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SF 646

as introduced - 90th Legislature (2017 - 2018) Posted on 02/07/2017 08:44am

KEY: stricken = removed, old language. underscored = added, new language.

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Current Version - as introduced

A bill for an act
relating to taxation; individual income; modifying the working family credit for
American Indians living on reservations;amending Minnesota Statutes 2016,
section 290.0671, subdivision 1.

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.

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

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

(d) For individuals with two or more qualifying children, the credit equals 11 percent
of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned
income or adjusted gross income, whichever is greater, in excess of $25,130, 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 and income derived from an Indian reservation by an enrolled
member of the reservation while living on the reservation are
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 in paragraph (b), the
$21,190 in paragraph (c), and the $25,130 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, 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, 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, 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, and
before January 1, 2018, the $8,130 in paragraph (b), the $21,190 in paragraph (c), and the
$25,130 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, 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.

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