SF 1443

as introduced - 90th Legislature (2017 - 2018) Posted on 03/09/2017 08:40am

A bill for an act
relating to taxation; individual income; establishing a subtraction and refundable
credit for contributions to a Minnesota college savings plan; amending Minnesota Statutes 2016, section 290.0132, by adding a subdivision; 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 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 23. new text end

new text begin Contributions to 529 plan. new text end

new text begin (a) The amount equal to the contributions made
during the taxable year to an account in a plan qualifying under section 529 of the Internal
Revenue Code, reduced by any withdrawals from the account during the taxable year, is a
subtraction.
new text end

new text begin (b) The subtraction under this subdivision does not include:
new text end

new text begin (1) amounts rolled over from other college savings plan accounts; or
new text end

new text begin (2) any amount used to claim the credit allowed under section 290.0684.
new text end

new text begin (c) The subtraction under this subdivision must not exceed $3,000 for married couples
filing joint returns and $1,500 for all other filers.
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, 2016.
new text end

Sec. 2.

new text begin [290.0684] SECTION 529 COLLEGE SAVINGS PLAN CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the term "federal adjusted
gross income" has the meaning given under section 62(a) of the Internal Revenue Code,
and "nonqualified distribution" means any distribution that is includable in gross income
under section 529 of the Internal Revenue Code.
new text end

new text begin (b) "College savings plan account" means the formal record of transactions relating to
a college savings account organized under section 529 of the Internal Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) A credit of up to $500 is allowed to a resident individual
against the tax imposed by this chapter, subject to the limitations in paragraph (b). The
credit is not allowed to an individual who is eligible to be claimed as a dependent, as defined
in sections 151 and 152 of the Internal Revenue Code.
new text end

new text begin (b) The credit allowed must be calculated by applying the following rates to the amount
contributed to an account in a plan qualifying under section 529 of the Internal Revenue
Code, in a taxable year, reduced by any withdrawals from the account made during the
taxable year:
new text end

new text begin (1) 50 percent for individual filers and married couples filing a joint return who have
federal adjusted gross income of not more than $80,000;
new text end

new text begin (2) 25 percent for married couples filing a joint return who have federal adjusted gross
income over $80,000, but not more than $100,000;
new text end

new text begin (3) ten percent for married couples filing a joint return who have federal adjusted gross
income over $100,000, but not more than $120,000; and
new text end

new text begin (4) five percent for married couples filing a joint return who have federal adjusted gross
income over $120,000, but not more than $160,000.
new text end

new text begin (c) The income thresholds in paragraph (b), clauses (1) to (4), used to calculate the credit,
must be adjusted for inflation. The commissioner shall adjust by the percentage determined
under the provisions of section 1(f) of the Internal Revenue Code, except that in section
1(f)(3)(B) the word "2016" is substituted for the word "1992." For 2018, the commissioner
shall then determine the percent 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 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 subject to
chapter 14, including section 14.386.
new text end

new text begin Subd. 3. new text end

new text begin Credit transfer. new text end

new text begin (a) The credit allowed under this section must be calculated
after applying all other credits to the taxpayer's tax liability. If the amount of credit that the
taxpayer is eligible to receive under this section exceeds the taxpayer's tax liability after
applying all other credits, the commissioner shall transfer the excess amount according to
paragraph (c).
new text end

new text begin (b) The taxpayer shall provide the commissioner with information required to transfer
the excess amount calculated under paragraph (a), in a form and manner prescribed by the
commissioner.
new text end

new text begin (c) The commissioner shall transfer the excess amount calculated under paragraph (a)
to the plan administrator to be deposited to the taxpayer's college savings plan account. If
the taxpayer made contributions to more than one account, the credit amount must be
allocated based on the contributions to each account as a percentage of the total contributions
to all accounts.
new text end

new text begin Subd. 4. new text end

new text begin Allocation. new text end

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

new text begin Subd. 5. new text end

new text begin Recapture of credit. new text end

new text begin In the case of a nonqualified distribution, the taxpayer is
liable to the commissioner for the lesser of: ten percent of the amount of the nonqualified
distribution, or the sum of credits received under this section for all years.
new text end

new text begin Subd. 6. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds required by this section
is appropriated to the commissioner from the general fund.
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, 2016.
new text end