HF 869

as introduced - 90th Legislature (2017 - 2018) Posted on 03/28/2017 05:05pm

A bill for an act
relating to taxation; individual income; allowing a subtraction for Social Security
benefits; amending Minnesota Statutes 2016, sections 290.0132, by adding a
subdivision; 290.091, subdivision 2; proposing coding for new law in Minnesota
Statutes, chapter 290.

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

Section 1.

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

new text begin Subd. 23. new text end

new text begin Social Security benefits. new text end

new text begin The amount of Social Security benefits, as provided
in section 290.0803, is a 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, 2016.
new text end

Sec. 2.

new text begin [290.0803] SOCIAL SECURITY SUBTRACTION.
new text end

new text begin (a) An individual is allowed a subtraction from federal taxable income equal to Social
Security benefits. The subtraction under this section is reduced by the amount of provisional
income over a threshold amount, but in no case is the subtraction less than zero. For married
couples filing joint returns and surviving spouses the threshold is $71,000. For all other
filers the threshold is $55,000.
new text end

new text begin (b) For purposes of this section, "provisional income" means modified adjusted gross
income, as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of the
amount of Social Security benefits received during the taxable year.
new text end

new text begin (c) The commissioner shall adjust the dollar amounts of the income thresholds at which
the subtraction begins to be reduced under paragraph (a) by the percentage determined
pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in section
1(f)(3)(B) the word "2016" shall be substituted for the word "1992." For 2018, the
commissioner shall then determine the percent change from the 12 months ending on August
31, 2016, to the 12 months ending on August 31, 2017, and in each subsequent year, from
the 12 months ending on August 31, 2016, to the 12 months ending on August 31 of the
year preceding the taxable year. The determination of the commissioner pursuant to this
section must not be considered a rule and is not subject to the Administrative Procedure
Act contained in chapter 14, including section 14.386. The threshold amount as adjusted
must be rounded to the nearest $100 amount. If the amount ends in $50, the amount is
rounded up to the nearest $100 amount.
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, 2016.
new text end

Sec. 3.

Minnesota Statutes 2016, 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 disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue
Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
to the extent not included in federal alternative minimum taxable income, the excess of the
deduction for depletion allowable under section 611 of the Internal Revenue Code for the
taxable year over the adjusted basis of the property at the end of the taxable year (determined
without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount
of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2; and

(6) the amount of addition required by section 290.0131, subdivisions 9 to 11;

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.0132, subdivision 2;

(2) an overpayment of state income tax as provided by section 290.0132, subdivision 3,
to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as defined
in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
in computing federal adjusted gross income;

(4) amounts subtracted from federal taxable income as provided by section 290.0132,
subdivisions 7, 9 to 15, 17, deleted text begin and deleted text end 21 new text begin , and 23 new text end ; and

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

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of
the Internal Revenue Code.

(c) "Net minimum tax" means the minimum tax imposed by this section.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
under this chapter.

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4. new text begin PURPOSE STATEMENT; TAX EXPENDITURES.
new text end

new text begin Subdivision 1. new text end

new text begin Authority. new text end

new text begin This section is intended to fulfill the requirement under
Minnesota Statutes, section 3.192, that a bill creating, renewing, or continuing a tax
expenditure provide a purpose for the tax expenditure and a standard or goal against which
its effectiveness may be measured.
new text end

new text begin Subd. 2. new text end

new text begin Social Security subtraction. new text end

new text begin The purpose of this subtraction is to increase the
amount of Social Security benefits excluded from taxable income for Minnesota taxpayers
to an amount equal to or greater than the amount that would have been excluded if the
income thresholds used at the federal level to determine the amount of benefits subject to
tax had been adjusted for inflation. Because this tax expenditure is not intended to modify
taxpayer behavior, there is no standard or goal against which its effectiveness may be
measured.
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