7,100,000 but not over $8,100,000 deleted text end	deleted text begin $868,000 plus 13.6 percent of the excess over $7,100,000 deleted text end
deleted text begin Over $8,100,000 but not over $9,100,000 deleted text end	deleted text begin $1,004,000 plus 14.4 percent of the excess over $8,100,000 deleted text end
deleted text begin Over $9,100,000 but not over $10,100,000 deleted text end	deleted text begin $1,148,000 plus 15.2 percent of the excess over $9,100,000 deleted text end
deleted text begin Over $10,100,000 deleted text end	deleted text begin $1,300,000 plus 16 percent of the excess over $10,100,000 deleted text end

deleted text begin (b) For estates of decedents dying in 2018 and thereafter:
deleted text end

Amount of Minnesota Taxable Estate	Rate of Tax
Not over $7,100,000	13 percent
Over $7,100,000 but not over $8,100,000	$923,000 plus 13.6 percent of the excess over $7,100,000
Over $8,100,000 but not over $9,100,000	$1,059,000 plus 14.4 percent of the excess over $8,100,000
Over $9,100,000 but not over $10,100,000	$1,203,000 plus 15.2 percent of the excess over $9,100,000
Over $10,100,000	$1,355,000 plus 16 percent of the excess over $10,100,000

new text begin EFFECTIVE DATE. new text end

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

Sec. 22.

Minnesota Statutes 2020, section 291.03, is amended by adding a subdivision to
read:

new text begin Subd. 1e. new text end

new text begin Election of portability of deceased spousal unused exclusion amounts;
election irrevocable; deemed elections. new text end

new text begin (a) A personal representative of a decedent's estate
may elect, on a return required under section 289A.10, subdivision 1, to allow a decedent's
surviving spouse to take into account the decedent's deceased spousal unused exclusion
amount, as provided in section 291.016, subdivision 3, paragraph (b).
new text end

new text begin (b) A personal representative of a decedent's estate that is not required to file a return
under section 289A.10, subdivision 1, must file a return to allow a decedent's surviving
spouse to take into account the decedent's deceased spousal unused exclusion amount, as
provided in section 291.016, subdivision 3, paragraph (b). The return is subject to the same
provisions as a return required under section 289A.10, subdivision 1.
new text end

new text begin (c) An election under paragraph (a) or (b) is irrevocable. The personal representative of
a decedent's estate must state affirmatively on the return that the decedent's estate is electing
portability. The commissioner may prescribe the form of the election on the return.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after June
30, 2022.
new text end

Sec. 23.

Minnesota Statutes 2020, section 297I.20, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin New markets tax credit. new text end

new text begin A taxpayer may claim a credit against the premiums
tax imposed under this chapter equal to the amount calculated under section 116X.01,
subdivision 2. If the amount of the credit exceeds the liability for tax under this chapter, the
excess is a credit carryover to each of the five succeeding taxable years. The entire amount
of the excess unused credit for the taxable year must be carried first to the earliest of the
taxable years to which the credit may be carried and then to each successive year to which
the credit may be carried. This credit does not affect the calculation of fire state aid under
section 477B.03 and police state aid under section 477C.03.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for premiums received after December
31, 2022, and before January 1, 2031.
new text end

Sec. 24. new text begin PRECEPTOR CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin (a) An individual who qualifies as a preceptor under
this section is allowed a credit against the tax imposed by Minnesota Statutes, chapter 290.
The credit equals:
new text end

new text begin (1) $2,500 for an individual who served as a preceptor for at least four weeks or 160
hours but not more than seven weeks or 280 hours during the taxable year;
new text end

new text begin (2) $3,750 for an individual who served as a preceptor for at least eight weeks or 320
hours but not more than 11 weeks or 440 hours during the taxable year; and
new text end

new text begin (3) $5,000 for an individual who served as a preceptor for at least 12 weeks or 480 hours
during the taxable year.
new text end

new text begin (b) For purposes of this section, a "preceptor" means an advanced practice registered
nurse, physician assistant, or mental health professional who:
new text end

new text begin (1) served as a health professions student preceptor or medical resident preceptor for at
least four weeks or 160 hours during the taxable year; and
new text end

new text begin (2) received no additional compensation for serving as a preceptor to an advanced practice
registered nurse, physician assistant, or mental health professional student.
new text end

new text begin (c) If the amount of the credit that an individual is eligible to receive under this section
exceeds the individual's tax liability under Minnesota Statutes, chapter 290, the commissioner
of revenue shall refund the excess to the taxpayer.
new text end

new text begin (d) For a nonresident or part-year resident taxpayer, the credit must be allocated based
on the percentage calculated under Minnesota Statutes, section 290.06, subdivision 2c,
paragraph (e).
new text end

new text begin (e) The commissioner of revenue, in consultation with the commissioner of health, shall
prescribe the form and manner in which the credit must be claimed.
new text end

new text begin Subd. 2. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds required by this section
is appropriated to the commissioner of revenue from the general fund.
new text end

new text begin Subd. 3. new text end

new text begin Report. new text end

new text begin (a) By March 1, 2026, the commissioner of revenue, in consultation
with the commissioner of health, shall issue a report to the chairs and ranking minority
members of the committees of the house of representatives and senate with jurisdiction over
taxes, higher education, and health and human services detailing:
new text end

new text begin (1) the number of preceptors claiming the credit;
new text end

new text begin (2) the average amount of credits claimed;
new text end

new text begin (3) the geographical distribution by county of the location of the preceptor's services;
new text end

new text begin (4) the professions of the preceptor and the students served by the preceptor; and
new text end

new text begin (5) the impact of the tax credit on the availability of preceptors in Minnesota.
new text end

new text begin (b) The report required under this subdivision must comply with Minnesota Statutes,
sections 3.195 and 3.197.
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, and before January 1, 2026.
new text end

Sec. 25. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2020, sections 290.0131, subdivision 15; and 290.0674,
subdivision 2a, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2021 Supplement, section 290.0681, subdivision 10, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective for taxable years beginning after
December 31, 2021. Paragraph (b) is effective the day following final enactment.
new text end

ARTICLE 3

SALES AND USE TAXES

Section 1.

Minnesota Statutes 2020, section 297A.67, subdivision 35, is amended to read:

Subd. 35.

Suite licenses.

The sale of the privilege of admission under section 297A.61,
subdivision 3, paragraph (g), clause (1), to a place of amusement or athletic event does not
include consideration paid for a license to use a private suite, private skybox, or private box
seat, and the sale of the license is exempt provided that: (1) the lessee may use the private
suite, private skybox, or private box seat by mutual arrangement with the lessor on days
when there is no amusement or athletic event; and (2) the sales price for the privilege of
admission is separately stated and is equal to or greater than the highest priced general
admission ticket for the closest seat not in the private suite, private skybox, or private box
seat. new text begin The sale of food and beverages for consumption in a private suite, private skybox, or
private box seat must be taxable to the extent provided under this chapter, but these taxable
sales do not invalidate the exemption in this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2023.
new text end

Sec. 2.

Minnesota Statutes 2021 Supplement, section 297A.67, subdivision 38, is amended
to read:

Subd. 38.

Season ticket purchasing rights to collegiate events.

new text begin (a) new text end The sale of a right
to purchase the privilege of admission to a college or university athletic event in a preferred
viewing location for a season of a particular athletic event is exempt provided that:

(1) the consideration paid for the right to purchase is used entirely to support student
scholarships, wellness, and academic costs;

(2) the consideration paid for the right to purchase is separately stated from the admission
price; and

(3) the admission price is equal to or greater than the highest priced general admission
ticket for the closest seat not in the preferred viewing location.

new text begin (b) The sale of food and beverages for consumption in a preferred seating location must
be taxable to the extent provided under this chapter, but these taxable sales do not invalidate
the exemption in this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2023.
new text end

Sec. 3.

Minnesota Statutes 2020, section 297A.68, is amended by adding a subdivision to
read:

new text begin Subd. 46. new text end

new text begin Certain amenities included with privilege of admission. new text end

new text begin Amenities included
in the sales price of the privilege of admission under section 297A.61, subdivision 3,
paragraph (m), are exempt when purchased by a taxpayer selling the privilege of admission.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2023.
new text end

Sec. 4.

Minnesota Statutes 2020, section 297A.69, subdivision 4, is amended to read:

Subd. 4.

Machinery, equipment, and fencing.

The following machinery, equipment,
and fencing is exempt:

(1) farm machinery;

(2) logging equipment, including chain saws used for commercial logging;

(3) fencing new text begin :
new text end

new text begin (i) new text end used for the containment of farmed Cervidae, as defined in section 35.153, subdivision
3; new text begin or
new text end

new text begin (ii) on property classified as class 2a under section 273.13, subdivision 23;
new text end

(4) primary and backup generator units used to generate electricity for the purpose of
operating farm machinery, aquacultural production equipment, or logging equipment, or
providing light or space heating necessary for the production of livestock, dairy animals,
dairy products, or poultry and poultry products; and

(5) aquaculture production equipment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after June 30, 2021.
new text end

Sec. 5.

Minnesota Statutes 2020, section 297A.70, is amended by adding a subdivision to
read:

new text begin Subd. 22. new text end

new text begin Animal shelters. new text end

new text begin (a) For purposes of this subdivision, the term "animal shelter"
means a nonprofit organization engaged in the business of rescuing, sheltering, and finding
homes for unwanted animals.
new text end

new text begin (b) Purchases made by an animal shelter are exempt if the purchases are used directly
in the activities of rescuing, sheltering, and finding homes for unwanted animals. The
exemption under this paragraph does not apply to the following purchases:
new text end

new text begin (1) building, construction, or reconstruction materials purchased by a contractor or a
subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed
maximum price covering both labor and materials for use in the construction, alteration, or
repair of a building or facility;
new text end

new text begin (2) construction materials purchased by an animal shelter or the animal shelter's
contractors to be used in constructing buildings or facilities that will not be used principally
by the animal shelter;
new text end

new text begin (3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause (2),
and prepared food, candy, soft drinks, and alcoholic beverages as defined in section 297A.67,
subdivision 2; and
new text end

new text begin (4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11.
new text end

new text begin (c) The sale or adoption of unwanted animals by an animal shelter and the sale of
associated animal supplies and equipment by an animal shelter are exempt.
new text end

new text begin (d) Sales made by and events run by an animal shelter for fund-raising purposes are
exempt. Exempt sales include the sale of prepared food, candy, and soft drinks at a
fund-raising event. The exemption under this paragraph is subject to the following limits:
new text end

new text begin (1) gross receipts from all fund-raising sales are taxable if the total fund-raising by the
animal shelter exceeds 24 days per year;
new text end

new text begin (2) it does not apply to fund-raising events conducted on premises leased for more than
five days but less than 30 days; and
new text end

new text begin (3) it does not apply to admission charges for events involving bingo or other gambling
activities or to charges for use of amusement devices involving bingo or other gambling
activities.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2022.
new text end

Sec. 6.

Minnesota Statutes 2021 Supplement, section 297A.71, subdivision 52, is amended
to read:

Subd. 52.

Construction; certain local government facilities.

(a) Materials and supplies
used in and equipment incorporated into the construction, reconstruction, upgrade, expansion,
or remodeling of the following local government owned facilities are exempt:

(1) a new fire station, which includes firefighting, emergency management, public safety
training, and other public safety facilities in the city of Monticello if materials, supplies,
and equipment are purchased after January 31, 2019, and before January 1, 2022;

(2) a new fire station, which includes firefighting and public safety training facilities
and public safety facilities, in the city of Inver Grove Heights if materials, supplies, and
equipment are purchased after June 30, 2018, and before January 1, 2021;

(3) a fire station and police station, including access roads, lighting, sidewalks, and
utility components, on or adjacent to the property on which the fire station or police station
are located that are necessary for safe access to and use of those buildings, in the city of
Minnetonka if materials, supplies, and equipment are purchased after May 23, 2019, and
before January 1, 2022;

(4) the school building in Independent School District No. 414, Minneota, if materials,
supplies, and equipment are purchased after January 1, 2018, and before January 1, 2021;

(5) a fire station in the city of Mendota Heights, if materials, supplies, and equipment
are purchased after December 31, 2018, and before January 1, 2021; deleted text begin and
deleted text end

(6) a Dakota County law enforcement collaboration center, also known as the Safety
and Mental Health Alternative Response Training (SMART) Center, if materials, supplies,
and equipment are purchased after June 30, 2019, and before July 1, 2021 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (7) the North Metro Regional Public Safety Training Facility in Maple Grove, if materials,
supplies, and equipment are purchased after August 31, 2021, and before December 31,
2023.
new text end

(b) The tax must be imposed and collected as if the rate under section 297A.62,
subdivision 1, applied and then refunded in the manner provided in section 297A.75.

(c) The total refund for the project listed in paragraph (a), clause (3), must not exceed
$850,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies retroactively to sales and purchases made during the period indicated for the project
in paragraph (a), clause (7).
new text end

Sec. 7.

Minnesota Statutes 2020, section 297A.71, is amended by adding a subdivision to
read:

new text begin Subd. 54. new text end

new text begin Construction materials purchased by contractors; exemption for certain
entities. new text end

new text begin (a) Materials and supplies used or consumed in and equipment incorporated into
the construction, reconstruction, repair, maintenance, or improvement of buildings or
facilities used principally by school districts, as defined under section 297A.70, subdivision
2, paragraph (c), are exempt.
new text end

new text begin (b) Materials and supplies used or consumed in and equipment incorporated into the
construction, reconstruction, repair, maintenance, or improvement of public infrastructure
of any kind, including but not limited to roads, bridges, culverts, drinking water facilities,
and wastewater facilities, purchased by a contractor, subcontractor, or builder as part of a
contract with a school district, as defined under section 297A.70, subdivision 2, paragraph
(c), are exempt.
new text end

new text begin (c) The tax on purchases exempt under this subdivision must be imposed and collected
as if the rate under section 297A.62, subdivision 1, applied, and then refunded in the manner
provided in section 297A.75.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2024.
new text end

Sec. 8.

Minnesota Statutes 2020, section 297A.71, is amended by adding a subdivision to
read:

new text begin Subd. 55. new text end

new text begin Building, repair, or replacement materials; farm fencing material. new text end

new text begin Materials
and supplies used or consumed in, and equipment incorporated into, the construction,
improvement, repair, or replacement of farm fencing material that is not exempt under
section 297A.69, subdivision 4, are exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after June 30, 2021.
new text end

Sec. 9.

Minnesota Statutes 2021 Supplement, section 297A.75, subdivision 1, is amended
to read:

Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the following
exempt items must be imposed and collected as if the sale were taxable and the rate under
section 297A.62, subdivision 1, applied. The exempt items include:

(1) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(2) building materials for mineral production facilities exempt under section 297A.71,
subdivision 14;

(3) building materials for correctional facilities under section 297A.71, subdivision 3;

(4) building materials used in a residence for veterans with a disability exempt under
section 297A.71, subdivision 11;

(5) elevators and building materials exempt under section 297A.71, subdivision 12;

(6) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23;

(7) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(8) equipment and materials used for the generation, transmission, and distribution of
electrical energy and an aerial camera package exempt under section 297A.68, subdivision
37;

(9) commuter rail vehicle and repair parts under section 297A.70, subdivision 3, paragraph
(a), clause (10);

(10) materials, supplies, and equipment for construction or improvement of projects and
facilities under section 297A.71, subdivision 40;

(11) materials, supplies, and equipment for construction, improvement, or expansion of
a biopharmaceutical manufacturing facility exempt under section 297A.71, subdivision 45;

(12) enterprise information technology equipment and computer software for use in a
qualified data center exempt under section 297A.68, subdivision 42;

(13) materials, supplies, and equipment for qualifying capital projects under section
297A.71, subdivision 44, paragraph (a), clause (1), and paragraph (b);

(14) items purchased for use in providing critical access dental services exempt under
section 297A.70, subdivision 7, paragraph (c);

(15) items and services purchased under a business subsidy agreement for use or
consumption primarily in greater Minnesota exempt under section 297A.68, subdivision
44;

(16) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivisions 49; 50, paragraph (b); and 51;

(17) building materials, equipment, and supplies for qualifying capital projects under
section 297A.71, subdivision 52; deleted text begin and
deleted text end

(18) building materials, equipment, and supplies for constructing, remodeling, expanding,
or improving a fire station, police station, or related facilities exempt under section 297A.71,
subdivision 53 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (19) building construction or reconstruction materials, supplies, and equipment exempt
under section 297A.71, subdivision 54.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2024.
new text end

Sec. 10.

Minnesota Statutes 2021 Supplement, section 297A.75, subdivision 2, is amended
to read:

Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt items must
be paid to the applicant. Only the following persons may apply for the refund:

(1) for subdivision 1, clauses (1), (2), and (14), the applicant must be the purchaser;

(2) for subdivision 1, clause (3), the applicant must be the governmental subdivision;

(3) for subdivision 1, clause (4), the applicant must be the recipient of the benefits
provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause (5), the applicant must be the owner of the homestead
property;

(5) for subdivision 1, clause (6), the owner of the qualified low-income housing project;

(6) for subdivision 1, clause (7), the applicant must be a municipal electric utility or a
joint venture of municipal electric utilities;

(7) for subdivision 1, clauses (8), (11), (12), and (15), the owner of the qualifying
business;

(8) for subdivision 1, clauses (9), (10), (13), (17), and (18), the applicant must be the
governmental entity that owns or contracts for the project or facility; deleted text begin and
deleted text end

(9) for subdivision 1, clause (16), the applicant must be the owner or developer of the
building or project new text begin ; and
new text end

new text begin (10) for subdivision 1, clause (19), the applicant must be the entity:
new text end

new text begin (i) listed in section 297A.71, subdivision 54, paragraph (a), that principally uses the
building or facility; or
new text end

new text begin (ii) listed in section 297A.71, subdivision 54, paragraph (b), that contracts with a
contractor, subcontractor, or builder for the public infrastructure project new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2024.
new text end

Sec. 11.

Minnesota Statutes 2021 Supplement, section 297A.75, subdivision 3, is amended
to read:

Subd. 3.

Application.

(a) The application must include sufficient information to permit
the commissioner to verify the tax paid. If the tax was paid by a contractor, subcontractor,
or builder, under subdivision 1, clauses (3) to (13) or (15) to deleted text begin (18) deleted text end new text begin (19) new text end , the contractor,
subcontractor, or builder must furnish to the refund applicant a statement including the cost
of the exempt items and the taxes paid on the items unless otherwise specifically provided
by this subdivision. The provisions of sections 289A.40 and 289A.50 apply to refunds under
this section.

(b) An applicant may not file more than two applications per calendar year for refunds
for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2024.
new text end

Sec. 12. new text begin SALES AND USE TAX EXEMPTION; CERTAIN NATURAL GAS FEES.
new text end

new text begin Subdivision 1. new text end

new text begin Exemption. new text end

new text begin Notwithstanding Minnesota Statutes, section 297A.67,
subdivision 15, clause (2), fees related to natural gas sold for residential use to customers
who were metered and billed as residential users and who used natural gas for their primary
source of residential heat are exempt for purposes of the billing periods May to October,
provided that:
new text end

new text begin (1) the fee for the natural gas is subject to a cost recovery plan for the price increase in
natural gas during the period February 13, 2021, to February 17, 2021, identified in docket
G-999/CI-21-135 before the Minnesota Public Utilities Commission; and
new text end

new text begin (2) the fee is separately stated and labeled as a fee pursuant to a cost recovery plan under
clause (1).
new text end

new text begin Subd. 2. new text end

new text begin Application; refund. new text end

new text begin (a) By October 1, 2022, each utility must apply to the
commissioner of revenue for a refund of sales taxes collected and remitted pursuant to
Minnesota Statutes, section 297A.77, on fees for sales and purchases of natural gas subject
to a cost recovery plan under subdivision 1, clause (1), that were added to residential
customers' bills for the period beginning September 1, 2021, and ending June 30, 2022.
new text end

new text begin (b) The provisions of Minnesota Statutes, section 289A.50, subdivision 2, except for
paragraph (c), apply to refunds issued under this subdivision. For purposes of this subdivision,
"utility" means a utility subject to the cost recovery plan under subdivision 1, clause (1).
Within 90 days after the date the commissioner issues the refund under Minnesota Statutes,
section 289A.50, subdivision 2, paragraph (a), to the utility:
new text end

new text begin (1) the utility must provide a plan to the Minnesota Public Utilities Commission for
crediting taxes exempt under subdivision 1 to residential customers; and
new text end

new text begin (2) any amount not refunded or credited to a residential customer by a utility must be
returned to the commissioner by the utility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for fees applied to sales
and purchases of natural gas made after February 12, 2021, and before February 18, 2021,
that are billed from September 1, 2021, to December 31, 2026.
new text end

ARTICLE 4

PROPERTY TAXES

Section 1.

Minnesota Statutes 2020, section 272.01, subdivision 2, is amended to read:

Subd. 2.

Exempt property used by private entity for profit.

(a) When any real or
personal property which is exempt from ad valorem taxes, and taxes in lieu thereof, is leased,
loaned, or otherwise made available and used by a private individual, association, or
corporation in connection with a business conducted for profit, there shall be imposed a
tax, for the privilege of so using or possessing such real or personal property, in the same
amount and to the same extent as though the lessee or user was the owner of such property.

(b) The tax imposed by this subdivision shall not apply to:

(1) property leased or used as a concession in or relative to the use in whole or part of
a public park, market, fairgrounds, port authority, economic development authority
established under chapter 469, municipal auditorium, municipal parking facility, municipal
museum, or municipal stadium;

(2) new text begin except as provided in paragraph (c), new text end property of an airport owned by a city, town,
county, or group thereof which is:

(i) leased to or used by any person or entity including a fixed base operator; and

(ii) used as a hangar for the storage deleted text begin or deleted text end new text begin , new text end repair new text begin , or manufacture new text end of aircraft or to provide
aviation goods, services, or facilities to the airport or general public;

deleted text begin the exception from taxation provided in this clause does not apply to:
deleted text end

deleted text begin (i) property located at an airport owned or operated by the Metropolitan Airports
Commission or by a city of over 50,000 population according to the most recent federal
census or such a city's airport authority; or
deleted text end

deleted text begin (ii) hangars leased by a private individual, association, or corporation in connection with
a business conducted for profit other than an aviation-related business;
deleted text end

(3) property constituting or used as a public pedestrian ramp or concourse in connection
with a public airport;

(4) new text begin except as provided in paragraph (d), new text end property constituting or used as a passenger
check-in area or ticket sale counter, boarding area, or luggage claim area in connection with
a public airport deleted text begin but not the airports owned or operated by the Metropolitan Airports
Commission or cities of over 50,000 population or an airport authority therein. Real estate
owned by a municipality in connection with the operation of a public airport and leased or
used for agricultural purposes is not exempt deleted text end ;

(5) property leased, loaned, or otherwise made available to a private individual,
corporation, or association under a cooperative farming agreement made pursuant to section
97A.135; or

(6) property leased, loaned, or otherwise made available to a private individual,
corporation, or association under section 272.68, subdivision 4.

new text begin (c) The exception from taxation provided in paragraph (b), clause (2), does not apply
to:
new text end

new text begin (1) property located at an airport owned or operated by:
new text end

new text begin (i) the Metropolitan Airports Commission; or
new text end

new text begin (ii) a city of over 50,000 population according to the most recent federal census or such
a city's airport authority, except that, when calculating the tax imposed by this subdivision
for property taxes payable in 2023 through 2034, the net tax capacity of such property is
reduced by 50 percent if it is owned or operated by a city over 50,000 but under 150,000
in population according to the most recent federal census or such a city's airport authority;
or
new text end

new text begin (2) hangars leased by a private individual, association, or corporation in connection with
a business conducted for profit other than an aviation-related business.
new text end

new text begin (d) The exception from taxation provided in paragraph (b), clause (4), does not apply
to:
new text end

new text begin (1) the property described in paragraph (b), clause (4), at airports that are owned or
operated by:
new text end

new text begin (i) the Metropolitan Airports Commission; or
new text end

new text begin (ii) a city of over 50,000 population or an airport authority therein, except that, when
calculating the tax imposed by this subdivision for property taxes payable in 2023 through
2034, the net tax capacity of such property is reduced by 50 percent if it is owned or operated
by a city over 50,000 but under 150,000 in population according to the most recent federal
census or such a city's airport authority; or
new text end

new text begin (2) real estate owned by a municipality in connection with the operation of a public
airport and leased or used for agricultural purposes.
new text end

deleted text begin (c) deleted text end new text begin (e) new text end Taxes imposed by this subdivision are payable as in the case of personal property
taxes and shall be assessed to the lessees or users of real or personal property in the same
manner as taxes assessed to owners of real or personal property, except that such taxes shall
not become a lien against the property. When due, the taxes shall constitute a debt due from
the lessee or user to the state, township, city, county, and school district for which the taxes
were assessed and shall be collected in the same manner as personal property taxes. If
property subject to the tax imposed by this subdivision is leased or used jointly by two or
more persons, each lessee or user shall be jointly and severally liable for payment of the
tax.

deleted text begin (d) deleted text end new text begin (f) new text end The tax on real property of the federal government, the state or any of its political
subdivisions that is leased, loaned, or otherwise made available to a private individual,
association, or corporation and becomes taxable under this subdivision or other provision
of law must be assessed and collected as a personal property assessment. The taxes do not
become a lien against the real property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2023.
new text end

Sec. 2.

Minnesota Statutes 2020, section 272.02, subdivision 98, is amended to read:

Subd. 98.

Certain property owned by an Indian tribe.

(a) Property is exempt that:

(1) was classified as 3a under section 273.13, subdivision 24, for taxes payable in 2013;

(2) is located in a city of the first class with a population greater than 300,000 as of the
2010 federal census;

(3) was on January 2, 2012, and is for the current assessment owned by a federally
recognized Indian tribe, or its instrumentality, that is located within the state of Minnesota;
and

(4) is used exclusively for tribal purposes or institutions of purely public charity as
defined in subdivision 7.

(b) For purposes of this subdivision, a "tribal purpose" means a public purpose as defined
in subdivision 8 and includes noncommercial tribal government activities. Property that
qualifies for the exemption under this subdivision is limited to no more than two contiguous
parcels and structures that do not exceed in the aggregate 20,000 square feet. Property
acquired for single-family housing, market-rate apartments, agriculture, or forestry does
not qualify for this exemption. The exemption created by this subdivision expires with taxes
payable in deleted text begin 2024 deleted text end new text begin 2034 new text end .

new text begin (c) Property exempt under this section is exempt from the requirements of section
272.025.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2022.
new text end

Sec. 3.

Minnesota Statutes 2020, section 272.02, is amended by adding a subdivision to
read:

new text begin Subd. 105. new text end

new text begin Energy storage systems. new text end

new text begin (a) Personal property consisting of an energy
storage system is exempt. For the purposes of this subdivision, "energy storage system" has
the meaning given in section 216B.2422, subdivision 1, paragraph (f).
new text end

new text begin (b) A taxpayer requesting an exemption under this subdivision must file an application
with the commissioner of revenue. The commissioner shall prescribe the content, format,
and manner of the application pursuant to section 270C.30, except that a "law administered
by the commissioner" includes the property tax laws. In determining eligibility for the
exemption under this section, the commissioner of revenue may request information and
advice from the commissioner of commerce. On determining that property qualifies for
exemption, the commissioner of revenue shall issue an order exempting the property from
taxation. The commissioner of revenue shall develop an electronic means to notify interested
parties when the commissioner has issued an order exempting property from taxation under
this section. The energy storage system shall continue to be exempt from taxation as long
as the order issued by the commissioner of revenue remains in effect.
new text end

new text begin (c) The exemption under this section expires with taxes payable in 2033.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 4.

Minnesota Statutes 2020, section 272.025, subdivision 1, is amended to read:

Subdivision 1.

Statement of exemption.

(a) Except in the case of property owned by
the state of Minnesota or any political subdivision thereof, a taxpayer claiming an exemption
from taxation on property described in section 272.02 must file a statement of exemption
with the assessor of the assessment district in which the property is located. By January 2,
2018, and each third year thereafter, the commissioner of revenue shall publish on its website
a list of the exemptions for which a taxpayer claiming an exemption must file a statement
of exemption. The commissioner's requirement that a taxpayer file a statement of exemption
pursuant to this subdivision shall not be considered a rule and is not subject to the
Administrative Procedure Act, chapter 14.

(b) A taxpayer claiming an exemption from taxation on property described in section
272.02, deleted text begin subdivision deleted text end new text begin subdivisions new text end 10 new text begin and 105 new text end , must file a statement of exemption with the
commissioner of revenue, on or before February 15 of each year for which the taxpayer
claims an exemption.

(c) In case of sickness, absence or other disability or for good cause, the assessor or the
commissioner may extend the time for filing the statement of exemption for a period not to
exceed 60 days.

(d) The commissioner of revenue shall prescribe the content, format, and manner of the
statement of exemption pursuant to section 270C.30, except that a "law administered by
the commissioner" includes the property tax laws.

(e) If a statement is made by electronic means, the taxpayer's signature is defined pursuant
to section 270C.304, except that a "law administered by the commissioner" includes the
property tax laws.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023
and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2020, section 273.032, is amended to read:

273.032 MARKET VALUE DEFINITION.

(a) Unless otherwise provided, for the purpose of determining any property tax levy
limitation based on market value or any limit on net debt, the issuance of bonds, certificates
of indebtedness, or capital notes based on market value, any qualification to receive state
aid based on market value, or any state aid amount based on market value, the terms "market
value," "estimated market value," and "market valuation," whether equalized or unequalized,
mean the estimated market value of taxable property within the local unit of government
before any of the following or similar adjustments for:

(1) the market value exclusions under:

(i) section 273.11, subdivisions 14a and 14c (vacant platted land);

(ii) section 273.11, subdivision 16 (certain improvements to homestead property);

(iii) section 273.11, subdivisions 19 and 20 (certain improvements to business properties);

(iv) section 273.11, subdivision 21 (homestead property damaged by mold);

(v) section 273.13, subdivision 34 (homestead of a veteran with a disability or family
caregiver); deleted text begin or
deleted text end

(vi) section 273.13, subdivision 35 (homestead market value exclusion); or

new text begin (vii) section 273.13, subdivision 36 (affordable housing market value exclusion); or
new text end

(2) the deferment of value under:

(i) the Minnesota Agricultural Property Tax Law, section 273.111;

(ii) the Aggregate Resource Preservation Law, section 273.1115;

(iii) the Minnesota Open Space Property Tax Law, section 273.112;

(iv) the rural preserves property tax program, section 273.114; or

(v) the Metropolitan Agricultural Preserves Act, section 473H.10; or

(3) the adjustments to tax capacity for:

(i) tax increment financing under sections 469.174 to 469.1794;

(ii) fiscal disparities under chapter 276A or 473F; or

(iii) powerline credit under section 273.425.

(b) Estimated market value under paragraph (a) also includes the market value of
tax-exempt property if the applicable law specifically provides that the limitation,
qualification, or aid calculation includes tax-exempt property.

(c) Unless otherwise provided, "market value," "estimated market value," and "market
valuation" for purposes of property tax levy limitations and calculation of state aid, refer
to the estimated market value for the previous assessment year and for purposes of limits
on net debt, the issuance of bonds, certificates of indebtedness, or capital notes refer to the
estimated market value as last finally equalized.

(d) For purposes of a provision of a home rule charter or of any special law that is not
codified in the statutes and that imposes a levy limitation based on market value or any limit
on debt, the issuance of bonds, certificates of indebtedness, or capital notes based on market
value, the terms "market value," "taxable market value," and "market valuation," whether
equalized or unequalized, mean "estimated market value" as defined in paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 6.

Minnesota Statutes 2020, section 273.11, subdivision 23, is amended to read:

Subd. 23.

First tier valuation limit; agricultural homestead property.

(a) The
commissioner of revenue shall annually certify the first tier limit for agricultural homestead
property. For assessment year deleted text begin 2010 deleted text end new text begin 2023 new text end , the limit is deleted text begin $1,140,000 deleted text end new text begin $2,500,000 new text end . Beginning
with assessment year deleted text begin 2011 deleted text end new text begin 2024 new text end , the limit is the product of (i) the first tier limit for the
preceding assessment year, and (ii) the ratio of the statewide average taxable market value
of agricultural property per acre of deeded farm land in the preceding assessment year to
the statewide average taxable market value of agricultural property per acre of deeded farm
land for the second preceding assessment year. The limit shall be rounded to the nearest
$10,000.

(b) For the purposes of this subdivision, "agricultural property" means all class 2a
property under section 273.13, subdivision 23, except for property consisting of the house,
garage, and immediately surrounding one acre of land of an agricultural homestead.

(c) The commissioner shall certify the limit by January 2 of each assessment year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 7.

Minnesota Statutes 2020, section 273.128, is amended by adding a subdivision to
read:

new text begin Subd. 1a. new text end

new text begin Approval. new text end

new text begin A property owner must receive approval by resolution of the
governing body of the city or town where the property is located before submitting an initial
application to the Housing Finance Agency, as required under subdivision 2, for property
that has not, in whole or in part, been classified as class 4d under section 273.13, subdivision
25, prior to assessment year 2023. A property owner that receives approval as required
under this subdivision, and the certification made under subdivision 3, shall not be required
to seek approval under this subdivision prior to submitting an application under subdivision
2 in each subsequent year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 8.

Minnesota Statutes 2020, section 273.128, subdivision 2, is amended to read:

Subd. 2.

Application.

(a) Application for certification under this section must be filed
by March 31 of the levy year, or at a later date if the Housing Finance Agency deems
practicable. The application must be filed with the Housing Finance Agency, on a form
prescribed by the agency, and must contain the information required by the Housing Finance
Agency.

(b) Each application must include:

(1) the property tax identification number; and

(2) evidence that the property meets the requirements of deleted text begin subdivision deleted text end new text begin subdivisions new text end 1 new text begin and
1a new text end .

(c) The Housing Finance Agency may charge an application fee approximately equal
to the costs of processing and reviewing the applications but not to exceed $10 per unit. If
imposed, the applicant must pay the application fee to the Housing Finance Agency. The
fee must be deposited in the housing development fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 9.

new text begin [273.129] AFFORDABLE HOUSING MARKET VALUE EXCLUSION
PROGRAM; ESTABLISHMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Governing body" means, with respect to a city, a city council, with respect to a
town, a town board, and with respect to an unorganized territory, the county board acting
on behalf of the unorganized territory.
new text end

new text begin (c) "Market value" has the meaning given in section 272.03, subdivision 8.
new text end

new text begin (d) "Municipality" means a statutory or home rule charter city, a township, or unorganized
territory.
new text end

new text begin (e) "Property" means a residential rental housing property classified as class 4a under
section 273.13, subdivision 25, a portion of which is occupied by residents meeting the
income requirement under subdivision 4.
new text end

new text begin Subd. 2. new text end

new text begin Establishment. new text end

new text begin An affordable housing market value exclusion program is
established to promote the development of affordable rental properties in the state. Eligible
properties located in participating municipalities are eligible to receive a market value
exclusion of 50 percent.
new text end

new text begin Subd. 3. new text end

new text begin Approval. new text end

new text begin (a) A governing body may, upon approval by a majority vote of its
members, adopt a resolution agreeing to participate in the affordable housing market value
exclusion program. Prior to approval, the governing body must publish notice of its intent
to discuss the resolution at a regularly scheduled meeting, in a newspaper with general
circulation in the city or on the municipality's website, not less than 30 days prior to the
meeting. The notice must include the date, time, and location of the meeting at which the
program will be discussed and public input allowed.
new text end

new text begin (b) After a governing body has adopted a resolution agreeing to participate in the program,
the governing body must adopt a separate resolution, subject to the same voting, notice, and
public hearing requirements under paragraph (a), for each property the governing body
approves to receive the affordable housing market value exclusion. The resolution must
state the property qualifies for a valuation exclusion of 50 percent, and that shall remain
the same each year, subject to the duration limit under subdivision 5.
new text end

new text begin (c) After a governing body has adopted the property-specific resolution as required under
paragraph (b), the governing body, other than the county board acting on behalf of an
unorganized territory, must provide the county board with a copy of the resolution for each
property the local government approved to receive the affordable housing market value
exclusion, along with information relating to the fiscal implications resulting from the
approved exclusion. The county board may request additional information from the local
government that the board deems necessary. The county board must approve, by a majority
vote of its members, the affordable housing market value exclusion for each property within
60 days of receipt. If a county board fails to approve the exclusion within 60 days of receipt,
or if the county board affirmatively denies approval of the exclusion, the property shall not
receive the affordable housing market value exclusion.
new text end

new text begin Subd. 4. new text end

new text begin Eligibility. new text end

new text begin (a) A property located in a participating municipality is eligible for
the affordable housing market value exclusion applied under section 273.13, subdivision
36, if:
new text end

new text begin (1) the property is not classified in whole or in part as class 4d under section 273.13,
subdivision 25;
new text end

new text begin (2) construction of the property began on or after January 1, 2023; and
new text end

new text begin (3) the Minnesota Housing Finance Agency certifies to the county or local assessor that:
new text end

new text begin (i) at least 20 percent of the units in the property are available for residents whose
household income at the time of initial occupancy does not exceed 60 percent of area median
income, adjusted for family size, as determined by the United States Department of Housing
and Urban Development;
new text end

new text begin (ii) at least 80 percent of the available units in the property are occupied by residents
meeting the income requirement; and
new text end

new text begin (iii) any unoccupied available units are being actively marketed toward persons meeting
the income requirements, as attested by the property owner.
new text end

new text begin (b) By February 1 each assessment year, an application for certification under this
subdivision must be filed by the property owner to the Minnesota Housing Finance Agency.
The property owner must provide a copy of the application to the county or city assessor.
The application must be filed on a form prescribed by the agency and must contain the
property tax identification number, evidence that the property meets the requirements of
paragraph (a), a copy of the property-specific approval by the county board if required, and
any other information necessary for the Minnesota Housing Finance Agency to determine
eligibility. The Minnesota Housing Finance Agency may charge an application fee
approximately equal to the costs of processing and reviewing the applications. If imposed,
the applicant must pay the application fee to the Minnesota Housing Finance Agency and
the fee must be deposited in the housing development fund.
new text end

new text begin (c) By April 1 each assessment year, the Minnesota Housing Finance Agency must
certify to the appropriate county or city assessor:
new text end

new text begin (1) the specific properties, identified by parcel identification numbers, that are eligible
under this section to receive the exclusion for the current assessment year; and
new text end

new text begin (2) the specific properties, identified by parcel identification numbers, that received the
exclusion in the previous assessment year but no longer meet the requirements under this
section.
new text end

new text begin In making the certification, the Minnesota Housing Finance Agency must rely on the property
owner's application and any other supporting information that the agency deems necessary.
new text end

new text begin Subd. 5. new text end

new text begin Duration. new text end

new text begin The governing body of a participating municipality shall determine
the duration of the affordable housing market value exclusion for each eligible property,
provided that the exclusion applies for at least ten but not more than 20 assessment years,
except that when a property no longer meets the requirements of subdivision 4, the exclusion
shall be removed for the current assessment year.
new text end

new text begin Subd. 6. new text end

new text begin Expiration. new text end

new text begin The affordable housing market value exclusion program expires
on December 31, 2030. A property that has not received the required approval under
subdivision 3 by December 31, 2030, shall not receive the exclusion.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 10.

Minnesota Statutes 2020, section 273.13, subdivision 22, is amended to read:

Subd. 22.

Class 1.

(a) Except as provided in subdivision 23 and in paragraphs (b) and
(c), real estate which is residential and used for homestead purposes is class 1a. In the case
of a duplex or triplex in which one of the units is used for homestead purposes, the entire
property is deemed to be used for homestead purposes. The market value of class 1a property
must be determined based upon the value of the house, garage, and land.

The first $500,000 of market value of class 1a property has a net classification rate of
one percent of its market value; and the market value of class 1a property that exceeds
$500,000 has a classification rate of 1.25 percent of its market value.

(b) Class 1b property includes homestead real estate or homestead manufactured homes
used for the purposes of a homestead by:

(1) any person who is blind as defined in section 256D.35, or the person who is blind
and the spouse of the person who is blind;

(2) any person who is permanently and totally disabled or by the person with a disability
and the spouse of the person with a disability; or

(3) the surviving spouse of a veteran who was permanently and totally disabled
homesteading a property classified under this paragraph for taxes payable in 2008.

Property is classified and assessed under clause (2) only if the government agency or
income-providing source certifies, upon the request of the homestead occupant, that the
homestead occupant satisfies the disability requirements of this paragraph, and that the
property is not eligible for the valuation exclusion under subdivision 34.

Property is classified and assessed under paragraph (b) only if the commissioner of
revenue or the county assessor certifies that the homestead occupant satisfies the requirements
of this paragraph.

Permanently and totally disabled for the purpose of this subdivision means a condition
which is permanent in nature and totally incapacitates the person from working at an
occupation which brings the person an income. The first $50,000 market value of class 1b
property has a net classification rate of .45 percent of its market value. The remaining market
value of class 1b property is classified as class 1a or class 2a property, whichever is
appropriate.

(c) Class 1c property is commercial use real and personal property that abuts public
water as defined in section 103G.005, subdivision 15, or abuts a state trail administered by
the Department of Natural Resources, and is devoted to temporary and seasonal residential
occupancy for recreational purposes but not devoted to commercial purposes for more than
250 days in the year preceding the year of assessment, and that includes a portion used as
a homestead by the owner, which includes a dwelling occupied as a homestead by a
shareholder of a corporation that owns the resort, a partner in a partnership that owns the
resort, or a member of a limited liability company that owns the resort even if the title to
the homestead is held by the corporation, partnership, or limited liability company. For
purposes of this paragraph, property is devoted to a commercial purpose on a specific day
if any portion of the property, excluding the portion used exclusively as a homestead, is
used for residential occupancy and a fee is charged for residential occupancy. Class 1c
property must contain three or more rental units. A "rental unit" is defined as a cabin,
condominium, townhouse, sleeping room, or individual camping site equipped with water
and electrical hookups for recreational vehicles. Class 1c property must provide recreational
activities such as the rental of ice fishing houses, boats and motors, snowmobiles, downhill
or cross-country ski equipment; provide marina services, launch services, or guide services;
or sell bait and fishing tackle. Any unit in which the right to use the property is transferred
to an individual or entity by deeded interest, or the sale of shares or stock, no longer qualifies
for class 1c even though it may remain available for rent. A camping pad offered for rent
by a property that otherwise qualifies for class 1c is also class 1c, regardless of the term of
the rental agreement, as long as the use of the camping pad does not exceed 250 days. If
the same owner owns two separate parcels that are located in the same township, and one
of those properties is classified as a class 1c property and the other would be eligible to be
classified as a class 1c property if it was used as the homestead of the owner, both properties
will be assessed as a single class 1c property; for purposes of this sentence, properties are
deemed to be owned by the same owner if each of them is owned by a limited liability
company, and both limited liability companies have the same membership. The portion of
the property used as a homestead is class 1a property under paragraph (a). The remainder
of the property is classified as follows: the first deleted text begin $600,000 deleted text end new text begin $850,000 new text end of market value is tier
I, the next deleted text begin $1,700,000 deleted text end new text begin $2,250,000 new text end of market value is tier II, and any remaining market value
is tier III. The classification rates for class 1c are: tier I, 0.50 percent; tier II, 1.0 percent;
and tier III, 1.25 percent. Owners of real and personal property devoted to temporary and
seasonal residential occupancy for recreation purposes in which all or a portion of the
property was devoted to commercial purposes for not more than 250 days in the year
preceding the year of assessment desiring classification as class 1c, must submit a declaration
to the assessor designating the cabins or units occupied for 250 days or less in the year
preceding the year of assessment by January 15 of the assessment year. Those cabins or
units and a proportionate share of the land on which they are located must be designated as
class 1c as otherwise provided. The remainder of the cabins or units and a proportionate
share of the land on which they are located must be designated as class 3a commercial. The
owner of property desiring designation as class 1c property must provide guest registers or
other records demonstrating that the units for which class 1c designation is sought were not
occupied for more than 250 days in the year preceding the assessment if so requested. The
portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center
or meeting room, and (5) other nonresidential facility operated on a commercial basis not
directly related to temporary and seasonal residential occupancy for recreation purposes
does not qualify for class 1c.

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under
section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time when
they work on that farm, and the occupants are not charged rent for the privilege of occupying
the property, provided that use of the structure for storage of farm equipment and produce
does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the appropriate
season; and

(4) the structure is not salable as residential property because it does not comply with
local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same classification rates as class 1a property
under paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2023 and thereafter.
new text end

Sec. 11.

Minnesota Statutes 2021 Supplement, section 273.13, subdivision 25, is amended
to read:

Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more units
and used or held for use by the owner or by the tenants or lessees of the owner as a residence
for rental periods of 30 days or more, excluding property qualifying for class 4d. Class 4a
also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt
under section 272.02, and contiguous property used for hospital purposes, without regard
to whether the property has been platted or subdivided. The market value of class 4a property
has a classification rate of 1.25 percent.

(b) Class 4b includes:

(1) residential real estate containing less than four units, including property rented as a
short-term rental property for more than 14 days in the preceding year, that does not qualify
as class 4bb, other than seasonal residential recreational property;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm
classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision
33.

For the purposes of this paragraph, "short-term rental property" means nonhomestead
residential real estate rented for periods of less than 30 consecutive days.

The market value of class 4b property has a classification rate of 1.25 percent.

(c) Class 4bb includes:

(1) nonhomestead residential real estate containing one unit, other than seasonal
residential recreational property;

(2) a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b); and

(3) a condominium-type storage unit having an individual property identification number
that is not used for a commercial purpose.

Class 4bb property has the same classification rates as class 1a property under subdivision
22.

Property that has been classified as seasonal residential recreational property at any time
during which it has been owned by the current owner or spouse of the current owner does
not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), real and personal property
devoted to commercial temporary and seasonal residential occupancy for recreation purposes,
for not more than 250 days in the year preceding the year of assessment. For purposes of
this clause, property is devoted to a commercial purpose on a specific day if any portion of
the property is used for residential occupancy, and a fee is charged for residential occupancy.
Class 4c property under this clause must contain three or more rental units. A "rental unit"
is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site
equipped with water and electrical hookups for recreational vehicles. A camping pad offered
for rent by a property that otherwise qualifies for class 4c under this clause is also class 4c
under this clause regardless of the term of the rental agreement, as long as the use of the
camping pad does not exceed 250 days. In order for a property to be classified under this
clause, either (i) the business located on the property must provide recreational activities,
at least 40 percent of the annual gross lodging receipts related to the property must be from
business conducted during 90 consecutive days, and either (A) at least 60 percent of all paid
bookings by lodging guests during the year must be for periods of at least two consecutive
nights; or (B) at least 20 percent of the annual gross receipts must be from charges for
providing recreational activities, or (ii) the business must contain 20 or fewer rental units,
and must be located in a township or a city with a population of 2,500 or less located outside
the metropolitan area, as defined under section 473.121, subdivision 2, that contains a portion
of a state trail administered by the Department of Natural Resources. For purposes of item
(i)(A), a paid booking of five or more nights shall be counted as two bookings. Class 4c
property also includes commercial use real property used exclusively for recreational
purposes in conjunction with other class 4c property classified under this clause and devoted
to temporary and seasonal residential occupancy for recreational purposes, up to a total of
two acres, provided the property is not devoted to commercial recreational use for more
than 250 days in the year preceding the year of assessment and is located within two miles
of the class 4c property with which it is used. In order for a property to qualify for
classification under this clause, the owner must submit a declaration to the assessor
designating the cabins or units occupied for 250 days or less in the year preceding the year
of assessment by January 15 of the assessment year. Those cabins or units and a proportionate
share of the land on which they are located must be designated class 4c under this clause
as otherwise provided. The remainder of the cabins or units and a proportionate share of
the land on which they are located will be designated as class 3a. The owner of property
desiring designation as class 4c property under this clause must provide guest registers or
other records demonstrating that the units for which class 4c designation is sought were not
occupied for more than 250 days in the year preceding the assessment if so requested. The
portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center
or meeting room, and (5) other nonresidential facility operated on a commercial basis not
directly related to temporary and seasonal residential occupancy for recreation purposes
does not qualify for class 4c. For the purposes of this paragraph, "recreational activities"
means renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country
ski equipment; providing marina services, launch services, or guide services; or selling bait
and fishing tackle;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or dues,
but a membership fee may not be required in order to use the property for golfing, and its
green fees for golfing must be comparable to green fees typically charged by municipal
courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with
the golf course is classified as class 3a property;

(3) real property up to a maximum of three acres of land owned and used by a nonprofit
community service oriented organization and not used for residential purposes on either a
temporary or permanent basis, provided that:

(i) the property is not used for a revenue-producing activity for more than six days in
the calendar year preceding the year of assessment; or

(ii) the organization makes annual charitable contributions and donations at least equal
to the property's previous year's property taxes and the property is allowed to be used for
public and community meetings or events for no charge, as appropriate to the size of the
facility.

For purposes of this clause:

(A) "charitable contributions and donations" has the same meaning as lawful gambling
purposes under section 349.12, subdivision 25, excluding those purposes relating to the
payment of taxes, assessments, fees, auditing costs, and utility payments;

(B) "property taxes" excludes the state general tax;

(C) a "nonprofit community service oriented organization" means any corporation,
society, association, foundation, or institution organized and operated exclusively for
charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal
Revenue Code; and

(D) "revenue-producing activities" shall include but not be limited to property or that
portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
insurance business, or office or other space leased or rented to a lessee who conducts a
for-profit enterprise on the premises.

Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The
use of the property for social events open exclusively to members and their guests for periods
of less than 24 hours, when an admission is not charged nor any revenues are received by
the organization shall not be considered a revenue-producing activity.

The organization shall maintain records of its charitable contributions and donations
and of public meetings and events held on the property and make them available upon
request any time to the assessor to ensure eligibility. An organization meeting the requirement
under item (ii) must file an application by May 1 with the assessor for eligibility for the
current year's assessment. The commissioner shall prescribe a uniform application form
and instructions;

(4) postsecondary student housing of not more than one acre of land that is owned by a
nonprofit corporation organized under chapter 317A and is used exclusively by a student
cooperative, sorority, or fraternity for on-campus housing or housing located within two
miles of the border of a college campus;

(5)(i) manufactured home parks as defined in section 327.14, subdivision 3, excluding
manufactured home parks described in items (ii) and (iii), (ii) manufactured home parks as
defined in section 327.14, subdivision 3, that are described in section 273.124, subdivision
3a, and (iii) class I manufactured home parks as defined in section 327C.01, subdivision
13;

(6) real property that is actively and exclusively devoted to indoor fitness, health, social,
recreational, and related uses, is owned and operated by a not-for-profit corporation, and is
located within the metropolitan area as defined in section 473.121, subdivision 2;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the leased
premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must be
filed by the new owner with the assessor of the county where the property is located within
60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under section
272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed agreement
restricting the use of the premises, prohibiting commercial use or activity performed at the
hangar; and

(9) residential real estate, a portion of which is used by the owner for homestead purposes,
and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods of 14
or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated in
the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer than
seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause is limited to five rental
units. Any rental units on the property in excess of five, must be valued and assessed as
class 3a. The portion of the property used for purposes of a homestead by the owner must
be classified as class 1a property under subdivision 22;

(10) real property up to a maximum of three acres and operated as a restaurant as defined
under section 157.15, subdivision 12, provided it: (i) is located on a lake as defined under
section 103G.005, subdivision 15, paragraph (a), clause (3); and (ii) is either devoted to
commercial purposes for not more than 250 consecutive days, or receives at least 60 percent
of its annual gross receipts from business conducted during four consecutive months. Gross
receipts from the sale of alcoholic beverages must be included in determining the property's
qualification under item (ii). The property's primary business must be as a restaurant and
not as a bar. Gross receipts from gift shop sales located on the premises must be excluded.
Owners of real property desiring 4c classification under this clause must submit an annual
declaration to the assessor by February 1 of the current assessment year, based on the
property's relevant information for the preceding assessment year;

(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used as
a marina, as defined in section 86A.20, subdivision 5, which is made accessible to the public
and devoted to recreational use for marina services. The marina owner must annually provide
evidence to the assessor that it provides services, including lake or river access to the public
by means of an access ramp or other facility that is either located on the property of the
marina or at a publicly owned site that abuts the property of the marina. No more than 800
feet of lakeshore may be included in this classification. Buildings used in conjunction with
a marina for marina services, including but not limited to buildings used to provide food
and beverage services, fuel, boat repairs, or the sale of bait or fishing tackle, are classified
as class 3a property; and

(12) real and personal property devoted to noncommercial temporary and seasonal
residential occupancy for recreation purposes.

Class 4c property has a classification rate of 1.5 percent of market value, except that (i)
each parcel of noncommercial seasonal residential recreational property under clause (12)
has the same classification rates as class 4bb property, (ii) manufactured home parks assessed
under clause (5), item (i), have the same classification rate as class 4b property, the market
value of manufactured home parks assessed under clause (5), item (ii), have a classification
rate of 0.75 percent if more than 50 percent of the lots in the park are occupied by
shareholders in the cooperative corporation or association and a classification rate of one
percent if 50 percent or less of the lots are so occupied, and class I manufactured home
parks as defined in section 327C.01, subdivision 13, have a classification rate of 1.0 percent,
(iii) commercial-use seasonal residential recreational property and marina recreational land
as described in clause (11), has a classification rate of one percent for the first $500,000 of
market value, and 1.25 percent for the remaining market value, (iv) the market value of
property described in clause (4) has a classification rate of one percent, (v) the market value
of property described in clauses (2), (6), and (10) has a classification rate of 1.25 percent,
(vi) that portion of the market value of property in clause (9) qualifying for class 4c property
has a classification rate of 1.25 percent, and (vii) property qualifying for classification under
clause (3) that is owned or operated by a congressionally chartered veterans organization
has a classification rate of one percent. The commissioner of veterans affairs must provide
a list of congressionally chartered veterans organizations to the commissioner of revenue
by June 30, 2017, and by January 1, 2018, and each year thereafter.

(e) Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion of
the units in the building qualify as low-income rental housing units as certified under section
273.128, subdivision 3, only the proportion of qualifying units to the total number of units
in the building qualify for class 4d. The remaining portion of the building shall be classified
by the assessor based upon its use. Class 4d also includes the same proportion of land as
the qualifying low-income rental housing units are to the total units in the building. For all
properties qualifying as class 4d, the market value determined by the assessor must be based
on the normal approach to value using normal unrestricted rents. new text begin Class 4d property has a
classification rate of 0.25 percent.
new text end

deleted text begin (f) The first tier of market value of class 4d property has a classification rate of 0.75
percent. The remaining value of class 4d property has a classification rate of 0.25 percent.
For the purposes of this paragraph, the "first tier of market value of class 4d property" means
the market value of each housing unit up to the first tier limit. For the purposes of this
paragraph, all class 4d property value must be assigned to individual housing units. The
first tier limit is $100,000 for assessment years 2022 and 2023. For subsequent assessment
years, the limit is adjusted each year by the average statewide change in estimated market
value of property classified as class 4a and 4d under this section for the previous assessment
year, excluding valuation change due to new construction, rounded to the nearest $1,000,
provided, however, that the limit may never be less than $100,000. Beginning with
assessment year 2015, the commissioner of revenue must certify the limit for each assessment
year by November 1 of the previous year.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 12.

Minnesota Statutes 2021 Supplement, section 273.13, subdivision 34, is amended
to read:

Subd. 34.

Homestead of veteran with a disability or family caregiver.

(a) All or a
portion of the market value of property owned by a veteran and serving as the veteran's
homestead under this section is excluded in determining the property's taxable market value
if the veteran has a service-connected disability of 70 percent or more as certified by the
United States Department of Veterans Affairs. To qualify for exclusion under this subdivision,
the veteran must have been honorably discharged from the United States armed forces, as
indicated by United States Government Form DD214 or other official military discharge
papers.

(b)(1) For a disability rating of 70 percent or more, $150,000 of market value is excluded,
except as provided in clause (2); and

(2) for a total (100 percent) and permanent disability, $300,000 of market value is
excluded.

(c) If a veteran with a disability qualifying for a valuation exclusion under paragraph
(b), clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the
spouse holds the legal or beneficial title to the homestead and permanently resides there,
the exclusion shall carry over to the benefit of the veteran's spouse until such time as the
spouse remarries, or sells, transfers, or otherwise disposes of the property, except as otherwise
provided in paragraph (n). Qualification under this paragraph requires an application under
paragraph (h), and a spouse must notify the assessor if there is a change in the spouse's
marital status, ownership of the property, or use of the property as a permanent residence. new text begin
If a spouse previously received the exclusion under this paragraph, but the exclusion expired
prior to assessment year 2019 before the eligibility time period for surviving spouses was
changed to a lifetime benefit, the spouse may reapply under paragraph (h) for the exclusion
under this paragraph.
new text end

(d) If the spouse of a member of any branch or unit of the United States armed forces
who dies due to a service-connected cause while serving honorably in active service, as
indicated on United States Government Form DD1300 or DD2064, holds the legal or
beneficial title to a homestead and permanently resides there, the spouse is entitled to the
benefit described in paragraph (b), clause (2), until such time as the spouse remarries or
sells, transfers, or otherwise disposes of the property, except as otherwise provided in
paragraph (n). new text begin If a spouse previously received the exclusion under this paragraph, but the
exclusion expired prior to assessment year 2019 before the eligibility time period for
surviving spouses was changed to a lifetime benefit, the spouse may reapply under paragraph
(h) for the exclusion under this paragraph.
new text end

(e) If a veteran meets the disability criteria of paragraph (a) but does not own property
classified as homestead in the state of Minnesota, then the homestead of the veteran's primary
family caregiver, if any, is eligible for the exclusion that the veteran would otherwise qualify
for under paragraph (b).

(f) In the case of an agricultural homestead, only the portion of the property consisting
of the house and garage and immediately surrounding one acre of land qualifies for the
valuation exclusion under this subdivision.

(g) A property qualifying for a valuation exclusion under this subdivision is not eligible
for the market value exclusion under subdivision 35, or classification under subdivision 22,
paragraph (b).

(h) To qualify for a valuation exclusion under this subdivision a property owner must
apply to the assessor by December 31 of the first assessment year for which the exclusion
is sought. Except as provided in paragraph (c), the owner of a property that has been accepted
for a valuation exclusion must notify the assessor if there is a change in ownership of the
property or in the use of the property as a homestead.

(i) A first-time application by a qualifying spouse for the market value exclusion under
paragraph (d) must be made any time within two years of the death of the service member new text begin ,
within two years of the United States Department of Veterans Affairs Dependency and
Indemnity Compensation determination, or by December 31, 2023, whichever is later. A
qualifying spouse whose application was previously denied may reapply, pursuant to this
paragraph, by December 31, 2023 new text end .

(j) For purposes of this subdivision:

(1) "active service" has the meaning given in section 190.05;

(2) "own" means that the person's name is present as an owner on the property deed;

(3) "primary family caregiver" means a person who is approved by the secretary of the
United States Department of Veterans Affairs for assistance as the primary provider of
personal care services for an eligible veteran under the Program of Comprehensive Assistance
for Family Caregivers, codified as United States Code, title 38, section 1720G; and

(4) "veteran" has the meaning given the term in section 197.447.

(k) If a veteran dying after December 31, 2011, did not apply for or receive the exclusion
under paragraph (b), clause (2), before dying, the veteran's spouse is entitled to the benefit
under paragraph (b), clause (2), until the spouse remarries or sells, transfers, or otherwise
disposes of the property, except as otherwise provided in paragraph (n), if:

(1) the spouse files a first-time application within two years of the death of the service
member new text begin , within two years of the United States Department of Veterans Affairs Dependency
and Indemnity Compensation determination, if applicable, new text end or by deleted text begin June 1, 2019 deleted text end new text begin December
31, 2023 new text end , whichever is later new text begin . A spouse whose application was previously denied may reapply,
pursuant to this paragraph, by December 31, 2023 new text end ;

(2) upon the death of the veteran, the spouse holds the legal or beneficial title to the
homestead and permanently resides there;

(3) the veteran met the honorable discharge requirements of paragraph (a); and

(4) the United States Department of Veterans Affairs certifies that:

(i) the veteran met the total (100 percent) and permanent disability requirement under
paragraph (b), clause (2); or

(ii) the spouse has been awarded dependency and indemnity compensation.

(l) The purpose of this provision of law providing a level of homestead property tax
relief for veterans with a disability, their primary family caregivers, and their surviving
spouses is to help ease the burdens of war for those among our state's citizens who bear
those burdens most heavily.

(m) By July 1, the county veterans service officer must certify the disability rating and
permanent address of each veteran receiving the benefit under paragraph (b) to the assessor.

(n) A spouse who received the benefit in paragraph (c), (d), or (k) but no longer holds
the legal or beneficial title to the property may continue to receive the exclusion for a
property other than the property for which the exclusion was initially granted until the spouse
remarries or sells, transfers, or otherwise disposes of the property, provided that:

(1) the spouse applies under paragraph (h) for the continuation of the exclusion allowed
under this paragraph;

(2) the spouse holds the legal or beneficial title to the property for which the continuation
of the exclusion is sought under this paragraph, and permanently resides there;

(3) the estimated market value of the property for which the exclusion is sought under
this paragraph is less than or equal to the estimated market value of the property that first
received the exclusion, based on the value of each property on the date of the sale of the
property that first received the exclusion; and

(4) the spouse has not previously received the benefit under this paragraph for a property
other than the property for which the exclusion is sought.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2022 and thereafter.
new text end

Sec. 13.

Minnesota Statutes 2020, section 273.13, subdivision 35, is amended to read:

Subd. 35.

Homestead market value exclusion.

(a) Prior to determining a property's
net tax capacity under this section, property classified as class 1a or 1b under subdivision
22, and the portion of property classified as class 2a under subdivision 23 consisting of the
house, garage, and surrounding one acre of land, shall be eligible for a market value exclusion
as determined under paragraph (b).

(b) For a homestead valued at deleted text begin $76,000 deleted text end new text begin $95,000 new text end or less, the exclusion is 40 percent of
market value. For a homestead valued between deleted text begin $76,000 deleted text end new text begin $95,000 new text end and deleted text begin $413,800 deleted text end new text begin $517,200 new text end ,
the exclusion is deleted text begin $30,400 deleted text end new text begin $38,000 new text end minus nine percent of the valuation over deleted text begin $76,000 deleted text end new text begin $95,000 new text end .
For a homestead valued at deleted text begin $413,800 deleted text end new text begin $517,200 new text end or more, there is no valuation exclusion. The
valuation exclusion shall be rounded to the nearest whole dollar, and may not be less than
zero.

(c) Any valuation exclusions or adjustments under section 273.11 shall be applied prior
to determining the amount of the valuation exclusion under this subdivision.

(d) In the case of a property that is classified as part homestead and part nonhomestead,
(i) the exclusion shall apply only to the homestead portion of the property, but (ii) if a portion
of a property is classified as nonhomestead solely because not all the owners occupy the
property, not all the owners have qualifying relatives occupying the property, or solely
because not all the spouses of owners occupy the property, the exclusion amount shall be
initially computed as if that nonhomestead portion were also in the homestead class and
then prorated to the owner-occupant's percentage of ownership. For the purpose of this
section, when an owner-occupant's spouse does not occupy the property, the percentage of
ownership for the owner-occupant spouse is one-half of the couple's ownership percentage.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2023 and thereafter.
new text end

Sec. 14.

Minnesota Statutes 2020, section 273.13, is amended by adding a subdivision to
read:

new text begin Subd. 36. new text end

new text begin Affordable housing market value exclusion. new text end

new text begin (a) Prior to determining a
property's net tax capacity under this section, property classified as class 4a under subdivision
25, paragraph (a), shall be eligible for an affordable housing market value exclusion as
determined under paragraph (b).
new text end

new text begin (b) For a property that meets the requirements under section 273.129, the exclusion is
50 percent of the market value. The valuation shall be rounded to the nearest whole dollar,
and may not be less than zero.
new text end

new text begin (c) Any valuation exclusions or adjustments under section 273.11 shall be applied prior
to determining the amount of the valuation exclusion under this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 15.

Minnesota Statutes 2020, section 273.41, is amended to read:

273.41 AMOUNT OF TAX; DISTRIBUTION.

There is hereby imposed upon each such cooperative association on December 31 of
each year a tax of $10 for each 100 members, or fraction thereof, of such association. The
tax, when paid, shall be in lieu of all personal property taxes, state, county, or local, upon
distribution lines and the attachments and appurtenances thereto of such associations located
in rural areas. new text begin For purposes of this section, "attachments and appurtenances" include, but
are not limited to, all cooperative association-owned metering and streetlighting equipment
that is physically or electrically connected to the cooperative association's distribution
system. new text end The tax shall be payable on or before March 1 of the next succeeding year, to the
commissioner of revenue. If the tax, or any portion thereof, is not paid within the time herein
specified for the payment thereof, there shall be added thereto a specific penalty equal to
ten percent of the amount so remaining unpaid. Such penalty shall be collected as part of
said tax, and the amount of said tax not timely paid, together with said penalty, shall bear
interest at the rate specified in section 270C.40 from the time such tax should have been
paid until paid. The commissioner shall deposit the amount so received in the general fund
of the state treasury.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 16.

Minnesota Statutes 2021 Supplement, section 275.025, subdivision 1, is amended
to read:

Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section. The state general levy for commercial-industrial property is deleted text begin $716,990,000 deleted text end new text begin
$708,188,000 new text end for taxes payable in 2023 new text begin through 2025; $637,369,000 for taxes payable in
2026; $566,550,000 for taxes payable in 2027; $495,731,000 for taxes payable in 2028;
$424,912,000 for taxes payable in 2029; $354,093,000 for taxes payable in 2030;
$283,274,000 for taxes payable in 2031; $212,455,000 for taxes payable in 2032;
$141,636,000 for taxes payable in 2033; $70,817,000 for taxes payable in 2034; and $0 for
taxes payable in 2035 new text end and thereafter. The state general levy for seasonal-recreational property
is deleted text begin $41,690,000 deleted text end new text begin $41,178,000 new text end for taxes payable in deleted text begin 2020 deleted text end new text begin 2023 through 2025; $37,060,000 for
taxes payable in 2026; $32,942,000 for taxes payable in 2027; $28,824,000 for taxes payable
in 2028; $24,706,000 for taxes payable in 2029; $20,588,000 for taxes payable in 2030;
$16,470,000 for taxes payable in 2031; $12,352,000 for taxes payable in 2032; $8,234,000
for taxes payable in 2033; $4,116,000 for taxes payable in 2034; and $0 for taxes payable
in 2035 new text end and thereafter. The tax under this section is not treated as a local tax rate under
section 469.177 and is not the levy of a governmental unit under chapters 276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year as
necessary to account for errors and tax base changes that affected a preliminary or final rate
for either of the two preceding years. Adjustments are allowed to the extent that the necessary
information is available to the commissioner at the time the rates for a year must be certified,
and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported to the commissioner under section 270C.85,
subdivision 2, clause (4), for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2023 and thereafter.
new text end

Sec. 17.

Minnesota Statutes 2020, section 276.04, subdivision 2, is amended to read:

Subd. 2.

Contents of tax statements.

(a) The treasurer shall provide for the printing of
the tax statements. The commissioner of revenue shall prescribe the form of the property
tax statement and its contents. The tax statement must not state or imply that property tax
credits are paid by the state of Minnesota. The statement must contain a tabulated statement
of the dollar amount due to each taxing authority and the amount of the state tax from the
parcel of real property for which a particular tax statement is prepared. The dollar amounts
attributable to the county, the state tax, the voter approved school tax, the other local school
tax, the township or municipality, and the total of the metropolitan special taxing districts
as defined in section 275.065, subdivision 3, paragraph (i), must be separately stated. The
amounts due all other special taxing districts, if any, may be aggregated except that any
levies made by the regional rail authorities in the county of Anoka, Carver, Dakota, Hennepin,
Ramsey, Scott, or Washington under chapter 398A shall be listed on a separate line directly
under the appropriate county's levy. If the county levy under this paragraph includes an
amount for a lake improvement district as defined under sections 103B.501 to 103B.581,
the amount attributable for that purpose must be separately stated from the remaining county
levy amount. In the case of Ramsey County, if the county levy under this paragraph includes
an amount for public library service under section 134.07, the amount attributable for that
purpose may be separated from the remaining county levy amount. The amount of the tax
on homesteads qualifying under the senior citizens' property tax deferral program under
chapter 290B is the total amount of property tax before subtraction of the deferred property
tax amount. The amount of the tax on contamination value imposed under sections 270.91
to 270.98, if any, must also be separately stated. The dollar amounts, including the dollar
amount of any special assessments, may be rounded to the nearest even whole dollar. For
purposes of this section whole odd-numbered dollars may be adjusted to the next higher
even-numbered dollar. The amount of market value excluded under section 273.11,
subdivision 16, if any, must also be listed on the tax statement.

(b) The property tax statements for manufactured homes and sectional structures taxed
as personal property shall contain the same information that is required on the tax statements
for real property.

(c) Real and personal property tax statements must contain the following information
in the order given in this paragraph. The information must contain the current year tax
information in the right column with the corresponding information for the previous year
in a column on the left:

(1) the property's estimated market value under section 273.11, subdivision 1;

(2) the property's homestead market value exclusion under section 273.13, subdivision
35 new text begin , or the affordable housing market value exclusion under section 273.13, subdivision 36 new text end ;

(3) the property's taxable market value under section 272.03, subdivision 15;

(4) the property's gross tax, before credits;

(5) for agricultural properties, the credits under sections 273.1384 deleted text begin and deleted text end new text begin , new text end 273.1387 new text begin , and
273.1388 new text end ;

(6) any credits received under sections 273.119; 273.1234 or 273.1235; 273.135;
273.1391; 273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit
received under section 273.135 must be separately stated and identified as "taconite tax
relief"; and

(7) the net tax payable in the manner required in paragraph (a).

(d) If the county uses envelopes for mailing property tax statements and if the county
agrees, a taxing district may include a notice with the property tax statement notifying
taxpayers when the taxing district will begin its budget deliberations for the current year,
and encouraging taxpayers to attend the hearings. If the county allows notices to be included
in the envelope containing the property tax statement, and if more than one taxing district
relative to a given property decides to include a notice with the tax statement, the county
treasurer or auditor must coordinate the process and may combine the information on a
single announcement.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2023.
new text end

Sec. 18.

Minnesota Statutes 2020, section 279.03, subdivision 1a, is amended to read:

Subd. 1a.

Rate.

(a) Except as provided in deleted text begin paragraph deleted text end new text begin paragraphs new text end (b) new text begin and (c) new text end , interest on
delinquent property taxes, penalties, and costs unpaid on or after January 1 is payable at the
per annum rate determined in section 270C.40, subdivision 5. deleted text begin If the rate so determined is
less than ten percent, the rate of interest is ten percent. deleted text end The maximum per annum rate is 14
percent if the rate specified under section 270C.40, subdivision 5, exceeds 14 percent. The
rate is subject to change on January 1 of each year.

(b) If a person is the owner of one or more parcels of property on which taxes are
delinquent, and the delinquent taxes are more than 25 percent of the prior year's school
district levy, interest on the delinquent property taxes, penalties, and costs unpaid is payable
at twice the rate determined under paragraph (a) for the year.

new text begin (c) A county board, by resolution, may establish an interest rate lower than the interest
rate determined under paragraph (a).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes, penalties, and costs
determined to be delinquent on or after January 1, 2023.
new text end

Sec. 19.

Minnesota Statutes 2020, section 282.261, subdivision 2, is amended to read:

Subd. 2.

Interest rate.

new text begin (a) Except as provided under paragraph (b), new text end the unpaid balance
on any repurchase contract approved by the county board is subject to interest at the rate
determined in section 279.03, subdivision 1a. The interest rate is subject to change each
year on the unpaid balance in the manner provided for rate changes in section 279.03,
subdivision 1a.

new text begin (b) A county board, by resolution, or a county auditor, if delegated the responsibility to
administer tax-forfeited land assigned to the county board as provided under section 282.135,
may establish an interest rate lower than the interest rate determined under paragraph (a).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2023.
new text end

Sec. 20.

Minnesota Statutes 2020, section 290A.04, subdivision 2h, is amended to read:

Subd. 2h.

Additional refund.

(a) If the gross property taxes payable on a homestead
increase more than deleted text begin 12 deleted text end new text begin ten new text end percent over the property taxes payable in the prior year on the
same property that is owned and occupied by the same owner on January 2 of both years,
and the amount of that increase is $100 or more, a claimant who is a homeowner shall be
allowed an additional refund equal to 60 percent of the amount of the increase over the
greater of deleted text begin 12 deleted text end new text begin ten new text end percent of the prior year's property taxes payable or $100. This subdivision
shall not apply to any increase in the gross property taxes payable attributable to
improvements made to the homestead after the assessment date for the prior year's taxes.
This subdivision shall not apply to any increase in the gross property taxes payable
attributable to the termination of valuation exclusions under section 273.11, subdivision
16.

The maximum refund allowed under this subdivision is deleted text begin $1,000 deleted text end new text begin $2,000 new text end .

(b) For purposes of this subdivision "gross property taxes payable" means property taxes
payable determined without regard to the refund allowed under this subdivision.

(c) In addition to the other proofs required by this chapter, each claimant under this
subdivision shall file with the property tax refund return a copy of the property tax statement
for taxes payable in the preceding year or other documents required by the commissioner.

(d) Upon request, the appropriate county official shall make available the names and
addresses of the property taxpayers who may be eligible for the additional property tax
refund under this section. The information shall be provided on a magnetic computer disk.
The county may recover its costs by charging the person requesting the information the
reasonable cost for preparing the data. The information may not be used for any purpose
other than for notifying the homeowner of potential eligibility and assisting the homeowner,
without charge, in preparing a refund claim.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refund claims based on taxes payable
in 2023 and thereafter.
new text end

Sec. 21.

Minnesota Statutes 2020, section 290B.03, subdivision 1, is amended to read:

Subdivision 1.

Program qualifications.

The qualifications for the senior citizens'
property tax deferral program are as follows:

(1) the property must be owned and occupied as a homestead by a person 65 years of
age or older. In the case of a married couple, at least one of the spouses must be at least 65
years old at the time the first property tax deferral is granted, regardless of whether the
property is titled in the name of one spouse or both spouses, or titled in another way that
permits the property to have homestead status, and the other spouse must be at least 62 years
of age;

(2) the total household income of the qualifying homeowners, as defined in section
290A.03, subdivision 5, for the calendar year preceding the year of the initial application
may not exceed deleted text begin $60,000 deleted text end new text begin $75,000 new text end ;

(3) the homestead must have been owned and occupied as the homestead of at least one
of the qualifying homeowners for at least deleted text begin 15 deleted text end new text begin five new text end years prior to the year the initial application
is filed;

(4) there are no state or federal tax liens or judgment liens on the homesteaded property;

(5) there are no mortgages or other liens on the property that secure future advances,
except for those subject to credit limits that result in compliance with clause (6); and

(6) the total unpaid balances of debts secured by mortgages and other liens on the
property, including unpaid and delinquent special assessments and interest and any delinquent
property taxes, penalties, and interest, but not including property taxes payable during the
year or debts secured by a residential PACE lien, as defined in section 216C.435, subdivision
10d, does not exceed 75 percent of the assessor's estimated market value for the year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications received for deferral of
taxes payable in 2023 and thereafter.
new text end

Sec. 22.

Minnesota Statutes 2020, section 290B.04, subdivision 3, is amended to read:

Subd. 3.

Excess-income certification by taxpayer.

A taxpayer whose initial application
has been approved under subdivision 2 shall notify the commissioner of revenue in writing
by July 1 if the taxpayer's household income for the preceding calendar year exceeded
deleted text begin $60,000 deleted text end new text begin $75,000 new text end . The certification must state the homeowner's total household income for
the previous calendar year. No property taxes may be deferred under this chapter in any
year following the year in which a program participant filed or should have filed an
excess-income certification under this subdivision, unless the participant has filed a
resumption of eligibility certification as described in subdivision 4.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications received for deferral of
taxes payable in 2023 and thereafter.
new text end

Sec. 23.

Minnesota Statutes 2020, section 290B.04, subdivision 4, is amended to read:

Subd. 4.

Resumption of eligibility certification by taxpayer.

A taxpayer who has
previously filed an excess-income certification under subdivision 3 may resume program
participation if the taxpayer's household income for a subsequent year is deleted text begin $60,000 deleted text end new text begin $75,000 new text end
or less. If the taxpayer chooses to resume program participation, the taxpayer must notify
the commissioner of revenue in writing by July 1 of the year following a calendar year in
which the taxpayer's household income is deleted text begin $60,000 deleted text end new text begin $75,000 new text end or less. The certification must
state the taxpayer's total household income for the previous calendar year. Once a taxpayer
resumes participation in the program under this subdivision, participation will continue until
the taxpayer files a subsequent excess-income certification under subdivision 3 or until
participation is terminated under section 290B.08, subdivision 1.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications received for deferral of
taxes payable in 2023 and thereafter.
new text end

Sec. 24.

Minnesota Statutes 2020, section 290B.05, subdivision 1, is amended to read:

Subdivision 1.

Determination by commissioner.

The commissioner shall determine
each qualifying homeowner's "annual maximum property tax amount" following approval
of the homeowner's initial application and following the receipt of a resumption of eligibility
certification. The "annual maximum property tax amount" equals three percent of the
homeowner's total household income for the year preceding either the initial application or
the resumption of eligibility certification, whichever is applicable. Following approval of
the initial application, the commissioner shall determine the qualifying homeowner's
"maximum allowable deferral." No tax may be deferred relative to the appropriate assessment
year for any homeowner whose total household income for the previous year exceeds
deleted text begin $60,000 deleted text end new text begin $75,000 new text end . No tax shall be deferred in any year in which the homeowner does not
meet the program qualifications in section 290B.03. The maximum allowable total deferral
is equal to 75 percent of the assessor's estimated market value for the year, less the balance
of any mortgage loans and other amounts secured by liens against the property at the time
of application, including any unpaid and delinquent special assessments and interest and
any delinquent property taxes, penalties, and interest, but not including property taxes
payable during the year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications received for deferral of
taxes payable in 2023 and thereafter.
new text end

Sec. 25. new text begin CITY OF VIRGINIA; NET DEBT LIMIT EXEMPTION.
new text end

new text begin The city of Virginia may finance the construction of a public safety building in the city
of Virginia by obtaining a loan from the United States Department of Agriculture secured
by its general obligation pledge. Any bonds issued relating to this construction project or
repayment of the loan must not be included in the computation of the city's limit on net debt
under Minnesota Statutes, section 475.53, subdivision 1.
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

ARTICLE 5

PROPERTY TAX AIDS AND CREDITS

Section 1.

new text begin [273.1388] AGRICULTURAL RIPARIAN BUFFER CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Eligibility. new text end

new text begin Class 2a and 2b property under section 273.13, subdivision
23, containing a riparian buffer as defined in section 103F.48, not including land enrolled
in and generating payments under a state or federal conservation reserve or easement program
under sections 103F.501 to 103F.531, is eligible to receive the credit under this section,
provided that the landowner follows the requirements of section 103F.48. Eligible land must
be certified by the local soil and water conservation district to the county assessor. This
certification is effective until the local soil and water conservation district notifies the
assessor that qualified land is no longer eligible for a credit under the requirements of this
section. The local soil and water conservation districts must annually notify their county
assessor of any qualified land that is no longer eligible for a credit under the requirements
of this section.
new text end

new text begin Subd. 2. new text end

new text begin Credit amount. new text end

new text begin For each qualifying property, the agricultural riparian buffer
credit is equal to the amount of net tax capacity-based property tax attributable to the portion
of the property eligible under subdivision 1.
new text end

new text begin Subd. 3. new text end

new text begin Credit reimbursement. new text end

new text begin The county auditor must determine the tax reductions
allowed under this section within the county for each taxes payable year and must certify
that amount to the commissioner of revenue as part of the data required under section
270C.85, subdivision 2. Any prior year adjustments must also be certified as part of the
data required under section 270C.85, subdivision 2. The commissioner must review the
certifications for accuracy and may make such changes as are deemed necessary or return
the certification to the county auditor for correction. The credit under this section must be
used to proportionately reduce the net tax capacity-based property tax payable to each local
taxing jurisdiction as provided in section 273.1393.
new text end

new text begin Subd. 4. new text end

new text begin Payment. new text end

new text begin (a) The commissioner of revenue shall reimburse each local taxing
jurisdiction, other than school districts, for the tax reductions granted under this section in
two equal installments on October 31 and December 26 of the taxes payable year for which
the reductions are granted, including in each payment the prior year adjustments certified
under section 270C.85, subdivision 2, for that taxes payable year.
new text end

new text begin (b) The commissioner of revenue shall certify the total of the tax reductions granted
under this section for each taxes payable year within each school district to the commissioner
of education and the commissioner of education must pay the reimbursement amounts to
each school district as provided in section 273.1392.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to make the payments required by this
section to taxing jurisdictions other than school districts is annually appropriated from the
general fund to the commissioner of revenue. An amount sufficient to make the payments
required by this section for school districts is annually appropriated from the general fund
to the commissioner of education.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2024.
new text end

Sec. 2.

Minnesota Statutes 2020, section 273.1392, is amended to read:

273.1392 PAYMENT; SCHOOL DISTRICTS.

The amounts of bovine tuberculosis credit reimbursements under section 273.113;
conservation tax credits under section 273.119; disaster or emergency reimbursement under
sections 273.1231 to 273.1235; agricultural credits under sections 273.1384 deleted text begin and deleted text end new text begin , new text end 273.1387 new text begin ,
and 273.1388 new text end ; aids and credits under section 273.1398; enterprise zone property credit
payments under section 469.171; deleted text begin and deleted text end metropolitan agricultural preserve reduction under
section 473H.10 new text begin ; and electric generation transition aid under section 477A.23 new text end for school
districts, shall be certified to the Department of Education by the Department of Revenue.
The amounts so certified shall be paid according to section 127A.45, subdivisions 9, 10,
and 13.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2024.
new text end

Sec. 3.

Minnesota Statutes 2020, section 273.1393, is amended to read:

273.1393 COMPUTATION OF NET PROPERTY TAXES.

Notwithstanding any other provisions to the contrary, "net" property taxes are determined
by subtracting the credits in the order listed from the gross tax:

(1) disaster credit as provided in sections 273.1231 to 273.1235;

(2) powerline credit as provided in section 273.42;

(3) agricultural preserves credit as provided in section 473H.10;

(4) enterprise zone credit as provided in section 469.171;

(5) disparity reduction credit;

(6) conservation tax credit as provided in section 273.119;

(7) deleted text begin the deleted text end school bond credit as provided in section 273.1387;

new text begin (8) agricultural riparian buffer credit as provided in section 273.1388;
new text end

deleted text begin (8) deleted text end new text begin (9) new text end agricultural credit as provided in section 273.1384;

deleted text begin (9) deleted text end new text begin (10) new text end taconite homestead credit as provided in section 273.135;

deleted text begin (10) deleted text end new text begin (11) new text end supplemental homestead credit as provided in section 273.1391; and

deleted text begin (11) deleted text end new text begin (12) new text end the bovine tuberculosis zone credit, as provided in section 273.113.

The combination of all property tax credits must not exceed the gross tax amount.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2024.
new text end

Sec. 4.

Minnesota Statutes 2021 Supplement, section 275.065, subdivision 3, is amended
to read:

Subd. 3.

Notice of proposed property taxes.

(a) The county auditor shall prepare and
the county treasurer shall deliver after November 10 and on or before November 24 each
year, by first class mail to each taxpayer at the address listed on the county's current year's
assessment roll, a notice of proposed property taxes. Upon written request by the taxpayer,
the treasurer may send the notice in electronic form or by electronic mail instead of on paper
or by ordinary mail.

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes each
taxing authority proposes to collect for taxes payable the following year. In the case of a
town, or in the case of the state general tax, the final tax amount will be its proposed tax.
The notice must clearly state for each city that has a population over 500, county, school
district, regional library authority established under section 134.201, metropolitan taxing
districts as defined in paragraph (i), and fire protection and emergency medical services
special taxing districts established under section 144F.01, the time and place of a meeting
for each taxing authority in which the budget and levy will be discussed and public input
allowed, prior to the final budget and levy determination. The taxing authorities must provide
the county auditor with the information to be included in the notice on or before the time it
certifies its proposed levy under subdivision 1. The public must be allowed to speak at that
meeting, which must occur after November 24 and must not be held before 6:00 p.m. It
must provide a telephone number for the taxing authority that taxpayers may call if they
have questions related to the notice and an address where comments will be received by
mail, except that no notice required under this section shall be interpreted as requiring the
printing of a personal telephone number or address as the contact information for a taxing
authority. If a taxing authority does not maintain public offices where telephone calls can
be received by the authority, the authority may inform the county of the lack of a public
telephone number and the county shall not list a telephone number for that taxing authority.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used for
computing property taxes payable in the following year and for taxes payable in the current
year as each appears in the records of the county assessor on November 1 of the current
year; and, in the case of residential property, whether the property is classified as homestead
or nonhomestead. The notice must clearly inform taxpayers of the years to which the market
values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, and state general
tax, agricultural homestead credit under section 273.1384, school building bond agricultural
credit under section 273.1387, new text begin agricultural riparian buffer credit under section 273.1388, new text end
voter approved school levy, other local school levy, and the sum of the special taxing
districts, and as a total of all taxing authorities:

(i) the actual tax for taxes payable in the current year; and

(ii) the proposed tax amount.

If the county levy under clause (2) includes an amount for a lake improvement district
as defined under sections 103B.501 to 103B.581, the amount attributable for that purpose
must be separately stated from the remaining county levy amount.

In the case of a town or the state general tax, the final tax shall also be its proposed tax
unless the town changes its levy at a special town meeting under section 365.52. If a school
district has certified under section 126C.17, subdivision 9, that a referendum will be held
in the school district at the November general election, the county auditor must note next
to the school district's proposed amount that a referendum is pending and that, if approved
by the voters, the tax amount may be higher than shown on the notice. In the case of the
city of Minneapolis, the levy for Minneapolis Park and Recreation shall be listed separately
from the remaining amount of the city's levy. In the case of the city of St. Paul, the levy for
the St. Paul Library Agency must be listed separately from the remaining amount of the
city's levy. In the case of Ramsey County, any amount levied under section 134.07 may be
listed separately from the remaining amount of the county's levy. In the case of a parcel
where tax increment or the fiscal disparities areawide tax under chapter 276A or 473F
applies, the proposed tax levy on the captured value or the proposed tax levy on the tax
capacity subject to the areawide tax must each be stated separately and not included in the
sum of the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and the
total proposed taxes, expressed as a percentage.

For purposes of this section, the amount of the tax on homesteads qualifying under the
senior citizens' property tax deferral program under chapter 290B is the total amount of
property tax before subtraction of the deferred property tax amount.

(e) The notice must clearly state that the proposed or final taxes do not include the
following:

(1) special assessments;

(2) levies approved by the voters after the date the proposed taxes are certified, including
bond referenda and school district levy referenda;

(3) a levy limit increase approved by the voters by the first Tuesday after the first Monday
in November of the levy year as provided under section 275.73;

(4) amounts necessary to pay cleanup or other costs due to a natural disaster occurring
after the date the proposed taxes are certified;

(5) amounts necessary to pay tort judgments against the taxing authority that become
final after the date the proposed taxes are certified; and

(6) the contamination tax imposed on properties which received market value reductions
for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or the
county treasurer to deliver the notice as required in this section does not invalidate the
proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as
nonhomestead, and satisfactory documentation is provided to the county assessor by the
applicable deadline, and the property qualifies for the homestead classification in that
assessment year, the assessor shall reclassify the property to homestead for taxes payable
in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental
periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant, renter,
or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by November 27 or within three
days of receipt of the notice, whichever is later. A taxpayer may notify the county treasurer
of the address of the taxpayer, agent, caretaker, or manager of the premises to which the
notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision and subdivision 6, "metropolitan special taxing
districts" means the following taxing districts in the seven-county metropolitan area that
levy a property tax for any of the specified purposes listed below:

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325, 473.446,
473.521, 473.547, or 473.834;

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672; and

(3) Metropolitan Mosquito Control Commission under section 473.711.

For purposes of this section, any levies made by the regional rail authorities in the county
of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A
shall be included with the appropriate county's levy.

(j) The governing body of a county, city, or school district may, with the consent of the
county board, include supplemental information with the statement of proposed property
taxes about the impact of state aid increases or decreases on property tax increases or
decreases and on the level of services provided in the affected jurisdiction. This supplemental
information may include information for the following year, the current year, and for as
many consecutive preceding years as deemed appropriate by the governing body of the
county, city, or school district. It may include only information regarding:

(1) the impact of inflation as measured by the implicit price deflator for state and local
government purchases;

(2) population growth and decline;

(3) state or federal government action; and

(4) other financial factors that affect the level of property taxation and local services
that the governing body of the county, city, or school district may deem appropriate to
include.

The information may be presented using tables, written narrative, and graphic
representations and may contain instruction toward further sources of information or
opportunity for comment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2024.
new text end

Sec. 5.

new text begin [477A.23] ELECTRIC GENERATION TRANSITION AID.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Electric generating unit" means a single generating unit at an electric generating
plant powered by coal, nuclear, or natural gas.
new text end

new text begin (c) "Electric generation property" means taxable property of an electric generating plant
owned by a public utility, as defined in section 216B.02, subdivision 4, that is powered by
coal, nuclear, or natural gas and located in an eligible taxing jurisdiction.
new text end

new text begin (d) "Eligible taxing jurisdiction" means a county, home rule charter or statutory city,
town, or school district.
new text end

new text begin (e) "Unit base year" means the assessment year in which the assessed value of electric
generation property is reduced due to the retirement of the electric generating unit.
new text end

new text begin (f) "Unit differential" means (1) the tax capacity of electric generation property in the
assessment year preceding the unit base year, minus (2) the tax capacity of electric generation
property in the unit base year. The unit differential may not be less than zero. The unit
differential equals zero if the tax capacity of electric generation property in the eligible
taxing jurisdiction in the assessment year preceding the unit base year is less than four
percent of the total net tax capacity of the eligible taxing jurisdiction in the assessment year
preceding the aid calculation year, as adjusted under section 473F.08, subdivision 2, or
276A.06, subdivision 2, as applicable.
new text end

new text begin Subd. 2. new text end

new text begin Required notification. new text end

new text begin Notwithstanding the requirements of Minnesota Rules,
chapter 8100, a public utility must notify the commissioner when the public utility expects
to retire an electric generating unit and remove that unit from the property tax base. The
notification must be in the form and manner determined by the commissioner, include
information required by the commissioner to calculate transition aid under this section, and
be filed together with the reports required under section 273.371.
new text end

new text begin Subd. 3. new text end

new text begin Unit transition amount. new text end

new text begin (a) The initial unit transition amount equals the product
of (1) the unit differential, times (2) the jurisdiction's tax rate for taxes payable in the unit
base year.
new text end

new text begin (b) The unit transition amount for the year following the unit base year, or in the year
as provided under subdivision 6, equals the initial unit transition amount. Unit transition
amounts in subsequent years must be reduced each year by an amount equal to five percent
of the initial unit transition amount. If the unit transition amount attributable to any unit is
less than $5,000 in any year, the unit transition amount for that unit equals zero.
new text end

new text begin Subd. 4. new text end

new text begin Electric generation transition aid. new text end

new text begin Electric generation transition aid for an
eligible taxing jurisdiction equals the sum of the unit transition amounts for that jurisdiction.
new text end

new text begin Subd. 5. new text end

new text begin Aid elimination. new text end

new text begin (a) Notwithstanding subdivision 4, beginning for aid in the
year after the year in which the jurisdiction first qualified for aid, aid for an eligible taxing
jurisdiction equals zero if the commissioner determines that the eligible taxing jurisdiction's
total net tax capacity in the assessment year preceding the aid calculation year is greater
than the product of:
new text end

new text begin (1) 90 percent of the jurisdiction's total net tax capacity in the assessment year preceding
the aid calculation year in which the jurisdiction first qualified for aid under this section;
times
new text end

new text begin (2) the greater of one or the ratio of (i) the statewide total net tax capacity of real and
personal property in the assessment year preceding the aid calculation year to (ii) the
statewide total net tax capacity of real and personal property in the assessment year preceding
the aid calculation year in which the jurisdiction first qualified for aid under this section.
new text end

new text begin (b) For the purposes of this subdivision, "net tax capacity" means net tax capacity as
adjusted under section 473F.08, subdivision 2, or 276A.06, subdivision 2, as applicable.
new text end

new text begin (c) If aid to a jurisdiction attributable to a previous unit retirement has been eliminated
under this subdivision, the jurisdiction may qualify for aid under this section for subsequent
unit retirements.
new text end

new text begin (d) The requirements of this subdivision do not apply to the aid attributable to prior unit
retirements qualifying under subdivision 7.
new text end

new text begin Subd. 6. new text end

new text begin Commissioner's duties; payment schedule. new text end

new text begin (a) The commissioner of revenue
shall compute the amount of electric generation transition aid payable to each jurisdiction
under this section. On or before August 1 of each year, the commissioner shall certify the
amount of aid computed for aids payable in the following year for each jurisdiction. The
commissioner shall pay aid to each jurisdiction other than school districts annually at the
times provided in section 477A.015. Aids to school districts must be certified to the
commissioner of education and paid under section 273.1392.
new text end

new text begin (b) The commissioner of revenue may require counties to provide any data that the
commissioner deems necessary to administer this section.
new text end

new text begin Subd. 7. new text end

new text begin Aid for prior unit retirements. new text end

new text begin An electric generating unit with a unit base
year after 2016 but before 2023 must be counted for the purpose of calculating aid under
this section. For a unit eligible to be counted under this subdivision and for the purpose of
the schedule of amounts under subdivision 3, paragraph (b), the unit base year is 2023.
new text end

new text begin Subd. 8. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to make the aid payments required by
this section to eligible taxing jurisdictions other than school districts is annually appropriated
from the general fund to the commissioner of revenue. An amount sufficient to make the
aid payments required by this section for school districts is annually appropriated from the
general fund to the commissioner of education.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in 2024 and thereafter.
new text end

Sec. 6. new text begin MILLE LACS COUNTY; COUNTY, CITY, TOWNSHIP, AND SCHOOL
DISTRICT REIMBURSEMENT.
new text end

new text begin (a) A taxing jurisdiction located in Mille Lacs County that has lost property tax revenue
due to the placement of property into trust by the United States Department of the Interior
Bureau of Indian Affairs is eligible for reimbursement under this section in the following
manner:
new text end

new text begin (1) by July 1, 2022, the auditor of Mille Lacs County must certify to the commissioner
of revenue the amount of tax revenue lost by each taxing jurisdiction in the county due to
property being placed into trust between January 1, 2009, and December 31, 2020;
new text end

new text begin (2) by July 1 of each year starting in 2022, the auditor of Mille Lacs County must certify
to the commissioner of revenue the amount of tax revenue lost by each taxing jurisdiction
in the county due to property being placed into trust during the preceding calendar year.
This clause only applies to properties that were the subject of an application for placement
into trust between January 1, 2009, and June 30, 2021; and
new text end

new text begin (3) in the first five years following certification under clause (1) or (2), the commissioner
of education must distribute to the county the full amount certified for school districts, and
the commissioner of revenue must distribute to the county the full amount certified for
taxing jurisdictions other than school districts. The county must distribute to each taxing
jurisdiction the certified amount of tax revenue lost by the jurisdiction. In the sixth year
following certification and in each year thereafter, the commissioners of education and
revenue must distribute to the county, for distribution to each taxing jurisdiction, an amount
equal to the previous year's amount minus 20 percent of the amount distributed in the first
year.
new text end

new text begin (b) Reimbursements required by this section must be paid to taxing jurisdictions other
than school districts at the times provided in Minnesota Statutes, section 477A.015, for
payment of local government aid. Aid to school districts must be certified to the
commissioner of education and paid under Minnesota Statutes, section 273.1392.
new text end

new text begin (c) An amount sufficient to make the payments to taxing jurisdictions other than school
districts is annually appropriated from the general fund to the commissioner of revenue. An
amount sufficient to make the payment to school districts is annually appropriated from the
general fund to the commissioner of education.
new text end

new text begin (d) For purposes of this section, "taxing jurisdiction" means a political subdivision
including a county, city, town, township, school district, or special taxing district imposing
a levy on real property.
new text end

new text begin (e) For purposes of this section, "tax revenue lost" means the amount that was payable
in the year before the property became exempt.
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. 7. new text begin CLASS 4D LOW-INCOME RENTAL PROPERTY 2024 AND 2025
TRANSITION AID; APPROPRIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "4d property" means class 4d low-income rental property under Minnesota Statutes,
section 273.13, subdivision 25.
new text end

new text begin (c) "Base assessment year" means assessment year 2022.
new text end

new text begin (d) "Local unit" means a home rule charter or statutory city.
new text end

new text begin (e) "Modified transition tax capacity" means the product of (1) one minus the transition
ratio for the local unit, times (2) the transition tax capacity for the local unit.
new text end

new text begin (f) "Transition ratio" means the ratio of (1) the net tax capacity of 4d property for the
local unit in the base assessment year calculated using the classification rates and first-tier
limit in effect for 4d property for taxes payable in 2024, to (2) the net tax capacity of 4d
property for the local unit in the base assessment year calculated using the classification
rates and first-tier limit in effect for 4d property for taxes payable in 2023.
new text end

new text begin (g) "Transition tax capacity" means the greater of zero or the difference between (1) the
net tax capacity of 4d property for the local unit in the base assessment year, minus (2) two
percent of the total net tax capacity for the local unit in the base assessment year.
new text end

new text begin Subd. 2. new text end

new text begin Aid amount. new text end

new text begin In 2024 and 2025 only, transition aid for a local unit equals the
product of (1) the local unit's tax rate for taxes payable in 2023, times (2) the modified
transition tax capacity for the local unit.
new text end

new text begin Subd. 3. new text end

new text begin Administration; payment schedule. new text end

new text begin (a) For purposes of this section, net tax
capacity must be determined by the commissioner of revenue based on information available
to the commissioner as of July 15, 2023.
new text end

new text begin (b) The commissioner of revenue must notify a local unit of its transition aid amount
before August 1 of the year preceding the aid distribution year and must pay the aid in two
installments on the dates specified in Minnesota Statutes, section 477A.015.
new text end

new text begin Subd. 4. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay transition aid under this section
is annually appropriated from the general fund to the commissioner of revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aid payable in calendar year 2024
and 2025 only.
new text end

Sec. 8. new text begin 2019 LOCAL GOVERNMENT AID PENALTY FORGIVENESS; CITY OF
ROOSEVELT; APPROPRIATION.
new text end

new text begin (a) Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the city of
Roosevelt shall receive its aid payment for calendar year 2019 under Minnesota Statutes,
section 477A.013, that was withheld under Minnesota Statutes, section 477A.017, subdivision
3, provided that the state auditor certifies to the commissioner of revenue that the state
auditor received the annual financial reporting form for 2018 from the city as well as all
forms, including the audited financial statement for calendar year 2019, by June 1, 2022.
The commissioner of revenue shall make a payment of $25,410 on July 1, 2022.
new text end

new text begin (b) An amount sufficient to pay aid under this section is appropriated in fiscal year 2023
from the general fund to the commissioner of revenue. This is a onetime appropriation.
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. 9. new text begin 2021 AID PENALTY FORGIVENESS; CITY OF BENA.
new text end

new text begin Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the city of Bena
must receive the city's aid payment for calendar year 2021 under Minnesota Statutes, section
477A.013, that was withheld under Minnesota Statutes, section 477A.017, subdivision 3,
and the city's small city assistance payment for calendar year 2021 under Minnesota Statutes,
section 162.145, that was withheld under Minnesota Statutes, section 162.145, subdivision
3, paragraph (c), provided that the state auditor certifies to the commissioner of revenue
that the state auditor received the annual financial reporting form for 2020 from the city by
June 1, 2022. The commissioner of revenue must make a payment of $43,774 to the city
by June 30, 2022.
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. 10. new text begin 2021 AID PENALTY FORGIVENESS; CITY OF BOY RIVER.
new text end

new text begin Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the city of Boy
River must receive the city's aid payment for calendar year 2021 under Minnesota Statutes,
section 477A.013, that was withheld under Minnesota Statutes, section 477A.017, subdivision
3, and the city's small city assistance payment for calendar year 2021 under Minnesota
Statutes, section 162.145, that was withheld under Minnesota Statutes, section 162.145,
subdivision 3, paragraph (c), provided that the state auditor certifies to the commissioner
of revenue that the state auditor received the annual financial reporting form for 2020 from
the city by June 1, 2022. The commissioner of revenue must make a payment of $19,578
to the city by June 30, 2022.
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. 11. new text begin 2021 AID PENALTY FORGIVENESS; CITY OF ECHO.
new text end

new text begin Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the city of Echo
must receive its aid payment for calendar year 2021 under Minnesota Statutes, section
477A.013, that was withheld under Minnesota Statutes, section 477A.017, subdivision 3,
and its small city assistance payment for calendar year 2021 under Minnesota Statutes,
section 162.145, that was withheld under Minnesota Statutes, section 162.145, subdivision
3, paragraph (c), provided that the state auditor certifies to the commissioner of revenue
that the state auditor received the annual financial reporting form for 2020 from the city by
June 1, 2022. The commissioner of revenue must make a payment of $46,060 to the city
by June 30, 2022.
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. 12. new text begin 2021 AID PENALTY FORGIVENESS; CITY OF MORTON.
new text end

new text begin Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the city of Morton
must receive its aid payment for calendar year 2021 under Minnesota Statutes, section
477A.013, that was withheld under Minnesota Statutes, section 477A.017, subdivision 3,
and its small city assistance payment for calendar year 2021 under Minnesota Statutes,
section 162.145, that was withheld under Minnesota Statutes, section 162.145, subdivision
3, paragraph (c), provided that the state auditor certifies to the commissioner of revenue
that it received the annual financial reporting form for 2020 from the city by June 1, 2022.
The commissioner of revenue must make a payment of $79,476 to the city by June 30, 2022.
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

ARTICLE 6

PUBLIC FINANCE

Section 1.

Minnesota Statutes 2020, section 123B.61, is amended to read:

123B.61 PURCHASE OF CERTAIN EQUIPMENT.

The board of a district may issue general obligation certificates of indebtedness or capital
notes subject to the district debt limits to: (a) purchase vehicles, computers, telephone
systems, cable equipment, photocopy and office equipment, technological equipment for
instruction, and other capital equipment having an expected useful life at least as long as
the terms of the certificates or notes; (b) purchase computer hardware and software, without
regard to its expected useful life, whether bundled with machinery or equipment or
unbundled, together with application development services and training related to the use
of the computer; and (c) prepay special assessments. The certificates or notes must be
payable in not more than deleted text begin ten deleted text end new text begin 20 new text end years and must be issued on the terms and in the manner
determined by the board deleted text begin , except that certificates or notes issued to prepay special assessments
must be payable in not more than 20 years deleted text end . The certificates or notes may be issued by
resolution and without the requirement for an election. The certificates or notes are general
obligation bonds for purposes of section 126C.55. A tax levy must be made for the payment
of the principal and interest on the certificates or notes, in accordance with section 475.61,
as in the case of bonds. The sum of the tax levies under this section and section 123B.62
for each year must not exceed the lesser of the amount of the district's total operating capital
revenue or the sum of the district's levy in the general and community service funds excluding
the adjustments under this section for the year preceding the year the initial debt service
levies are certified. The district's general fund levy for each year must be reduced by the
sum of (1) the amount of the tax levies for debt service certified for each year for payment
of the principal and interest on the certificates or notes issued under this section as required
by section 475.61, (2) the amount of the tax levies for debt service certified for each year
for payment of the principal and interest on bonds issued under section 123B.62, and (3)
any excess amount in the debt redemption fund used to retire bonds, certificates, or notes
issued under this section or section 123B.62 after April 1, 1997, other than amounts used
to pay capitalized interest. If the district's general fund levy is less than the amount of the
reduction, the balance shall be deducted first from the district's community service fund
levy, and next from the district's general fund or community service fund levies for the
following year. A district using an excess amount in the debt redemption fund to retire the
certificates or notes shall report the amount used for this purpose to the commissioner by
July 15 of the following fiscal year. A district having an outstanding capital loan under
section 126C.69 or an outstanding debt service loan under section 126C.68 must not use an
excess amount in the debt redemption fund to retire the certificates or notes.

Sec. 2.

Minnesota Statutes 2020, section 366.095, subdivision 1, is amended to read:

Subdivision 1.

Certificates of indebtedness.

The town board may issue certificates of
indebtedness within the debt limits for a town purpose otherwise authorized by law. The
certificates shall be payable in not more than deleted text begin ten deleted text end new text begin 20 new text end years and be issued on the terms and
in the manner deleted text begin as deleted text end new text begin determined by new text end the board deleted text begin may determine, provided that notes issued for
projects that eliminate R-22, as defined in section 240A.09, paragraph (b), clause (2), must
be payable in not more than 20 years deleted text end . If the amount of the certificates to be issued exceeds
0.25 percent of the estimated market value of the town, they shall not be issued for at least
ten days after publication in a newspaper of general circulation in the town of the board's
resolution determining to issue them. If within that time, a petition asking for an election
on the proposition signed by voters equal to ten percent of the number of voters at the last
regular town election is filed with the clerk, the certificates shall not be issued until their
issuance has been approved by a majority of the votes cast on the question at a regular or
special election. A tax levy shall be made to pay the principal and interest on the certificates
as in the case of bonds.

Sec. 3.

Minnesota Statutes 2020, section 373.01, subdivision 3, is amended to read:

Subd. 3.

Capital notes.

(a) A county board may, by resolution and without referendum,
issue capital notes subject to the county debt limit to purchase capital equipment useful for
county purposes that has an expected useful life at least equal to the term of the notes. The
notes shall be payable in not more than deleted text begin ten deleted text end new text begin 20 new text end years and shall be issued on new text begin the new text end terms and in
deleted text begin a deleted text end new text begin the new text end manner new text begin determined by new text end the board deleted text begin determines deleted text end . A tax levy shall be made for payment of
the principal and interest on the notes, in accordance with section 475.61, as in the case of
bonds.

(b) For purposes of this subdivision, "capital equipment" means:

(1) public safety, ambulance, road construction or maintenance, deleted text begin and deleted text end medical equipment new text begin ,
and other capital equipment new text end ; and

(2) computer hardware and software, whether bundled with machinery or equipment or
unbundled, together with application development services and training related to the use
of the computer hardware or software.

Sec. 4.

Minnesota Statutes 2020, section 383B.117, subdivision 2, is amended to read:

Subd. 2.

Equipment acquisition; capital notes.

The board may, by resolution and
without public referendum, issue capital notes within existing debt limits for the purpose
of purchasing ambulance and other medical equipment, road construction or maintenance
equipment, public safety equipment and other capital equipment having an expected useful
life at least equal to the term of the notes issued. The notes shall be payable in not more
than deleted text begin ten deleted text end new text begin 20 new text end years and shall be issued on new text begin the new text end terms and in deleted text begin a deleted text end new text begin the new text end manner deleted text begin as deleted text end new text begin determined by new text end the
board deleted text begin determines, provided that notes issued for projects that eliminate R-22, as defined in
section 240A.09, paragraph (b), clause (2), must be payable in not more than 20 years deleted text end . The
total principal amount of the notes issued for any fiscal year shall not exceed one percent
of the total annual budget for that year and shall be issued solely for the purchases authorized
in this subdivision. A tax levy shall be made for the payment of the principal and interest
on such notes as in the case of bonds. For purposes of this subdivision, "equipment" includes
computer hardware and software, whether bundled with machinery or equipment or
unbundled. For purposes of this subdivision, the term "medical equipment" includes computer
hardware and software and other intellectual property for use in medical diagnosis, medical
procedures, research, record keeping, billing, and other hospital applications, together with
application development services and training related to the use of the computer hardware
and software and other intellectual property, all without regard to their useful life. For
purposes of determining the amount of capital notes which the county may issue in any
year, the budget of the county and Hennepin Healthcare System, Inc. shall be combined
and the notes issuable under this subdivision shall be in addition to obligations issuable
under section 373.01, subdivision 3.

Sec. 5.

Minnesota Statutes 2020, section 410.32, is amended to read:

410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL EQUIPMENT.

(a) Notwithstanding any contrary provision of other law or charter, a home rule charter
city may, by resolution and without public referendum, issue capital notes subject to the
city debt limit to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road construction
and maintenance equipment, and other capital equipment; and

(2) computer hardware and software, whether bundled with machinery or equipment or
unbundled, together with application development services and training related to the use
of the computer hardware and software.

(c) The equipment or software must have an expected useful life at least as long as the
term of the notes.

(d) The notes shall be payable in not more than deleted text begin ten deleted text end new text begin 20 new text end years and be issued on new text begin the new text end terms
and in the manner new text begin determined by new text end the city deleted text begin determines, provided that notes issued for projects
that eliminate R-22, as defined in section 240A.09, paragraph (b), clause (2), must be payable
in not more than 20 years deleted text end . The total principal amount of the capital notes issued in a fiscal
year shall not exceed 0.03 percent of the estimated market value of taxable property in the
city for that year.

(e) A tax levy shall be made for the payment of the principal and interest on the notes,
in accordance with section 475.61, as in the case of bonds.

(f) Notes issued under this section shall require an affirmative vote of two-thirds of the
governing body of the city.

(g) Notwithstanding a contrary provision of other law or charter, a home rule charter
city may also issue capital notes subject to its debt limit in the manner and subject to the
limitations applicable to statutory cities pursuant to section 412.301.

Sec. 6.

Minnesota Statutes 2020, section 412.301, is amended to read:

412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.

(a) The council may issue certificates of indebtedness or capital notes subject to the city
debt limits to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road construction
and maintenance equipment, and other capital equipment; and

(2) computer hardware and software, whether bundled with machinery or equipment or
unbundled, together with application development services and training related to the use
of the computer hardware or software.

(c) The equipment or software must have an expected useful life at least as long as the
terms of the certificates or notes.

(d) Such certificates or notes shall be payable in not more than deleted text begin ten deleted text end new text begin 20 new text end years and shall
be issued on deleted text begin such deleted text end new text begin the new text end terms and in deleted text begin such deleted text end new text begin the new text end manner deleted text begin as deleted text end new text begin determined by new text end the council deleted text begin may
determine, provided, however, that notes issued for projects that eliminate R-22, as defined
in section 240A.09, paragraph (b), clause (2), must be payable in not more than 20 years deleted text end .

(e) If the amount of the certificates or notes to be issued to finance any such purchase
exceeds 0.25 percent of the estimated market value of taxable property in the city, they shall
not be issued for at least ten days after publication in the official newspaper of a council
resolution determining to issue them; and if before the end of that time, a petition asking
for an election on the proposition signed by voters equal to ten percent of the number of
voters at the last regular municipal election is filed with the clerk, such certificates or notes
shall not be issued until the proposition of their issuance has been approved by a majority
of the votes cast on the question at a regular or special election.

(f) A tax levy shall be made for the payment of the principal and interest on such
certificates or notes, in accordance with section 475.61, as in the case of bonds.

ARTICLE 7

LOCAL SALES TAXES

Section 1.

Minnesota Statutes 2020, section 297A.99, subdivision 3, is amended to read:

Subd. 3.

Legislative authority required before voter approval; requirements for
adoption, use, termination.

(a) A political subdivision must receive legislative authority
to impose a local sales tax before submitting the tax for approval by voters of the political
subdivision. Imposition of a local sales tax is subject to approval by voters of the political
subdivision at a general election. The election must be conducted at a general election within
the two-year period after the governing body of the political subdivision has received
authority to impose the tax. If the authorizing legislation allows the tax to be imposed for
more than one project, deleted text begin there must be deleted text end new text begin the political subdivision is not required to present each
project on the ballot. The political subdivision may present new text end a separate question approving
the use of the tax revenue for each project. new text begin Regardless of whether the ballot presents a
separate question for each project, the question must state the project or projects proposed
to be funded with the tax, the amount for each project proposed to be funded with the tax,
and the estimated length of time the tax will be in effect. new text end Notwithstanding the authorizing
legislation, a project that is not approved by the voters may not be funded with the local
sales tax revenue and the termination date of the tax set in the authorizing legislation must
be reduced proportionately based on the share of that project's cost to the total costs of all
projects included in the authorizing legislation.

(b) The proceeds of the tax must be dedicated exclusively to payment of the construction
and rehabilitation costs and associated bonding costs related to the specific capital
improvement projects that were approved by the voters under paragraph (a).

(c) The tax must terminate after the revenues raised are sufficient to fund the projects
approved by the voters under paragraph (a).

(d) After a sales tax imposed by a political subdivision has expired or been terminated,
the political subdivision is prohibited from imposing a local sales tax for a period of one