SF 28

as introduced - 90th Legislature (2017 - 2018) Posted on 02/15/2017 10:54am

A bill for an act
relating to taxation; individual income; modifying the working family credit;
amending Minnesota Statutes 2016, section 290.0671, subdivisions 1, 7.

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

Section 1.

Minnesota Statutes 2016, 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) the earned income and adjusted gross income limitations of section 32 of the Internal
Revenue Code do not apply; and

(2) a taxpayer with no qualifying children who has attained the age of 21 but not attained
the age of 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.

(b) For individuals with no qualifying children, the credit equals 2.10 three percent of
the first $6,180 $6,550 of earned income. The credit is reduced by 2.01 three percent of
earned income or adjusted gross income, whichever is greater, in excess of $8,130 $12,100,
but in no case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 9.35 12.71 percent of the
first $11,120 $8,420 of earned income. The credit is reduced by 6.02 5.2 percent of earned
income or adjusted gross income, whichever is greater, in excess of $21,190 $21,790, but
in no case is the credit less than zero.

(d) For individuals with two or more qualifying children, the credit equals 11 14.94
percent of the first $18,240 $13,810 of earned income. The credit is reduced by 10.82 9.2
percent of earned income or adjusted gross income, whichever is greater, in excess of
$25,130 $25,850, but in no case is the credit less than zero.

(e) For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income not
subject to tax under this chapter, including income excluded under section 290.0132,
subdivision 10, 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 subtractions for military pay
under section 290.0132, subdivisions 11 and 12, are not considered "earned income not
subject to tax under this chapter."

For the purposes of this paragraph, 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."

(g) For tax years beginning after December 31, 2007, and before December 31, 2010,
and for tax years beginning after December 31, 2017, the $8,130 $12,100 in paragraph (b),
the $21,190 $21,790 in paragraph (c), and the $25,130 $25,850 in paragraph (d), after being
adjusted for inflation under subdivision 7, are each increased by $3,000 for married taxpayers
filing joint returns. For tax years beginning after December 31, 2008 2017, the commissioner
shall annually adjust the $3,000 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 "2007"
shall be substituted for the word "1992." For 2009 2018, the commissioner shall then
determine the percent change from the 12 months ending on August 31, 2007, to the 12
months ending on August 31, 2008 2017, and in each subsequent year, from the 12 months
ending on August 31, 2007, to the 12 months ending on August 31 of the year preceding
the taxable year. The earned income thresholds as adjusted for inflation must be rounded
to the nearest $10. If the amount ends in $5, the amount is rounded up to the nearest $10.
The determination of the commissioner under this subdivision is not a rule under the
Administrative Procedure Act.

(h)(1) For tax years beginning after December 31, 2012, and before January 1, 2014,
the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph (d),
after being adjusted for inflation under subdivision 7, are increased by $5,340 for married
taxpayers filing joint returns; and (2) For tax years beginning after December 31, 2013
2016, and before January 1, 2018, the $8,130 $12,100 in paragraph (b), the $21,190 $21,790
in paragraph (c), and the $25,130 $25,850 in paragraph (d), after being adjusted for inflation
under subdivision 7, are each increased by $5,000 for married taxpayers filing joint returns.
For tax years beginning after December 31, 2010, and before January 1, 2012, and for tax
years beginning after December 31, 2013 2016, and before January 1, 2018, the commissioner
shall annually adjust the $5,000 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 "2008"
shall be substituted for the word "1992." For 2011 2017, the commissioner shall then
determine the percent change from the 12 months ending on August 31, 2008, to the 12
months ending on August 31, 2010 2016, and in each subsequent year, from the 12 months
ending on August 31, 2008, to the 12 months ending on August 31 of the year preceding
the taxable year. The earned income thresholds as adjusted for inflation must be rounded
to the nearest $10. If the amount ends in $5, the amount is rounded up to the nearest $10.
The determination of the commissioner under this subdivision is not a rule under the
Administrative Procedure Act.

(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.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 2.

Minnesota Statutes 2016, section 290.0671, subdivision 7, is amended to read:

Subd. 7.

Inflation adjustment.

The earned income amounts used to calculate the credit
and the income thresholds at which the maximum credit begins to be reduced in subdivision
1 must be adjusted for inflation. The commissioner shall adjust 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 "2013" "2016" shall be substituted for the word "1992." For 2015 2018,
the commissioner shall then determine the percent change from the 12 months ending on
August 31, 2013 2016, to the 12 months ending on August 31, 2014 2017, and in each
subsequent year, from the 12 months ending on August 31, 2013 2016, to the 12 months
ending on August 31 of the year preceding the taxable year. The earned income thresholds
as adjusted for inflation must be rounded to the nearest $10 amount. If the amount ends in
$5, the amount is rounded up to the nearest $10 amount. The determination of the
commissioner under this subdivision is not a rule under the Administrative Procedure Act.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2017.