Minnesota Legislature
HF 721
as introduced - 93rd Legislature (2023 - 2024) Posted on 02/06/2023 06:45pm
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A bill for an act
relating to taxation; individual income; expanding the working family credit;
amending Minnesota Statutes 2022, section 290.0671, subdivisions 1, 7.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2022, section 290.0671, subdivision 1, is amended to read:
Subdivision 1.
Credit allowed.
(a) An individual who is a resident of Minnesota is
allowed a credit against the tax imposed by this chapter equal to a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Code, except that:
(1) a taxpayer with no qualifying children who has attained the age of 19, but not attained
age 65 before the close of the taxable year and is otherwise eligible for a credit under section
32 of the Internal Revenue Code may also receive a credit; and
(2) a taxpayer who is otherwise eligible for a credit under section 32 of the Internal
Revenue Code remains eligible for the credit even if the taxpayer's earned income or adjusted
gross income exceeds the income limitation under section 32 of the Internal Revenue Code.
(b) For individuals with no qualifying children, the credit equals deleted text begin 3.9deleted text end new text begin 9.0new text end percent of the
first deleted text begin $7,150deleted text end new text begin $7,000new text end of earned income. The credit is reduced by deleted text begin 2.0deleted text end new text begin 3.5new text end percent of earned
income or adjusted gross income, whichever is greater, in excess of the phaseout threshold,
but in no case is the credit less than zero.
(c) For individuals with one qualifying child, the credit equals deleted text begin 9.35deleted text end new text begin 12.5new text end percent of the
first deleted text begin $11,950deleted text end new text begin $12,500new text end of earned income. The credit is reduced by deleted text begin 6.0deleted text end new text begin 7.25new text end percent of earned
income or adjusted gross income, whichever is greater, in excess of the phaseout threshold,
but in no case is the credit less than zero.
(d) For individuals with two qualifying children, the credit equals deleted text begin 11deleted text end new text begin 14new text end percent of the
first deleted text begin $19,600deleted text end new text begin $19,000new text end of earned income. The credit is reduced by deleted text begin 10.5deleted text end new text begin 10.75new text end percent of
earned income or adjusted gross income, whichever is greater, in excess of the phaseout
threshold, but in no case is the credit less than zero.
(e) For individuals with three or more qualifying children, the credit equals deleted text begin 12.5deleted text end new text begin 15new text end
percent of the first $20,000 of earned income. The credit is reduced by deleted text begin 10.5deleted text end new text begin 11.5new text end percent
of earned income or adjusted gross income, whichever is greater, in excess of the phaseout
threshold, but in no case is the credit less than zero.
(f) For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).
(g) For a person who was a resident for the entire tax year and has earned income not
subject to tax under this chapter, deleted text begin including income excluded under section 290.0132,
subdivision 10,deleted text end the credit must be allocated based on the ratio of federal adjusted gross
income reduced by the earned income not subject to tax under this chapter over federal
adjusted gross income. For purposes of this paragraph, the following clauses are not
considered "earned income not subject to tax under this chapter":
(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12;
(2) the exclusion of combat pay under section 112 of the Internal Revenue Code; and
(3) income derived from an Indian reservation by an enrolled member of the reservation
while living on the reservation.
(h) For the purposes of this section, the phaseout threshold equals:
(1) deleted text begin $14,570deleted text end new text begin $25,000new text end for married taxpayers filing joint returns with no qualifying children;
(2) deleted text begin $8,730deleted text end new text begin $17,000new text end for all other taxpayers with no qualifying children;
(3) deleted text begin $28,610deleted text end new text begin $33,810new text end for married taxpayers filing joint returns with one qualifying child;
(4) deleted text begin $22,770deleted text end new text begin $25,810new text end for all other taxpayers with one qualifying child;
(5) deleted text begin $32,840deleted text end new text begin $39,000new text end for married taxpayers filing joint returns with two qualifying
children;
(6) deleted text begin $27,000deleted text end new text begin $31,000new text end for all other taxpayers with two qualifying children;
(7) deleted text begin $33,140deleted text end new text begin $43,000new text end for married taxpayers filing joint returns with three or more
qualifying children; and
(8) deleted text begin $27,300deleted text end new text begin $35,000new text end for all other taxpayers with three or more qualifying children.
(i) The commissioner shall construct tables showing the amount of the credit at various
income levels and make them available to taxpayers. The tables shall follow the schedule
contained in this subdivision, except that the commissioner may graduate the transition
between income brackets.
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. 2.
Minnesota Statutes 2022, section 290.0671, subdivision 7, is amended to read:
Subd. 7.
Inflation adjustment.
The commissioner shall annually adjust the earned
income amounts used to calculate the credit and the phase-out thresholds in subdivision 1
as provided in section 270C.22. The statutory year is taxable year deleted text begin 2019deleted text end new text begin 2023new 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