SF 558

as introduced - 92nd Legislature (2021 - 2022) Posted on 02/04/2022 10:48am

A bill for an act
relating to taxation; individual income; allowing a full subtraction for Social
Security income; providing for a partial subtraction and new tax for net investment
income; amending Minnesota Statutes 2020, section 290.0132, subdivision 26;
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 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 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 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 $4,500. The maximum subtraction is reduced by 20 percent of provisional
income over $77,000. 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 $3,500.
The maximum subtraction is reduced by 20 percent of provisional income over $60,200.
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 $2,250.
The maximum subtraction is reduced by 20 percent of provisional income over $38,500.
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 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) 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) of the Internal Revenue
Code the word "2016" shall be substituted for the word "1992." For 2018, the commissioner
shall then determine the percentage 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
subdivision must not be considered a rule and is not subject to the Administrative Procedure
Act contained in chapter 14, including section 14.386. 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. 2.

new text begin [290.033] NET INVESTMENT INCOME TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Imposition. new text end

new text begin (a) An annual tax for each taxable year, computed in the
manner provided in paragraph (b), and at the rate determined under subdivision 2, is imposed
on all net investment income, as defined in the Internal Revenue Code, section 1411(c), in
excess of $250,000, for the following classes of taxpayers:
new text end

new text begin (1) resident and nonresident individuals;
new text end

new text begin (2) estates of decedents, dying domiciled within or without this state; and
new text end

new text begin (3) trusts, except those taxable as corporations, however created by residents or
nonresidents or by domestic or foreign corporations.
new text end

new text begin (b) The taxes imposed by paragraph (a) on individuals, estates, and trusts must be
computed by applying the rate determined under subdivision 2, to the individual's, estate's,
or trust's net investment income, as defined in the Internal Revenue Code, section 1411(c),
in excess of $250,000.
new text end

new text begin Subd. 2. new text end

new text begin Rate. new text end

new text begin (a) By December 1, 2022, and each year thereafter, the commissioner of
management and budget, in consultation with the commissioner of revenue, shall estimate
the reduction in revenue for the current tax year from taxes imposed on taxable net income,
as defined in section 290.01, subdivision 22, by determining the following amount:
new text end

new text begin (1) the estimated revenue for the current tax year from the taxes imposed on all taxable
net income, disregarding the subtraction allowed under section 290.0132, subdivision 26,
less
new text end

new text begin (2) the estimated revenue for the current tax year from the taxes imposed on all taxable
net income, but excluding the amount subtracted under section 290.0132, subdivision 26.
new text end

new text begin (b) By January 15, 2023, and each year thereafter, the commissioner of revenue, in
consultation with the commissioner of management and budget, shall determine and publish
a new tax rate applicable for the previous tax year on all net investment income in excess
of $250,000. The rate must be sufficient to raise revenue to offset the projected amount of
reduction in revenue determined under paragraph (a). The new rate shall be rounded to the
nearest one-tenth of one percent.
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