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SF 1401

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/26/2021 01:55pm

KEY: stricken = removed, old language.
underscored = added, new language.
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Current Version - as introduced

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A bill for an act
 relating to taxation; individual income; modifying income tax rates and brackets;
amending Minnesota Statutes 2020, section 290.06, subdivisions 2c, 2d.

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

Section 1.

Minnesota Statutes 2020, 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) On the first deleted text begin $38,770deleted text end new text begin $39,810new text end , 5.35 percent;

(2) On all over deleted text begin $38,770deleted text end new text begin $39,810new text end , but not over deleted text begin $154,020deleted text end new text begin $158,140new text end , 6.8 percent;

(3) On all over deleted text begin $154,020deleted text end new text begin $158,140new text end , but not over deleted text begin $269,010deleted text end new text begin $276,200new text end , 7.85 percent;

(4) On all over deleted text begin $269,010deleted text end new text begin $276,200new text end ,new text begin but not over $500,000,new text end 9.85 percentnew text begin ;
new text end

new text begin (5) On all over $500,000, 12.45 percentnew 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 after the adjustment required in subdivision 2d.

(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) On the first deleted text begin $26,520deleted text end new text begin $27,230new text end , 5.35 percent;

(2) On all over deleted text begin $26,520deleted text end new text begin $27,230new text end , but not over deleted text begin $87,110deleted text end new text begin $89,440new text end , 6.8 percent;

(3) On all over deleted text begin $87,110deleted text end new text begin $89,440new text end , but not over deleted text begin $161,720deleted text end new text begin $166,040new text end , 7.85 percent;

(4) On all over deleted text begin $161,720deleted text end new text begin $166,040new text end ,new text begin but not over $250,000,new text end 9.85 percentnew text begin ;
new text end

new text begin (5) On all over $250,000, 12.45 percentnew 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) On the first deleted text begin $32,650deleted text end new text begin $33,520new text end , 5.35 percent;

(2) On all over deleted text begin $32,650deleted text end new text begin $33,520new text end , but not over deleted text begin $131,190deleted text end new text begin $134,700new text end , 6.8 percent;

(3) On all over deleted text begin $131,190deleted text end new text begin $134,700new text end , but not over deleted text begin $214,980deleted text end new text begin $220,730new text end , 7.85 percent;

(4) On all over deleted text begin $214,980deleted text end new text begin $220,730new text end ,new text begin but not over $400,000,new text end 9.85 percentnew text begin ;
new text end

new text begin (5) On all over $400,000, 12.45 percentnew 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:

(i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, and
17, and 290.0137, paragraph (a); and reduced by

(ii) the Minnesota assignable portion of the subtraction for United States government
interest under section 290.0132, subdivision 2, the subtractions under sections 290.0132,
subdivisions 9, 10, 14, 15, 17, 18, and 27, and 290.0137, paragraph (c), 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, increased by:

(i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, and
17, and 290.0137, paragraph (a); and reduced by

(ii) the subtractions under sections 290.0132, subdivisions 2, 9, 10, 14, 15, 17, 18, and
27, and 290.0137, paragraph (c).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2020.
 new text end

Sec. 2.

Minnesota Statutes 2020, section 290.06, subdivision 2d, is amended to read:


Subd. 2d.

Inflation adjustment of brackets.

The commissioner shall annually adjust
the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed
in subdivision 2c as provided in section 270C.22. The statutory year is taxable year deleted text begin 2019deleted text end new text begin
2021new text end . 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. The commissioner shall determine the
rate bracket for married filing separate returns after this adjustment is done. The rate bracket
for married filing separate must be one-half of the rate bracket for married filing joint.

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