SF 1333

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; increasing individual income tax
rates; amending Minnesota Statutes 2004, section
290.06, subdivisions 2c, 2d.

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

Section 1.

Minnesota Statutes 2004, section 290.06,
subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates,
and trusts.

(a) The income taxes imposed by this chapter upon
married individuals filing joint returns and surviving spouses
as defined in section 2(a) of the Internal Revenue Code must be
computed by applying to their taxable net income the following
schedule of rates:

(1) new text begin For taxable years beginning after December 31, 2004,
and before January 1, 2006, new text end on the first deleted text begin $25,680, 5.35 deleted text end new text begin $29,070,
5.38 new text end percent new text begin , and for taxable years beginning after December 31,
2005, on the first bracket amount determined under subdivision
2d, 5.4 percent new text end ;

(2) new text begin For taxable years beginning after December 31, 2004,
and before January 1, 2006, new text end on all over deleted text begin $25,680 deleted text end new text begin $29,070 new text end , but not
over deleted text begin $102,030, 7.05 deleted text end new text begin $115,510, 7.38 new text end percent new text begin , and for taxable
years beginning after December 31, 2005, on the second bracket
amount determined under subdivision 2d, 7.7 percent new text end ;

(3) new text begin For taxable years beginning after December 31, 2004,
and before January 1, 2006, new text end on all over deleted text begin $102,030, 7.85 deleted text end new text begin $115,510,
8.28 new text end percent new text begin , and for taxable years beginning after December 31,
2005, on the third bracket amount determined under subdivision
2d, 8.7 percent new text end .

Married individuals filing separate returns, estates, and
trusts must compute their income tax by applying the above rates
to their taxable income, except that the income brackets will be
one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried
individuals must be computed by applying to taxable net income
the following schedule of rates:

(1) new text begin For taxable years beginning after December 31, 2004,
and before January 1, 2006, new text end on the first deleted text begin $17,570, 5.35 deleted text end new text begin $19,890,
5.38 new text end percent new text begin , and for taxable years beginning after December 31,
2005, on the first bracket amount determined under subdivision
2d, 5.4 percent new text end ;

(2) new text begin For taxable years beginning after December 31, 2004,
and before January 1, 2006, new text end on all over deleted text begin $17,570 deleted text end new text begin $19,890 new text end , but not
over deleted text begin $57,710, 7.05 deleted text end new text begin $65,330, 7.38 new text end percent new text begin , and for taxable years
beginning after December 31, 2005, on the second bracket amount
determined under subdivision 2d, 7.7 percent new text end ;

(3) new text begin For taxable years beginning after December 31, 2004,
and before January 1, 2006, new text end on all over deleted text begin $57,710, 7.85 deleted text end new text begin $65,330,
8.28 new text end percent new text begin , and for taxable years beginning after December 31,
2005, on the third bracket amount determined under subdivision
2d, 8.7 percent new text end .

(c) The income taxes imposed by this chapter upon unmarried
individuals qualifying as a head of household as defined in
section 2(b) of the Internal Revenue Code must be computed by
applying to taxable net income the following schedule of rates:

(1) new text begin For taxable years beginning after December 31, 2004,
and before January 1, 2006, new text end on the first deleted text begin $21,630, 5.35 deleted text end new text begin $24,490,
5.38 new text end percent new text begin , and for taxable years beginning after December 31,
2005, on the first bracket amount determined under subdivision
2d, 5.4 percent new text end ;

(2) new text begin For taxable years beginning after December 31, 2004,
and before January 1, 2006, new text end on all over deleted text begin $21,630 deleted text end new text begin $24,490 new text end , but not
over deleted text begin $86,910, 7.05 deleted text end new text begin $98,390, 7.38 new text end percent new text begin , and for taxable years
beginning after December 31, 2005, on the second bracket amount
determined under subdivision 2d, 7.7 percent new text end ;

(3) new text begin For taxable years beginning after December 31, 2004,
and before January 1, 2006, new text end on all over deleted text begin $86,910, 7.85 deleted text end new text begin $98,390,
8.28 new text end percent new text begin , and for taxable years beginning after December 31,
2005, on the third bracket amount determined under subdivision
2d, 8.7 percent new text end .

(d) In lieu of a tax computed according to the rates set
forth in this subdivision, the tax of any individual taxpayer
whose taxable net income for the taxable year is less than an
amount determined by the commissioner must be computed in
accordance with tables prepared and issued by the commissioner
of revenue based on income brackets of not more than $100. The
amount of tax for each bracket shall be computed at the rates
set forth in this subdivision, provided that the commissioner
may disregard a fractional part of a dollar unless it amounts to
50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the
entire year must compute the individual's Minnesota income tax
as provided in this subdivision. After the application of the
nonrefundable credits provided in this chapter, the tax
liability must then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source
federal adjusted gross income as defined in section 62 of the
Internal Revenue Code and increased by the additions required
under section 290.01, subdivision 19a, clauses (1), (5), and
(6), and reduced by the subtraction under section 290.01,
subdivision 19b, clause (11), and the Minnesota assignable
portion of the subtraction for United States government interest
under section 290.01, subdivision 19b, clause (1), after
applying the allocation and assignability provisions of section
290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted
gross income as defined in section 62 of the Internal Revenue
Code of 1986, increased by the amounts specified in section
290.01, subdivision 19a, clauses (1), (5), and (6), and reduced
by the amounts specified in section 290.01, subdivision 19b,
clauses (1) and (11).

Sec. 2.

Minnesota Statutes 2004, section 290.06,
subdivision 2d, is amended to read:

Subd. 2d.

Inflation adjustment of brackets.

(a) For
taxable years beginning after December 31, deleted text begin 2000 deleted text end new text begin 2006 new text end , the
minimum and maximum dollar amounts for each rate bracket for
which a tax is imposed in subdivision 2c shall be adjusted for
inflation by the percentage determined under paragraph (b). For
the purpose of making the adjustment as provided in this
subdivision all of the rate brackets provided in subdivision 2c
shall be the rate brackets as they existed for taxable years
beginning after December 31, 1999, and before January 1, 2001.
The rate applicable to any rate bracket must not be changed.
The dollar amounts setting forth the tax shall be adjusted to
reflect the changes in the rate brackets. The rate brackets as
adjusted must be rounded to the nearest $10 amount. If the rate
bracket ends in $5, it must be rounded up to the nearest $10
amount.

(b) The commissioner shall adjust the rate brackets and 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 "1999" shall be substituted for the word
"1992." For 2001, the commissioner shall then determine the
percent change from the 12 months ending on August 31, 1999, to
the 12 months ending on August 31, 2000, and in each subsequent
year, from the 12 months ending on August 31, 1999, to the 12
months ending on August 31 of the year preceding the taxable
year. The determination of the commissioner pursuant to this
subdivision shall not be considered a "rule" and shall not be
subject to the Administrative Procedure Act contained in chapter
14.

No later than December 15 of each year, the commissioner
shall announce the specific percentage that will be used to
adjust the tax rate brackets.