Engrossments
Introduction		Posted on 02/15/2023
1st Engrossment		Posted on 04/28/2023

ARTICLE 1

INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

Minnesota Statutes 2022, section 13.4967, is amended by adding a subdivision
to read:

new text begin Subd. 9. new text end

new text begin New markets tax credit. new text end

new text begin Disclosure of information regarding issuance of new
market tax credit certificates is governed under section 270B.14, subdivision 2, paragraph
(a), clause (4).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2022, section 41B.0391, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given.

(b) "Agricultural assets" means agricultural land, livestock, facilities, buildings, and
machinery used for farming in Minnesota.

(1) is a resident of Minnesota;

(2) is seeking entry, or has entered within the last ten years, into farming;

(3) intends to farm land located within the state borders of Minnesota;

(4) new text begin except as provided in subdivision 2, paragraph (f), new text end is not and whose spouse is not a
family member of the owner of the agricultural assets from whom the beginning farmer is
seeking to purchase or rent agricultural assets;

(5) new text begin except as provided in subdivision 2, paragraph (f), new text end is not and whose spouse is not a
family member of a partner, member, shareholder, or trustee of the owner of agricultural
assets from whom the beginning farmer is seeking to purchase or rent agricultural assets;
and

(6) meets the following eligibility requirements as determined by the authority:

(i) has a net worth that does not exceed the limit provided under section 41B.03,
subdivision 3, paragraph (a), clause (2);

(ii) provides the majority of the day-to-day physical labor and management of the farm;

(iii) has, by the judgment of the authority, adequate farming experience or demonstrates
knowledge in the type of farming for which the beginning farmer seeks assistance from the
authority;

(iv) demonstrates to the authority a profit potential by submitting projected earnings
statements;

(v) asserts to the satisfaction of the authority that farming will be a significant source
of income for the beginning farmer;

(vi) is enrolled in or has completed within ten years of their first year of farming a
financial management program approved by the authority or the commissioner of agriculture;

(vii) agrees to notify the authority if the beginning farmer no longer meets the eligibility
requirements within the three-year certification period, in which case the beginning farmer
is no longer eligible for credits under this section; and

(viii) has other qualifications as specified by the authority.

The authority may waive the requirement in item (vi) if the participant requests a waiver
and has a four-year degree in an agricultural program or related field, reasonable agricultural
job-related experience, or certification as an adult farm management instructor.

(d) "Family member" means a family member within the meaning of the Internal Revenue
Code, section 267(c)(4).

(e) "Farm product" means plants and animals useful to humans and includes, but is not
limited to, forage and sod crops, oilseeds, grain and feed crops, dairy and dairy products,
poultry and poultry products, livestock, fruits, and vegetables.

(f) "Farming" means the active use, management, and operation of real and personal
property for the production of a farm product.

(g) "Owner of agricultural assets" means an individual, trust, or pass-through entity that
is the owner in fee of agricultural land or has legal title to any other agricultural asset. Owner
of agricultural assets does not mean an equipment dealer, livestock dealer defined in section
17A.03, subdivision 7, or comparable entity that is engaged in the business of selling
agricultural assets for profit and that is not engaged in farming as its primary business
activity. An owner of agricultural assets approved and certified by the authority under
subdivision 4 must notify the authority if the owner no longer meets the definition in this
paragraph within the three year certification period and is then no longer eligible for credits
under this section.

(h) "Resident" has the meaning given in section 290.01, subdivision 7.

(i) "Share rent agreement" means a rental agreement in which the principal consideration
given to the owner of agricultural assets is a predetermined portion of the production of
farm products produced from the rented agricultural assets and which provides for sharing
production costs or risk of loss, or both.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 3.

Minnesota Statutes 2022, section 41B.0391, subdivision 2, is amended to read:

Subd. 2.

Tax credit for owners of agricultural assets.

(a) An owner of agricultural
assets may take a credit against the tax due under chapter 290 for the sale or rental of
agricultural assets to a beginning farmer in the amount allocated by the authority under
subdivision 4. An owner of agricultural assets is eligible for allocation of a credit equal to:

(1) deleted text begin fivedeleted text end new text begin eightnew text end percent of the lesser of the sale price or the fair market value of the
agricultural asset, up to a maximum of deleted text begin $32,000deleted text end new text begin $50,000new text end ;

(2) ten percent of the gross rental income in each of the first, second, and third years of
a rental agreement, up to a maximum of $7,000 per year; or

(3) 15 percent of the cash equivalent of the gross rental income in each of the first,
second, and third years of a share rent agreement, up to a maximum of $10,000 per year.

(b) A qualifying rental agreement includes cash rent of agricultural assets or a share rent
agreement. The agricultural asset must be rented at prevailing community rates as determined
by the authority.

(c) The credit may be claimed only after approval and certification by the authority, and
is limited to the amount stated on the certificate issued under subdivision 4. An owner of
agricultural assets must apply to the authority for certification and allocation of a credit, in
a form and manner prescribed by the authority.

(d) An owner of agricultural assets or beginning farmer may terminate a rental agreement,
including a share rent agreement, for reasonable cause upon approval of the authority. If a
rental agreement is terminated without the fault of the owner of agricultural assets, the tax
credits shall not be retroactively disallowed. In determining reasonable cause, the authority
must look at which party was at fault in the termination of the agreement. If the authority
determines the owner of agricultural assets did not have reasonable cause, the owner of
agricultural assets must repay all credits received as a result of the rental agreement to the
commissioner of revenue. The repayment is additional income tax for the taxable year in
which the authority makes its decision or when a final adjudication under subdivision 5,
paragraph (a), is made, whichever is later.

(e) The credit is limited to the liability for tax as computed under chapter 290 for the
taxable year. If the amount of the credit determined under this section for any taxable year
exceeds this limitation, the excess is a beginning farmer incentive credit carryover according
to section 290.06, subdivision 37.

new text begin (f) For purposes of the credit for the sale of agricultural land only, the family member
definitional exclusions in subdivision 1, paragraph (c), clauses (4) and (5), do not apply.
For a sale to a family member to qualify for the credit, the sales price of the agricultural
land must equal or exceed the assessed value of the land as of the date of the sale. For
purposes of this paragraph, "sale to a family member" means a sale to a beginning farmer
in which the beginning farmer or the beginning farmer's spouse is a family member of:
new text end

new text begin (1) the owner of the agricultural land; or
new text end

new text begin (2) a partner, member, shareholder, or trustee of the owner of the agricultural land.
new text end

new text begin (g) For a sale to a socially disadvantaged farmer or rancher, the credit rate under paragraph
(a), clause (1), is twelve percent rather than eight percent. For the purposes of this section,
"socially disadvantaged farmer or rancher" has the meaning given in United States Code,
title 7, section 2279(a)(5).
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, 2022.
new text end

Sec. 4.

Minnesota Statutes 2022, section 41B.0391, subdivision 4, is amended to read:

Subd. 4.

Authority duties.

(a) The authority shall:

(1) approve and certify or recertify beginning farmers as eligible for the program under
this section;

(2) approve and certify or recertify owners of agricultural assets as eligible for the tax
credit under subdivision 2 subject to the allocation limits in paragraph (c);

(3) provide necessary and reasonable assistance and support to beginning farmers for
qualification and participation in financial management programs approved by the authority;

(4) refer beginning farmers to agencies and organizations that may provide additional
pertinent information and assistance; and

(5) notwithstanding section 41B.211, the Rural Finance Authority must share information
with the commissioner of revenue to the extent necessary to administer provisions under
this subdivision and section 290.06, subdivisions 37 and 38. The Rural Finance Authority
must annually notify the commissioner of revenue of approval and certification or
recertification of beginning farmers and owners of agricultural assets under this section.
For credits under subdivision 2, the notification must include the amount of credit approved
by the authority and stated on the credit certificate.

(b) The certification of a beginning farmer or an owner of agricultural assets under this
section is valid for the year of the certification and the two following years, after which
time the beginning farmer or owner of agricultural assets must apply to the authority for
recertification.

(c) For credits for owners of agricultural assets allowed under subdivision 2, the authority
must not allocate more than deleted text begin $5,000,000 for taxable years beginning after December 31,
2017, and before January 1, 2019, and must not allocate more than $6,000,000 for taxable
years beginning after December 31, 2018deleted text end new text begin $4,000,000 for each taxable yearnew text end . The authority
must allocate credits on a first-come, first-served basis beginning on January 1 of each year,
except that recertifications for the second and third years of credits under subdivision 2,
paragraph (a), clauses (1) and (2), have first priority. Anynew text begin amount authorized but not allocated
for taxable years ending before January 1, 2024, are canceled and are not allocated for future
taxable years. For taxable years beginning after December 31, 2023, anynew text end amount authorized
but not allocated in any taxable year does not cancel and is added to the allocation for the
next taxable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 5.

Minnesota Statutes 2022, section 41B.0391, subdivision 6, is amended to read:

Subd. 6.

Report to legislature.

(a) No later than February 1, deleted text begin 2022deleted text end new text begin 2024new text end , the Rural
Finance Authority, in consultation with the commissioner of revenue, must provide a report
to the chairs and ranking minority members of the legislative committees having jurisdiction
over agriculture, economic development, rural development, and taxes, in compliance with
sections 3.195 and 3.197, on the beginning farmer tax credits under this section issued in
tax years beginning after December 31, 2017, and before January 1, deleted text begin 2022deleted text end new text begin 2024new text end .

(b) The report must include background information on beginning farmers in Minnesota
and any other information the commissioner and authority find relevant to evaluating the
effect of the credits on increasing opportunities for and the number of beginning farmers.

(1) the number and amount of credits issued under each clause;

(2) the geographic distribution of credits issued under each clause;

(3) the type of agricultural assets for which credits were issued under clause (1);

(4) the number and geographic distribution of beginning farmers whose purchase or
rental of assets resulted in credits for the seller or owner of the asset;

(5) the number and amount of credits disallowed under subdivision 2, paragraph (d);

(6) data on the number of beginning farmers by geographic region in calendar years
2017 through deleted text begin 2021deleted text end new text begin 2023, including:
new text end

new text begin (i) the number of beginning farmers by race and ethnicity, as those terms are applied in
the 2020 United States Census; and
new text end

new text begin (ii) to the extent available, the number of beginning farmers who are members of a
socially disadvantaged group, as defined in United States Code, title 7, section 2279(a)(6)new text end ;
and

(7) the number and amount of credit applications that exceeded the allocation available
in each year.

(d) For credits issued under subdivision 3, the report must include:

(1) the number and amount of credits issued;

(2) the geographic distribution of credits;

(3) a listing and description of each approved financial management program for which
credits were issued; and

(4) a description of the approval procedure for financial management programs not on
the list maintained by the authority, as provided in subdivision 3, paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2022, section 116J.401, subdivision 3, is amended to read:

Subd. 3.

Classificationnew text begin and releasenew text end of data on individuals.

new text begin (a) new text end Data collected on
individuals pursuant to a program operated by the commissioner are private data on
individuals as defined in section 13.02, subdivision 12, unless more restrictively classified
by law.

new text begin (b) The commissioner may release to the Department of Revenue data on individuals to
the extent required to administer the new markets tax credit under chapter 116X and sections
290.0693 and 297I.20, subdivision 6.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

Minnesota Statutes 2022, section 116J.8737, subdivision 5, is amended to read:

Subd. 5.

Credit allowed.

(a) A qualified investor or qualified fund is eligible for a credit
equal to 25 percent of the qualified investment in a qualified small business. Investments
made by a pass-through entity qualify for a credit only if the entity is a qualified fund. The
commissioner must not allocate to qualified investors or qualified funds more than the dollar
amount in credits allowed for the taxable years listed in paragraph (i). For each taxable year,
50 percent must be allocated to credits for qualified investments in qualified greater
Minnesota businesses and minority-owned, women-owned, or veteran-owned qualified
small businesses in Minnesota. Any portion of a taxable year's credits that is reserved for
qualified investments in greater Minnesota businesses and minority-owned, women-owned,
or veteran-owned qualified small businesses in Minnesota that is not allocated by September
30 of the taxable year is available for allocation to other credit applications beginning on
October 1. Any portion of a taxable year's credits that is not allocated by the commissioner
does not cancel and may be carried forward to subsequent taxable years until all credits
have been allocated.

(b) The commissioner may not allocate more than a total maximum amount in credits
for a taxable year to a qualified investor for the investor's cumulative qualified investments
as an individual qualified investor and as an investor in a qualified fund; for married couples
filing joint returns the maximum is $250,000, and for all other filers the maximum is
$125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
over all taxable years for qualified investments in any one qualified small business.

(c) The commissioner may not allocate a credit to a qualified investor either as an
individual qualified investor or as an investor in a qualified fund if, at the time the investment
is proposed:

(1) the investor is an officer or principal of the qualified small business; or

(2) the investor, either individually or in combination with one or more members of the
investor's family, owns, controls, or holds the power to vote 20 percent or more of the
outstanding securities of the qualified small business.

A member of the family of an individual disqualified by this paragraph is not eligible for a
credit under this section. For a married couple filing a joint return, the limitations in this
paragraph apply collectively to the investor and spouse. For purposes of determining the
ownership interest of an investor under this paragraph, the rules under section 267(c) and
267(e) of the Internal Revenue Code apply.

(d) Applications for tax credits must be made available on the department's website by
November 1 of the preceding year.

(e) Qualified investors and qualified funds must apply to the commissioner for tax credits.
Tax credits must be allocated to qualified investors or qualified funds in the order that the
tax credit request applications are filed with the department. The commissioner must approve
or reject tax credit request applications within 15 days of receiving the application. The
investment specified in the application must be made within 60 days of the allocation of
the credits. If the investment is not made within 60 days, the credit allocation is canceled
and available for reallocation. A qualified investor or qualified fund that fails to invest as
specified in the application, within 60 days of allocation of the credits, must notify the
commissioner of the failure to invest within five business days of the expiration of the
60-day investment period.

(f) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified investors or
qualified funds file tax credit request applications on the same day, and the aggregate amount
of credit allocation claims exceeds the aggregate limit of credits under this section or the
lesser amount of credits that remain unallocated on that day, then the credits must be allocated
among the qualified investors or qualified funds who filed on that day on a pro rata basis
with respect to the amounts claimed. The pro rata allocation for any one qualified investor
or qualified fund is the product obtained by multiplying a fraction, the numerator of which
is the amount of the credit allocation claim filed on behalf of a qualified investor and the
denominator of which is the total of all credit allocation claims filed on behalf of all
applicants on that day, by the amount of credits that remain unallocated on that day for the
taxable year.

(g) A qualified investor or qualified fund, or a qualified small business acting on their
behalf, must notify the commissioner when an investment for which credits were allocated
has been made, and the taxable year in which the investment was made. A qualified fund
must also provide the commissioner with a statement indicating the amount invested by
each investor in the qualified fund based on each investor's share of the assets of the qualified
fund at the time of the qualified investment. After receiving notification that the investment
was made, the commissioner must issue credit certificates for the taxable year in which the
investment was made to the qualified investor or, for an investment made by a qualified
fund, to each qualified investor who is an investor in the fund. The certificate must state
that the credit is subject to revocation if the qualified investor or qualified fund does not
hold the investment in the qualified small business for at least three years, consisting of the
calendar year in which the investment was made and the two following years. The three-year
holding period does not apply if:

(1) the investment by the qualified investor or qualified fund becomes worthless before
the end of the three-year period;

(2) 80 percent or more of the assets of the qualified small business is sold before the end
of the three-year period;

(3) the qualified small business is sold before the end of the three-year period;

(4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period; or

(5) the qualified investor dies before the end of the three-year period.

(h) The commissioner must notify the commissioner of revenue of credit certificates
issued under this section.

(i) The credit allowed under this subdivision is effective as follows:

(1) $10,000,000 for taxable years beginning after December 31, 2020, and before January
1, 2022; and

(2) $5,000,000 for taxable years beginning after December 31, 2021, and before January
1, deleted text begin 2023deleted text end new text begin 2027new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 8.

Minnesota Statutes 2022, section 116J.8737, subdivision 12, is amended to read:

Subd. 12.

Sunset.

This section expires for taxable years beginning after December 31,
deleted text begin 2022deleted text end new text begin 2026new text end , except that reporting requirements under subdivision 6 and revocation of credits
under subdivision 7 remain in effect through deleted text begin 2024deleted text end new text begin 2028new text end for qualified investors and qualified
funds, and through deleted text begin 2026deleted text end new text begin 2030new text end for qualified small businesses, reporting requirements under
subdivision 9 remain in effect through deleted text begin 2022deleted text end new text begin 2026new text end , and the appropriation in subdivision 11
remains in effect through deleted text begin 2026deleted text end new text begin 2030new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

Minnesota Statutes 2022, section 116U.27, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given.

(b) "Allocation certificate" means a certificate issued by the commissioner to a taxpayer
upon receipt of an initial application for a credit for a project that has not yet been completed.

(d) "Commissioner" means the commissioner of employment and economic development.

(e) "Credit certificate" means a certificate issued by the commissioner upon submission
of the cost verification report in subdivision 4, paragraph (e).

(f) "Eligible production costs" means eligible production costs as defined in section
116U.26, paragraph (b), clause (1), incurred in Minnesota that are directly attributable to
the production of a film project in Minnesota.

(g) "Film" has the meaning given in section 116U.26, paragraph (b), clause (2).

(h) "Project" means a film:

(1) that includes the promotion of Minnesota;

(2) for which the taxpayer has expended at least $1,000,000 in deleted text begin the taxable yeardeleted text end new text begin a
consecutive 12-month period beginning when expenditures are first paid in Minnesotanew text end for
eligible production costs; and

(3) to the extent practicable, that employs Minnesota residents.

(i) "Promotion of Minnesota" or "promotion" means visible display of a static or animated
logo, approved by the commissioner and lasting approximately five seconds, that promotes
Minnesota within its presentation in the end credits before the below-the-line crew crawl
for the life of the project.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 10.

Minnesota Statutes 2022, section 116U.27, subdivision 4, is amended to read:

Subd. 4.

Applications; allocations.

(a) To qualify for a credit under this section, a
taxpayer must submit to the commissioner an application for a credit in the form prescribed
by the commissioner, in consultation with the commissioner of revenue.

(b) Upon approving an application for a credit that meets the requirements of this section,
the commissioner shall issue allocation certificates that:

(1) verify eligibility for the credit;

(2) state the amount of credit anticipated for the eligible project, with the credit amount
up to 25 percent of eligible project costs; and

(3) state the taxable year in which the credit is allocated.

The commissioner must consult with the Minnesota Film and TV Board prior to issuing an
allocation certificate.

(c) The commissioner must not issue allocation certificates for more than deleted text begin $4,950,000deleted text end new text begin
$9,950,000new text end of credits each year. deleted text begin If the entire amount is not allocated in that taxable year,
any remaining amount is available for allocation for the four following taxable years until
the entire allocation has been madedeleted text end new text begin Any amount authorized but not allocated for taxable
years ending before January 1, 2024, are canceled and are not allocated for future taxable
years. For taxable years beginning after December 31, 2023, any amount authorized but not
allocated in any taxable year does not cancel and is added to the allocation for the next
taxable yearnew text end . The commissioner must not award any credits for taxable years beginning
after December 31, deleted text begin 2024deleted text end new text begin 2032new text end , and any unallocated amounts cancel on that date.

(d) The commissioner must allocate credits on a first-come, first-served basis.

(e) Upon completion of a project, the taxpayer shall submit to the commissioner a report
prepared by an independent certified public accountant licensed in the state of Minnesota
to verify the amount of eligible production costs related to the project. The report must be
prepared in accordance with generally accepted accounting principles. Upon receipt and
review of the cost verification report, the commissioner shall determine the final amount
of eligible production costs and issue a credit certificate to the taxpayer. The credit may not
exceed the anticipated credit amount on the allocation certificate. If the credit is less than
the anticipated amount on the allocation credit, the difference is returned to the amount
available for allocation under paragraph (c). To claim the credit under section 290.06,
subdivision 39, or 297I.20, subdivision 4, a taxpayer must include a copy of the credit
certificate as part of the taxpayer's return.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for allocation certificates issued after
December 31, 2022.
new text end

Sec. 11.

Minnesota Statutes 2022, section 116U.27, subdivision 7, is amended to read:

Subd. 7.

Expiration.

Subdivisions 1 to 5 expire January 1, deleted text begin 2025deleted text end new text begin 2033new text end , for taxable years
beginning after December 31, deleted text begin 2024deleted text end new text begin 2032new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for allocation certificates issued after
December 31, 2022.
new text end

Sec. 12.

new text begin [116X.01] NEW MARKETS TAX 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 following terms have
the meanings given.
new text end

new text begin (b) "Applicable percentage" means zero percent for each of the first two credit allowance
dates and ten percent for each of the final five credit allowance dates.
new text end

new text begin (c) "CDFI fund" means the Community Development Financial Institutions fund of the
United States Department of the Treasury.
new text end

new text begin (d) "Commissioner" means the commissioner of employment and economic development.
new text end

new text begin (e) "Credit allowance date" means:
new text end

new text begin (1) the date on which a qualified equity investment is initially made; and
new text end

new text begin (2) each of the six anniversary dates thereafter.
new text end

new text begin (f) "Greater Minnesota allocation" means $60,000,000 in qualified equity investment
authority to be awarded for investment in qualified active low-income community businesses
with principal business operations in a greater Minnesota county.
new text end

new text begin (g) "Greater Minnesota county" means any county located in Minnesota that is not a
metropolitan county.
new text end

new text begin (h) "Internal Revenue Code" has the meaning given in section 290.01, subdivision 31.
new text end

new text begin (i) "Metropolitan allocation" means $60,000,000 in qualified equity investment authority
to be awarded for investment in qualified active low-income community businesses with
principal business operations in a metropolitan county.
new text end

new text begin (j) "Metropolitan county" has the meaning given in section 473.121, subdivision 4.
new text end

new text begin (k) "Minnesota qualified community development entity" means a qualified community
development entity that is or whose controlling entity is headquartered in this state.
new text end

new text begin (l) "Principal business operations" means the physical location of a business where at
least 60 percent of a qualified active low-income community business' employees work.
An out-of-state business that has agreed to relocate employees or a Minnesota business that
has agreed to hire employees using the proceeds of a qualified low-income community
investment to establish principal business operations in Minnesota is deemed to have principal
business operations in Minnesota if the business satisfies the requirements of this paragraph
within 180 days of receiving the qualified low-income community investment or another
date as agreed by the business and the commissioner.
new text end

new text begin (m) "Purchase price" means the amount paid to the qualified community development
entity for a qualified equity investment.
new text end

new text begin (n) "Qualified active low-income community business" has the meaning given in section
45D of the Internal Revenue Code, except that businesses or projects may not derive more
than 15 percent or more of its annual revenue from the rental or sale of real estate. This
exception does not apply if the business is controlled by or is under common control with
another business, and the business is a primary tenant of real estate leased from that other
business.
new text end

new text begin (o) "Qualified community development entity" has the meaning given in section 45D
of the Internal Revenue Code, provided that the entity:
new text end

new text begin (1) has previously entered into an allocation agreement with the CDFI fund with respect
to credits authorized by section 45D of the Internal Revenue Code; and
new text end

new text begin (2) includes the state within the service area set forth in the allocation agreement.
new text end

new text begin (p) "Qualified equity investment" means an equity investment in a qualified community
development entity, if the equity investment:
new text end

new text begin (1) is acquired after the effective date of this section at its original issuance solely in
exchange for cash, or if the investment met the requirements of this provision while under
the possession of a prior holder;
new text end

new text begin (2) has at least 100 percent of its cash purchase price used by the qualified community
development entity to make qualified low-income community investments in qualified
active low-income community businesses that have their principal business operations in
the state of Minnesota; and
new text end

new text begin (3) is:
new text end

new text begin (i) designated by the qualified community development entity as a qualified equity
investment under this section; and
new text end

new text begin (ii) except for a Minnesota qualified community development entity, is at least 50 percent
designated by the qualified community development entity as a qualified equity investment
eligible for the federal credit under section 45D of the Internal Revenue Code.
new text end

new text begin (q) "Qualified low-income community investment" means any capital or equity investment
in, or loan to, any qualified active low-income community business.
new text end

new text begin (r) "Tax credit" or "credit" means a credit against the tax imposed by chapter 290 or
297I.
new text end

new text begin (s) "Taxpayer" means a taxpayer as defined in section 290.01, subdivision 6, or a taxpayer
as defined in section 297I.01, subdivision 16.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed; qualification; limitation. new text end

new text begin (a) An entity is eligible for a credit
against the tax imposed under chapter 290 or 297I, subject to the requirements of this section.
The credit may be claimed against the tax imposed by chapter 290 or 297I, but not both.
new text end

new text begin (b) The credit equals the applicable percentage for each credit allowance date multiplied
by the purchase price paid to the qualified community development entity for the qualified
equity investment.
new text end

new text begin Subd. 3. new text end

new text begin Requirements. new text end

new text begin (a) A qualified community development entity that seeks to
have an equity investment designated as a qualified equity investment and be eligible for
the credit under this section must:
new text end

new text begin (1) have an allocation agreement, that is currently in effect, executed by the applicant
or its controlling entity, and the CDFI fund;
new text end

new text begin (2) be certified as a qualified community development entity by the CDFI fund; and
new text end

new text begin (3) meet all requirements under section 45D of the Internal Revenue Code.
new text end

new text begin (b) An entity that seeks to be eligible for the credit under this section must:
new text end

new text begin (1) hold a qualified equity investment on a credit allowance date of that investment; and
new text end

new text begin (2) meet all requirements under section 45D of the Internal Revenue Code.
new text end

new text begin Subd. 4. new text end

new text begin Application. new text end

new text begin (a) A qualified community development entity that seeks to have
an equity investment designated as a qualified equity investment under this section shall
apply to the commissioner on a form provided by the commissioner that includes:
new text end

new text begin (1) the name, address, and tax identification number of the applicant, and evidence of
the applicant's certification as a qualified community development entity by the CDFI fund;
new text end

new text begin (2) a copy of the allocation agreement executed by the applicant or its controlling entity,
and the CDFI fund;
new text end

new text begin (3) a certificate executed by an executive officer of the applicant attesting that the
allocation agreement remains in effect and has not been revoked or canceled by the CDFI
fund;
new text end

new text begin (4) a description of the proposed amount, structure, and purchaser of the equity
investment;
new text end

new text begin (5) for a qualified community development entity that is not a Minnesota qualified
community development entity, the amount of qualified equity investment authority sought
under the greater Minnesota allocation or the metropolitan allocation, as applicable, which
collectively may not exceed the applicant or its controlling entity's available qualified equity
investment authority under section 45D of the Internal Revenue Code multiplied by two;
new text end

new text begin (6) if required by clause (5), evidence of the applicant or its controlling entity's available
qualified equity investment authority under section 45D of the Internal Revenue Code; and
new text end

new text begin (7) a nonrefundable application fee of $5,000 paid to the commissioner to offset costs
associated with personnel and administrative expenses related to administering the credit.
new text end

new text begin (b) The commissioner shall set a date to accept applications not less than 30 days but
not more than 45 days after the date the CDFI fund announces allocation awards under a
notice of funding availability that was published in the Federal Register in November 2022.
new text end

new text begin (c) A qualified community development entity may apply for both a greater Minnesota
allocation and a metropolitan allocation.
new text end

new text begin Subd. 5. new text end

new text begin Certification and timing of qualified equity investments. new text end

new text begin (a) Within 30 days
after receipt of an application, the commissioner shall grant or deny the application in full
or in part. If the commissioner denies any part of the application, the commissioner shall
inform the applicant of the grounds for the denial. If the applicant provides the information
required by the commissioner or otherwise completes its application within 15 days of the
notice of denial, the application is deemed complete as of the original date of submission.
If the applicant fails to provide the requested information or complete its application within
the 15-day period, the applicant may submit a new application.
new text end

new text begin (b) If the application is deemed complete, the commissioner shall certify the proposed
equity investment as a qualified equity investment eligible for a credit under this section.
The commissioner shall provide written notice of the certification to the qualified community
development entity. Once the qualified community development entity identifies the
taxpayers who are allocated credits and their respective credit amounts, the qualified
community development entity shall provide a notice of allocation to the commissioner.
The commissioner shall provide a certification to the qualified community development
entity and each taxpayer containing the credit amount and utilization schedule for which
the taxpayer is eligible. If the taxpayer's eligibility to utilize the credits change due to a
transfer of a qualified equity investment or a change in allocation pursuant to paragraph (c),
the qualified community development entity shall notify the commissioner of the change.
new text end

new text begin (c) The aggregate amount of credits allowed to all certified qualified equity investments
in greater Minnesota counties is $30,000,000. The aggregate amount of credits allowed to
all certified qualified equity investments in metropolitan counties is $30,000,000. The
commissioner shall certify applications for the greater Minnesota allocation and the
metropolitan allocation in proportionate percentages based upon the ratio of the amount of
qualified equity investments requested in applications for each allocation to the total amount
of qualified equity investments requested in all applications for each allocation received on
the same day.
new text end

new text begin (d) If a pending request cannot be fully certified, the commissioner shall certify the
portion that may be certified unless the qualified community development entity elects to
withdraw its request rather than receive a partial award of qualified equity investment
authority.
new text end

new text begin (e) A qualified community development entity must make its qualified equity investment
by January 1, 2026.
new text end

new text begin (f) An approved applicant may transfer all or a portion of its certified qualified equity
investment authority to its controlling entity or any affiliate or partner of the controlling
entity that is also a qualified community development entity if the applicant provides the
information required in the application with respect to the transferee and the applicant
notifies the commissioner in the notice required by paragraph (g). Within 90 days after
receiving notice of certification under paragraph (b), the applicant or transferee shall:
new text end

new text begin (1) issue qualified equity investments in an amount equal to the total amount of certified
qualified equity investment authority;
new text end

new text begin (2) receive cash in the amount of the certified qualified equity investment; and
new text end

new text begin (3) if the applicant or transferee is not a Minnesota qualified community development
entity, designate 50 percent of the qualified equity investment authority as a qualified equity
investment under section 45D of the Internal Revenue Code.
new text end

new text begin The entity to which the certified qualified equity investment authority is transferred is
responsible for any assessment resulting from an audit by the commissioner of revenue.
new text end

new text begin (g) The qualified community development entity must provide the commissioner with
evidence of the receipt of the cash investment and, if the qualified community development
entity is not a Minnesota qualified community development entity, the designation of 50
percent of the qualified equity investment as a qualified equity investment under section
45D of the Internal Revenue Code within 95 days after receiving notice of certification. If
the qualified community development entity does not receive the cash investment, issue the
qualified equity investment within 90 days following receipt of the certification notice, and
comply with paragraph (f), clause (3), if applicable, the certification is void. A voided
certification must be returned to the commissioner and must first be awarded pro rata to
applicants that received awards of qualified equity investment authority and complied with
paragraph (f).
new text end

new text begin (h) The commissioner shall notify the commissioner of revenue of credits approved
under this subdivision within 15 days of granting an application.
new text end

new text begin Subd. 6. new text end

new text begin Examination. new text end

new text begin The commissioner may conduct examinations to verify that the
credits under this section have been received and applied according to the requirements of
this section and to verify that no event has occurred that would result in a recapture of credits
under subdivision 5.
new text end

new text begin Subd. 7. new text end

new text begin Annual reporting by community development entities. new text end

new text begin (a) Each qualified
community development entity shall submit an annual report to the commissioner within
120 days after the beginning of each calendar year during the compliance period. No annual
report is due prior to the first anniversary of the initial credit allowance date. The report
must include but is not limited to information with respect to all qualified low-income
community investments made by the qualified community development entity, including:
new text end

new text begin (1) the date and amount of, and bank statements or wire transfer reports documenting,
qualified low-income community investments;
new text end

new text begin (2) the name and address of each qualified active low-income community business
funded by the qualified community development entity, the number of persons employed
by the business at the time of the initial qualified low-income community investment, and
a brief description of the business and its financing;
new text end

new text begin (3) the number of employment positions maintained by each qualified active low-income
community business as of the date of the report or the end of the preceding calendar year
and the average annual salaries of those positions;
new text end

new text begin (4) the total number of employment positions created and retained as a result of qualified
low-income community investments and the average annual salaries of those positions;
new text end

new text begin (5) a certification by its chief executive officer or similar officer that no credits have
been subject to recapture under subdivision 5;
new text end

new text begin (6) any changes with respect to the taxpayers entitled to claim credits with respect to
qualified equity investments issued by the qualified community development entity since
its last report pursuant to this section; and
new text end

new text begin (7) each qualified community development entity shall pay the commissioner an annual
fee of $1,500. The initial annual fee required of the qualified community development entity
is due and payable to the commissioner along with the submission of documentation required
under subdivision 4, paragraph (g). Each subsequent annual fee is required to be submitted
with the annual report under paragraph (a).
new text end

new text begin (b) The qualified community development entity is not required to provide the annual
report set forth in this section for qualified low-income community investments that have
been redeemed or repaid.
new text end

new text begin Subd. 8. new text end

new text begin Program report. new text end

new text begin If the credit under this section has not been reviewed under
the provisions of section 3.8855 by December 15, 2032, the commissioner, with input from
the commissioner of revenue, shall report to the legislature no later than December 31, 2032,
regarding the implementation of the credit under this section, including an evaluation of
the credit using the components listed in section 3.885, subdivision 5.
new text end

new text begin Subd. 9. new text end

new text begin Expiration. new text end

new text begin This section expires for taxable years beginning after December
31, 2031, except that the commissioner's authority to allow the credit under subdivision 2
based on certificates that were issued under subdivision 4 before expiration remains in effect
through the year following the year in which all certificates have either been canceled or
resulted in issuance of credit certificates, or 2034, whichever is earlier.
new text end

new text begin Subd. 10. new text end

new text begin Account created; appropriation. new text end

new text begin The Minnesota new markets tax credit
account is created in the special revenue fund in the state treasury. The account is
administered by the commissioner. Application and reporting fees required under subdivision
3, paragraph (a), clause (7), are appropriated to the commissioner for costs associated with
certifying applications and for personnel and administrative expenses related to administering
the credit under this section.
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, 2023.
new text end

Sec. 13.

Minnesota Statutes 2022, section 270B.14, subdivision 2, is amended to read:

Subd. 2.

Disclosure to Department of Employment and Economic Development.

(a)
Data relating to individuals are treated as follows:

(1) Return information may be disclosed to the Department of Employment and Economic
Development to the extent provided in clause (2) and for the purposes provided in clause
(3).

(2) The data that may be disclosed is limited to the amount of gross income earned by
an individual, the total amounts of earnings from each employer, and the employer's name.

(3) Data may be requested pertaining only to individuals who have claimed benefits
under sections 268.03 to 268.23 and only if the individuals are the subject of investigations
based on other information available to the Department of Employment and Economic
Development. Data received may be used only as set forth in section 268.19, subdivision
1, paragraph (b).

new text begin (4) Notwithstanding the limitation in paragraph (a), the commissioner may disclose
return information to the Department of Employment and Economic Development to the
extent required to administer the new markets tax credit in sections 290.0693 and 297I.20.
new text end

(b) Data pertaining to corporations or other employing units may be disclosed to the
Department of Employment and Economic Development to the extent necessary for the
proper enforcement of chapter 268.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 14.

Minnesota Statutes 2022, section 289A.08, subdivision 7, as amended by Laws
2023, chapter 1, section 2, is amended to read:

Subd. 7.

Composite income tax returns for nonresident partners, shareholders, and
beneficiaries.

(a) The commissioner may allow a partnership with nonresident partners to
file a composite return and to pay the tax on behalf of nonresident partners who have no
other Minnesota source income. This composite return must include the names, addresses,
Social Security numbers, income allocation, and tax liability for the nonresident partners
electing to be covered by the composite return.

(b) The computation of a partner's tax liability must be determined by multiplying the
income allocated to that partner by the highest rate used to determine the tax liability for
individuals under section 290.06, subdivision 2c. Nonbusiness deductions, standard
deductions, or personal exemptions are not allowed.

(c) The partnership must submit a request to use this composite return filing method for
nonresident partners. The requesting partnership must file a composite return in the form
prescribed by the commissioner of revenue. The filing of a composite return is considered
a request to use the composite return filing method.

(d) The electing partner must not have any Minnesota source income other than the
income from the partnership, other electing partnerships, and other qualifying entities
electing to file and pay the pass-through entity tax under subdivision 7a. If it is determined
that the electing partner has other Minnesota source income, the inclusion of the income
and tax liability for that partner under this provision will not constitute a return to satisfy
the requirements of subdivision 1. The tax paid for the individual as part of the composite
return is allowed as a payment of the tax by the individual on the date on which the composite
return payment was made. If the electing nonresident partner has no other Minnesota source
income, filing of the composite return is a return for purposes of subdivision 1.

(e) This subdivision does not negate the requirement that an individual pay estimated
tax if the individual's liability would exceed the requirements set forth in section 289A.25.
The individual's liability to pay estimated tax is, however, satisfied when the partnership
pays composite estimated tax in the manner prescribed in section 289A.25.

(f) If an electing partner's share of the partnership's gross income from Minnesota sources
is less than the filing requirements for a nonresident under this subdivision, the tax liability
is zero. However, a statement showing the partner's share of gross income must be included
as part of the composite return.

(g) The election provided in this subdivision is only available to a partner who has no
other Minnesota source income and who is either (1) a full-year nonresident individual or
(2) a trust or estate that does not claim a deduction under either section 651 or 661 of the
Internal Revenue Code.

(h) A corporation defined in section 290.9725 and its nonresident shareholders may
make an election under this paragraph. The provisions covering the partnership apply to
the corporation and the provisions applying to the partner apply to the shareholder.

(i) Estates and trusts distributing current income only and the nonresident individual
beneficiaries of the estates or trusts may make an election under this paragraph. The
provisions covering the partnership apply to the estate or trust. The provisions applying to
the partner apply to the beneficiary.

(j) For the purposes of this subdivision, "income" deleted text begin means the partner's share of federal
adjusted gross income from the partnership modified by the additions provided in section
290.0131, subdivisions 8 to 10, 16, and 17, and the subtractions provided in: (1) section
290.0132, subdivisions 9, 27, 28, and 31, to the extent the amount is assignable or allocable
to Minnesota under section 290.17; and (2) section 290.0132, subdivision 14. The subtraction
allowed under section 290.0132, subdivision 9, is only allowed on the composite tax
computation to the extent the electing partner would have been allowed the subtraction.deleted text end new text begin has
the meaning given in section 290.01, subdivision 19, paragraph (h).
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, 2022.
new text end

Sec. 15.

Minnesota Statutes 2022, section 289A.08, subdivision 7a, as amended by Laws
2023, chapter 1, section 3, is amended to read:

Subd. 7a.

Pass-through entity tax.

(a) For the purposes of this subdivision, the following
terms have the meanings given:

(1) "income" has the meaning given in deleted text begin subdivision 7, paragraph (j), modified by the
addition provided in section 290.0131, subdivision 5, and the subtraction provided in section
290.0132, subdivision 3, except that the provisions that apply to a partnership apply to a
qualifying entity and the provisions that apply to a partner apply to a qualifying owner. The
income of both a resident and nonresident qualifying owner is allocated and assigned to
this state as provided for nonresident partners and shareholders under sections 290.17,
290.191, and 290.20deleted text end new text begin section 290.01, subdivision 19, paragraphs (i) and (j)new text end ;

(2) "qualifying entity" means a partnership, limited liability companynew text begin taxed as a
partnership or S corporationnew text end , or S corporation including a qualified subchapter S subsidiary
organized under section 1361(b)(3)(B) of the Internal Revenue Codenew text begin that has at least one
qualifying ownernew text end . Qualifying entity does not include a deleted text begin partnership, limited liability company,
or corporation that has a partnership, limited liability company other than a disregarded
entity, or corporation as a partner, member, or shareholderdeleted text end new text begin publicly traded partnership, as
defined in section 7704 of the Internal Revenue Codenew text end ; and

(3) "qualifying owner" means:

(i) a resident or nonresident individual or estate that is a partner, member, or shareholder
of a qualifying entity; deleted text begin or
deleted text end

(ii) a resident or nonresident trust that is a shareholder of a qualifying entity that is an
S corporationdeleted text begin .deleted text end new text begin ; or
new text end

new text begin (iii) a disregarded entity that has a qualifying owner as its single owner.
new text end

(b) For taxable years beginning after December 31, 2020, deleted text begin in which the taxes of a
qualifying owner are limited under section 164(b)(6)(B) of the Internal Revenue Code,deleted text end a
qualifying entity may elect to file a return and pay the pass-through entity tax imposed under
paragraph (c). The election:

(1) must be made on or before the due date or extended due date of the qualifying entity's
pass-through entity tax return;

new text begin (2) must exclude partners, members, shareholders, or owners who are not qualifying
owners;
new text end

deleted text begin (2)deleted text end new text begin (3)new text end may only be made by qualifying owners who collectively hold more than deleted text begin adeleted text end 50
percent new text begin of the new text end ownership deleted text begin interestdeleted text end new text begin interestsnew text end in the qualifying entitynew text begin held by qualifying ownersnew text end ;

deleted text begin (3)deleted text end new text begin (4)new text end is binding on all qualifying owners who have an ownership interest in the
qualifying entity; and

deleted text begin (4)deleted text end new text begin (5)new text end once made is irrevocable for the taxable year.

(c) Subject to the election in paragraph (b), a pass-through entity tax is imposed on a
qualifying entity in an amount equal to the sum of the tax liability of each qualifying owner.

(d) The amount of a qualifying owner's tax liability under paragraph (c) is the amount
of the qualifying owner's income multiplied by the highest tax rate for individuals under
section 290.06, subdivision 2c. When making this determination:

(1) nonbusiness deductions, standard deductions, or personal exemptions are not allowed;
and

(2) a credit or deduction is allowed only to the extent allowed to the qualifying owner.

(e) The amount of each credit and deduction used to determine a qualifying owner's tax
liability under paragraph (d) must also be used to determine that qualifying owner's income
tax liability under chapter 290.

(f) This subdivision does not negate the requirement that a qualifying owner pay estimated
tax if the qualifying owner's tax liability would exceed the requirements set forth in section
289A.25. The qualifying owner's liability to pay estimated tax on the qualifying owner's
tax liability as determined under paragraph (d) is, however, satisfied when the qualifying
entity pays estimated tax in the manner prescribed in section 289A.25 for composite estimated
tax.

(g) A qualifying owner's adjusted basis in the interest in the qualifying entity, and the
treatment of distributions, is determined as if the election to pay the pass-through entity tax
under paragraph (b) is not made.

(h) To the extent not inconsistent with this subdivision, for purposes of this chapter, a
pass-through entity tax return must be treated as a composite return and a qualifying entity
filing a pass-through entity tax return must be treated as a partnership filing a composite
return.

(i) The provisions of subdivision 17 apply to the election to pay the pass-through entity
tax under this subdivision.

(j) If a nonresident qualifying owner of a qualifying entity making the election to file
and pay the tax under this subdivision has no other Minnesota source income, filing of the
pass-through entity tax return is a return for purposes of subdivision 1, provided that the
nonresident qualifying owner must not have any Minnesota source income other than the
income from the qualifying entity, other electing qualifying entities, and other partnerships
electing to file a composite return under subdivision 7. If it is determined that the nonresident
qualifying owner has other Minnesota source income, the inclusion of the income and tax
liability for that owner under this provision will not constitute a return to satisfy the
requirements of subdivision 1. The tax paid for the qualifying owner as part of the
pass-through entity tax return is allowed as a payment of the tax by the qualifying owner
on the date on which the pass-through entity tax return payment was made.

(k) Once a credit is claimed by a qualifying owner under section 290.06, subdivision
40, a qualifying entity cannot receive a refund for tax paid under this subdivision for any
amounts claimed under that section by the qualifying owners. Once a credit is claimed under
section 290.06, subdivision 40, any refund must be claimed in conjunction with a return
filed by the qualifying owner.

new text begin (l) This section expires at the same time and on the same terms as section 164(b)(6)(B)
of the Internal Revenue Code, except that the expiration of this section does not affect the
commissioner's authority to audit or power of examination and assessments for credits
claimed under this section.
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

Sec. 16.

Minnesota Statutes 2022, section 289A.382, subdivision 2, is amended to read:

Subd. 2.

Reporting and payment requirements for partnerships and tiered
partners.

(a) Except for when an audited partnership makes the election in subdivision 3,
and except for negative federal adjustments required under federal law taken into account
by the partnership in the partnership return for the adjustment or other year, all final federal
adjustments of an audited partnership must comply with paragraph (b) and each direct
partner of the audited partnership, other than a tiered partner, must comply with paragraph
(c).

(b) No later than 90 days after the final determination date, the audited partnership must:

(1) file a completed federal adjustments report, including all partner-level information
required under section 289A.12, subdivision 3, with the commissioner;

(2) notify each of its direct partners of their distributive share of the final federal
adjustments;

(3) file an amended composite report for all direct partners who were included in a
composite return under section 289A.08, subdivision 7, in the reviewed year, and pay the
additional amount that would have been due had the federal adjustments been reported
properly as required; deleted text begin and
deleted text end

(4) file amended withholding reports for all direct partners who were or should have
been subject to nonresident withholding under section 290.92, subdivision 4b, in the reviewed
year, and pay the additional amount that would have been due had the federal adjustments
been reported properly as requireddeleted text begin .deleted text end new text begin ; and
new text end

new text begin (5) file an amended pass-through entity tax report for all direct partners who were
included in a pass-through entity tax return under section 289A.08, subdivision 7a, in the
reviewed year, and pay the additional amount that would have been due had the federal
adjustments been reported properly as required.
new text end

(c) No later than 180 days after the final determination date, each direct partner, other
than a tiered partner, that is subject to a tax administered under this chapter, other than the
sales tax, must:

(1) file a federal adjustments report reporting their distributive share of the adjustments
reported to them under paragraph (b), clause (2); and

(2) pay any additional amount of tax due as if the final federal adjustment had been
properly reported, plus any penalty and interest due under this chapter, and less any credit
for related amounts paid or withheld and remitted on behalf of the direct partner under
paragraph (b), clauses (3) and (4).

new text begin EFFECTIVE DATE. new text end

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

Sec. 17.

Minnesota Statutes 2022, section 290.01, subdivision 7b, is amended to read:

Subd. 7b.

Resident trust.

(a) deleted text begin Resident trust meansdeleted text end A trust, except a grantor type trust,
deleted text begin which eitherdeleted text end new text begin that became irrevocable on or before December 31, 1995, or was first
administered in Minnesota on or before December 31, 1995, is a resident trust only if two
or more of the following conditions are satisfied:
new text end

new text begin (1) a majority of the discretionary decisions of the trustees relative to the investment of
trust assets are made in Minnesota;
new text end

new text begin (2) a majority of the discretionary decisions of the trustees relative to the distributions
of trust income and principal are made in Minnesota; or
new text end

new text begin (3) the official books and records of the trust, consisting of the original minutes of trustee
meetings and the original trust instruments, are located in Minnesota.
new text end

new text begin (b) A trust, except a grantor type trust, that became irrevocable after December 31, 1995,
or was first administered in Minnesota after December 31, 1995, is a resident trust only if:
new text end

(1) new text begin either it:
new text end

new text begin (i) new text end was created by a will of a decedent who at death was domiciled in this statenew text begin ;new text end or

deleted text begin (2)deleted text end new text begin (ii)new text end is an irrevocable trust, the grantor of which was domiciled in this state at the time
the trust became irrevocabledeleted text begin .deleted text end new text begin ; and
new text end

new text begin (2) two or more of the following conditions are satisfied:
new text end

new text begin (i) a majority of the discretionary decisions of the trustees relative to the investment of
trust assets are made in Minnesota;
new text end

new text begin (ii) a majority of the discretionary decisions of the trustees relative to the distributions
of trust income and principal are made in Minnesota; or
new text end

new text begin (iii) the official books and records of the trust, consisting of the original minutes of
trustee meetings and the original trust instruments, are located in Minnesota.
new text end

new text begin (c) new text end For the purpose of this subdivision, a trust is considered irrevocable to the extent the
grantor is not treated as the owner thereof under sections 671 to 678 of the Internal Revenue
Code. The term "grantor type trust" means a trust where the income or gains of the trust are
taxable to the grantor or others treated as substantial owners under sections 671 to 678 of
the Internal Revenue Code. deleted text begin This paragraph applies to trusts, except grantor type trusts, that
became irrevocable after December 31, 1995, or are first administered in Minnesota after
December 31, 1995.
deleted text end

deleted text begin (b) This paragraph applies to trusts, except grantor type trusts, that are not governed
under paragraph (a). A trust, except a grantor type trust, is a resident trust only if two or
more of the following conditions are satisfied:
deleted text end

deleted text begin (1) a majority of the discretionary decisions of the trustees relative to the investment of
trust assets are made in Minnesota;
deleted text end

deleted text begin (2) a majority of the discretionary decisions of the trustees relative to the distributions
of trust income and principal are made in Minnesota;
deleted text end

deleted text begin (3) the official books and records of the trust, consisting of the original minutes of trustee
meetings and the original trust instruments, are located in Minnesota.
deleted text end

deleted text begin (c)deleted text end new text begin (d)new text end For purposes of deleted text begin paragraphdeleted text end new text begin paragraphs (a) andnew text end (b), if the trustees delegate decisions
and actions to an agent or custodian, the actions and decisions of the agent or custodian
must not be taken into account in determining whether the trust is administered in Minnesota,
if:

(1) the delegation was permitted under the trust agreement;

(2) the trustees retain the power to revoke the delegation on reasonable notice; and

(3) the trustees monitor and evaluate the performance of the agent or custodian on a
regular basis as is reasonably determined by the trustees.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end

Sec. 18.

Minnesota Statutes 2022, section 290.01, subdivision 19, as amended by Laws
2023, chapter 1, section 4, is amended to read:

Subd. 19.

Net income.

(a) For a trust or estate taxable under section 290.03, and a
corporation taxable under section 290.02, the term "net income" means the federal taxable
income, as defined in section 63 of the Internal Revenue Code of 1986, as amended through
the date named in this subdivision, incorporating the federal effective dates of changes to
the Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in sections 290.0131 to 290.0136.

(b) For an individual, the term "net income" means federal adjusted gross income with
the modifications provided in sections 290.0131, 290.0132, and 290.0135 to 290.0137.

(c) In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue
Code must be applied by allowing a deduction for capital gain dividends and exempt-interest
dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code;
and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

(d) The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

(e) The net income of a designated settlement fund as defined in section 468B(d) of the
Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal
Revenue Code.

(f) The Internal Revenue Code of 1986, as amended through December 15, 2022, applies
for taxable years beginning after December 31, 1996.

(g) Except as otherwise provided, references to the Internal Revenue Code in this
subdivision and sections 290.0131 to 290.0136 mean the code in effect for purposes of
determining net income for the applicable year.

new text begin (h) In the case of a partnership electing to file a composite return under section 289A.08,
subdivision 7, income means the partner's share of federal adjusted gross income from the
partnership modified by the additions provided in section 290.0131, subdivisions 8 to 10,
16, and 17, and the subtractions provided in: (1) section 290.0132, subdivisions 9, 27, and
28, to the extent the amount is assignable or allocable to Minnesota under section 290.17;
and (2) section 290.0132, subdivision 14. The subtraction allowed under section 290.0132,
subdivision 9, is only allowed on the composite tax computation to the extent the electing
partner would have been allowed the subtraction.
new text end

new text begin (i) In the case of a qualifying entity electing to pay the pass-through entity tax under
section 289A.08, subdivision 7a, income means the qualifying owner's share of federal
adjusted gross income from the qualifying entity modified by the additions provided in
section 290.0131, subdivisions 5, 8 to 10, 16, and 17, and the subtractions provided in: (1)
section 290.0132, subdivisions 3, 9, 27, and 28, to the extent the amount is assignable or
allocable to Minnesota under section 290.17; and (2) section 290.0132, subdivision 14. The
subtraction allowed under section 290.0132, subdivision 9, is only allowed on the
pass-through entity tax computation to the extent the qualifying owners would have been
allowed the subtraction.
new text end

new text begin (j) The income of a resident qualifying owner of a qualifying entity that is a partnership
or limited liability company taxed as a partnership under the Internal Revenue Code is not
subject to allocation outside this state as provided for resident individuals under section
290.17, subdivision 1, paragraph (a). The income of a nonresident qualifying owner of a
qualifying entity and the income of a resident qualifying owner of a qualifying entity that
is an S corporation, including a qualified subchapter S subsidiary organized under section
1361(b)(3)(B) of the Internal Revenue Code, are allocated and assigned to this state as
provided for nonresident partners and shareholders under sections 290.17, 290.191, and
290.20.
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

Sec. 19.

Minnesota Statutes 2022, section 290.0131, is amended by adding a subdivision
to read:

new text begin Subd. 21. new text end

new text begin Dependent flexible spending accounts. new text end

new text begin For a taxpayer who claims the credit
under section 290.067, or for a married taxpayer filing a separate return whose spouse claims
the credit under that section, the amount of dependent care assistance that is excluded from
gross income under section 129 of the Internal Revenue Code is an addition.
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, 2022.
new text end

Sec. 20.

Minnesota Statutes 2022, section 290.0132, subdivision 4, is amended to read:

Subd. 4.

Education expenses.

(a) Subject to the limits in paragraph (b), the following
amounts paid to others for each qualifying child are a subtraction:

(1) education-related expenses; plus

(2) tuition and fees paid to attend a school described in section 290.0674, deleted text begin subdivision 1deleted text end new text begin
subdivision 1a, paragraph (b)new text end , clause (4), that are not included in education-related expenses;
less

(3) any amount used to claim the credit under section 290.0674.

(b) The maximum subtraction allowed under this subdivision is:

(1) $1,625 for each qualifying child in kindergarten through grade 6; and

(2) $2,500 for each qualifying child in grades 7 through 12.

(c) The definitions in section 290.0674, deleted text begin subdivision 1deleted text end new text begin subdivision 1anew text end , apply to this
subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 21.

Minnesota Statutes 2022, section 290.0132, subdivision 26, is amended to read:

Subd. 26.

Social Security benefits.

(a) A deleted text begin portion of taxable Social Security benefits is
allowed as a subtraction. Thedeleted text end new text begin taxpayer is allowed anew text end subtraction deleted text begin equalsdeleted text end new text begin equal to the greater
of the simplified subtraction allowed under paragraph (b) or the alternate subtraction
determined under paragraphs (c), (d), and (e).
new text end

new text begin (b) A taxpayer's simplified subtraction equals the amount of taxable social security
benefits, as reduced under paragraphs (e) to (h).
new text end

new text begin (c) For a taxpayer other than a married taxpayer filing a separate return with adjusted
gross income above the phaseout threshold, the simplified subtraction is reduced by ten
percent for each $4,000 of adjusted gross income, or fraction thereof, in excess of the
phaseout threshold. The phaseout threshold equals:
new text end

new text begin (1) $100,000 for a married taxpayer filing a joint return or surviving spouse;
new text end

new text begin (2) $78,000 for a single or head of household taxpayer; and
new text end

new text begin (3) for a married taxpayer filing a separate return, half the amount for a married taxpayer
filing a joint return.
new text end

new text begin (d) For a married taxpayer filing a separate return, the simplified subtraction is reduced
by ten percent for each $2,000 of adjusted gross income, or fraction thereof, in excess of
the phaseout threshold.
new text end

new text begin (e) A taxpayer's alternate subtraction equals new text end the lesser of taxable Social Security benefits
or a maximum subtraction subject to the limits under paragraphs deleted text begin (b), (c), and (d)deleted text end new text begin (f), (g),
and (h)new text end .

deleted text begin (b)deleted text end new text begin (f)new text end For married taxpayers filing a joint return and surviving spouses, the maximum
subtraction new text begin under paragraph (c) new text end equals deleted text begin $5,150deleted text end new text begin $5,840new text end . The maximum subtraction is reduced
by 20 percent of provisional income over deleted text begin $78,180deleted text end new text begin $88,630new text end . In no case is the subtraction
less than zero.

deleted text begin (c)deleted text end new text begin (g)new text end For single or head-of-household taxpayers, the maximum subtraction new text begin under
paragraph (c) new text end equals deleted text begin $4,020deleted text end new text begin $4,560new text end . The maximum subtraction is reduced by 20 percent of
provisional income over deleted text begin $61,080deleted text end new text begin $69,250new text end . In no case is the subtraction less than zero.

deleted text begin (d)deleted text end new text begin (h)new text end For married taxpayers filing separate returns, the maximum subtraction new text begin under
paragraph (c) new text end equals one-half the maximum subtraction for joint returns under paragraph
deleted text begin (b)deleted text end new text begin (d)new text end . The maximum subtraction is reduced by 20 percent of provisional income over
one-half the threshold amount specified in paragraph deleted text begin (b)deleted text end new text begin (d)new text end . In no case is the subtraction
less than zero.

deleted text begin (e)deleted text end new text begin (i)new text end 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 taxable 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 begin (f)deleted text end new text begin (j)new text end The commissioner shall adjust the deleted text begin maximum subtraction anddeleted text end new text begin phaseout new text end threshold
amounts in paragraphs deleted text begin (b) todeleted text end new text begin (c) and new text end (d) as provided in section 270C.22. The statutory year
is taxable year deleted text begin 2019deleted text end new text begin 2023new text end . 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 22.

Minnesota Statutes 2022, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 34. new text end

new text begin Qualified retirement benefits. new text end

new text begin (a) The amount of qualified public pension
income is a subtraction. The subtraction in this section is limited to:
new text end

new text begin (1) $25,000 for a married taxpayer filing a joint return or surviving spouse; or
new text end

new text begin (2) $12,500 for all other filers.
new text end

new text begin (b) For a taxpayer with adjusted gross income above the phaseout threshold, the
subtraction is reduced by ten percent for each $2,000 of adjusted gross income, or fraction
thereof, in excess of the threshold. The phaseout threshold equals:
new text end

new text begin (1) $100,000 for a married taxpayer filing a joint return or surviving spouse;
new text end

new text begin (2) $78,000 for a single or head of household taxpayer; or
new text end

new text begin (3) for a married taxpayer filing a separate return, half the amount for a married taxpayer
filing a joint return.
new text end

new text begin (c) For the purposes of this section, "qualified public pension income" means any amount
received:
new text end

new text begin (1) by a former basic member or the survivor of a former basic member, as an annuity
or survivor benefit, from a pension plan governed by chapter 353, 353E, 354, or 354A,
provided that the annuity or benefit is based on service for which the member or survivor
is not also receiving Social Security benefits;
new text end

new text begin (2) as an annuity or survivor benefit from the legislators plan under chapter 3A, the State
Patrol retirement plan under chapter 352B, or the public employees police and fire plan
under sections 353.63 to 353.666, provided that the annuity or benefit is based on service
for which the member or survivor is not also receiving Social Security benefits;
new text end

new text begin (3) from any retirement system administered by the federal government that is based on
service for which the recipient or the recipient's survivor is not also receiving Social Security
benefits; or
new text end

new text begin (4) from a public retirement system of or created by another state or any of its political
subdivisions, or the District of Columbia, if the income tax laws of the other state or district
permit a similar deduction or exemption or a reciprocal deduction or exemption of a
retirement or pension benefit received from a public retirement system of or created by this
state or any political subdivision of this state.
new text end

new text begin (d) The commissioner must annually adjust the subtraction limits in paragraph (a) and
the phaseout thresholds in paragraph (b), as provided in section 270C.22. The statutory year
is taxable year 2023.
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, 2022.
new text end

Sec. 23.

Minnesota Statutes 2022, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 35. new text end

new text begin Subpart F income. new text end

new text begin For a unitary business, as defined in section 290.17,
subdivision 4, paragraph (b), the amount of subpart F income included in gross income
under section 951 of the Internal Revenue Code is a subtraction.
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, 2023.
new text end

Sec. 24.

Minnesota Statutes 2022, section 290.0134, is amended by adding a subdivision
to read:

new text begin Subd. 21. new text end

new text begin Subpart F income. 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, 2023.
new text end

Sec. 25.

Minnesota Statutes 2022, section 290.06, subdivision 23, is amended to read:

Subd. 23.

Refund of contributions to political parties and candidates.

(a) A taxpayer
may claim a refund equal to the amount of the taxpayer's contributions made in the calendar
year to candidates and to a political party. The maximum refund for an individual must not
exceed deleted text begin $50deleted text end new text begin $75new text end and for a married couple, filing jointly, must not exceed deleted text begin $100deleted text end new text begin $150new text end . A
refund of a contribution is allowed only if the taxpayer files a form required by the
commissioner and attaches to the form a copy of an official refund receipt form issued by
the candidate or party and signed by the candidate, the treasurer of the candidate's principal
campaign committee, or the chair or treasurer of the party unit, after the contribution was
received. The receipt forms must be numbered, and the data on the receipt that are not public
must be made available to the campaign finance and public disclosure board upon its request.
A claim must be filed with the commissioner no sooner than January 1 of the calendar year
in which the contribution was made and no later than April 15 of the calendar year following
the calendar year in which the contribution was made. A taxpayer may file only one claim
per calendar year. Amounts paid by the commissioner after June 15 of the calendar year
following the calendar year in which the contribution was made must include interest at the
rate specified in section 270C.405.

(b) No refund is allowed under this subdivision for a contribution to a candidate unless
the candidate:

(1) has signed an agreement to limit campaign expenditures as provided in section
10A.322;

(2) is seeking an office for which voluntary spending limits are specified in section
10A.25; and

(3) has designated a principal campaign committee.

This subdivision does not limit the campaign expenditures of a candidate who does not
sign an agreement but accepts a contribution for which the contributor improperly claims
a refund.

(c) For purposes of this subdivision, "political party" means a major political party as
defined in section 200.02, subdivision 7, or a minor political party qualifying for inclusion
on the income tax or property tax refund form under section 10A.31, subdivision 3a.

A "major party" or "minor party" includes the aggregate of that party's organization
within each house of the legislature, the state party organization, and the party organization
within congressional districts, counties, legislative districts, municipalities, and precincts.

"Candidate" means a candidate as defined in section 10A.01, subdivision 10, except a
candidate for judicial office.

"Contribution" means a gift of money.

(d) The commissioner shall make copies of the form available to the public and candidates
upon request.

(e) The following data collected or maintained by the commissioner under this subdivision
are private: the identities of individuals claiming a refund, the identities of candidates to
whom those individuals have made contributions, and the amount of each contribution.

(f) The commissioner shall report to the campaign finance and public disclosure board
by each August 1 a summary showing the total number and aggregate amount of political
contribution refunds made on behalf of each candidate and each political party. These data
are public.

(g) The amount necessary to pay claims for the refund provided in this section is
appropriated from the general fund to the commissioner of revenue.

(h) For a taxpayer who files a claim for refund via the Internet or other electronic means,
the commissioner may accept the number on the official receipt as documentation that a
contribution was made rather than the actual receipt as required by paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2024, and applies to refunds
for contributions made in calendar year 2024 and thereafter.
new text end

Sec. 26.

Minnesota Statutes 2022, section 290.06, subdivision 39, is amended to read:

Subd. 39.

Film production credit.

(a) A taxpayer, including a taxpayer to whom a credit
has been assigned under section 116U.27, subdivision 3, may claim a credit against the tax
imposed by this chapter equal to the amount certified on a credit certificate under section
116U.27, subject to the limitations in this subdivision.

(b) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a film production credit carryover to each of the
five succeeding taxable years. The entire amount of the excess unused credit for the taxable
year is carried first to the earliest of the taxable years to which the credit may be carried
and then to each successive year to which the credit may be carried. The amount of the
unused credit that may be added under this paragraph must not exceed the taxpayer's liability
for tax, less any film production credit for the taxable year.

(c) Credits allowed to a partnership, a limited liability company taxed as a partnership,
or an S corporation are passed through to the partners, members, shareholders, or owners,
respectively, pro rata to each based on the partner's, member's, shareholder's, or owner's
share of the entity's assets, or as specially allocated in the organizational documents or any
other executed agreement, as of the last day of the taxable year.

(d) Notwithstanding the approval and certification by the commissioner of employment
and economic development under section 116U.27, the commissioner may utilize any audit
and examination powers under chapter 270C or 289A to the extent necessary to verify that
the taxpayer is eligible for the credit and to assess the amount of any improperly claimed
credit. The commissioner may only assess the original recipient of the credit certificate for
the amount of improperly claimed credits. The commissioner may not assess a credit
certificate assignee for any amount of improperly claimed credits, and an assignee's claim
for credit is not affected by the commissioner's assessment of improperly claimed credits
against the assignor.

(e) This subdivision expires January 1, deleted text begin 2025deleted text end new text begin 2033new text end , for taxable years beginning after
December 31, 2024, except that the expiration of this section does not affect the commissioner
of revenue's authority to audit or power of examination and assessment for credits claimed
under this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 27.

Minnesota Statutes 2022, section 290.06, is amended by adding a subdivision to
read:

new text begin Subd. 41. new text end

new text begin Pass-through entity tax paid to another state. new text end

new text begin (a) A credit is allowed against
the pass-through entity tax imposed under section 289A.08, subdivision 7a, for pass-through
entity tax paid to another state. The credit under this subdivision shall be deemed to be
allowed as a credit for taxes paid to another state in accordance with subdivision 22,
paragraph (a), and can only be claimed by the qualifying owner. As used in this subdivision,
"pass-through entity tax" means the tax under section 289A.08, subdivision 7a. The credit
allowed under this subdivision must be claimed in a manner prescribed by the commissioner.
new text end

new text begin (b) This section expires at the same time and on the same terms as section 164(b)(6)(B)
of the Internal Revenue Code, except that the expiration of this section does not affect the
commissioner's authority to audit or power of examination and assessments for credits
claimed under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 21, 2021.
new text end

Sec. 28.

Minnesota Statutes 2022, section 290.067, is amended to read:

290.067 deleted text begin DEPENDENTdeleted text end new text begin GREAT START CHILD CARE AND DEPENDENTnew text end CARE
CREDIT.

Subdivision 1.

Amount of credit.

(a) A taxpayer may take as a credit against the tax
due from the taxpayer and a spouse, if any, under this chapter an amount equal to deleted text begin the
dependent care credit for which the taxpayer is eligible pursuant to the provisions of section
21 of the Internal Revenue Code except that in determining whether the child qualified as
a dependent, income received as a Minnesota family investment program grant or allowance
to or on behalf of the child must not be taken into account in determining whether the child
received more than half of the child's support from the taxpayerdeleted text end new text begin the taxpayer's eligible
dependent care expenses, as determined under subdivisions 1a and 1b, multiplied by the
taxpayer's credit percentage, as determined under subdivision 1cnew text end .

deleted text begin (b) If a child who has not attained the age of six years at the close of the taxable year is
cared for at a licensed family day care home operated by the child's parent, the taxpayer is
deemed to have paid employment-related expenses. If the child is 16 months old or younger
at the close of the taxable year, the amount of expenses deemed to have been paid equals
the maximum limit for one qualified individual under section 21(c) and (d) of the Internal
Revenue Code. If the child is older than 16 months of age but has not attained the age of
six years at the close of the taxable year, the amount of expenses deemed to have been paid
equals the amount the licensee would charge for the care of a child of the same age for the
same number of hours of care.
deleted text end

deleted text begin (c) If a married couple:
deleted text end

deleted text begin (1) has a child who has not attained the age of one year at the close of the taxable year;
deleted text end

deleted text begin (2) files a joint tax return for the taxable year; and
deleted text end

deleted text begin (3) does not participate in a dependent care assistance program as defined in section 129
of the Internal Revenue Code, in lieu of the actual employment related expenses paid for
that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of (i)
the combined earned income of the couple or (ii) the amount of the maximum limit for one
qualified individual under section 21(c) and (d) of the Internal Revenue Code will be deemed
to be the employment related expense paid for that child. The earned income limitation of
section 21(d) of the Internal Revenue Code shall not apply to this deemed amount. These
deemed amounts apply regardless of whether any employment-related expenses have been
paid.
deleted text end

deleted text begin (d) If the taxpayer is not required and does not file a federal individual income tax return
for the tax year, no credit is allowed for any amount paid to any person unless:
deleted text end

deleted text begin (1) the name, address, and taxpayer identification number of the person are included on
the return claiming the credit; or
deleted text end

deleted text begin (2) if the person is an organization described in section 501(c)(3) of the Internal Revenue
Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name
and address of the person are included on the return claiming the credit.
deleted text end

deleted text begin In the case of a failure to provide the information required under the preceding sentence,
the preceding sentence does not apply if it is shown that the taxpayer exercised due diligence
in attempting to provide the information required.
deleted text end

deleted text begin (e)deleted text end new text begin (b)new text end In the case of a nonresident, part-year resident, or a person who has earned income
not subject to tax under this chapter deleted text begin including earned income excluded pursuant to section
290.0132, subdivision 10deleted text end , the credit determined under deleted text begin section 21 of the Internal Revenue
Codedeleted text end new text begin this sectionnew text end must be allocated deleted text begin based on the ratio by which the earned income of the
claimant and the claimant's spouse from Minnesota sources bears to the total earned income
of the claimant and the claimant's spousedeleted text end new text begin using the percentage calculated in section 290.06,
subdivision 2c, paragraph (e)new text end .

deleted text begin (f) For residents of Minnesota, 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."
deleted text end

deleted text begin (g) For residents of Minnesota, the exclusion of combat pay under section 112 of the
Internal Revenue Code is not considered "earned income not subject to tax under this
chapter."
deleted text end

deleted text begin (h) For taxpayers with federal adjusted gross income in excess of $52,230, the credit is
equal to the lesser of the credit otherwise calculated under this subdivision, or the amount
equal to $600 minus five percent of federal adjusted gross income in excess of $52,230 for
taxpayers with one qualified individual, or $1,200 minus five percent of federal adjusted
gross income in excess of $52,230 for taxpayers with two or more qualified individuals,
but in no case is the credit less than zero.
deleted text end

new text begin (c) For the purposes of this section, the following terms have the meanings given:
new text end

new text begin (1) "employment-related expenses" has the meaning given in section 21(b)(2) of the
Internal Revenue Code;
new text end

new text begin (2) "qualifying individual" has the meaning given in section 21(b)(1) of the Internal
Revenue Code, except that in determining whether the child qualified as a dependent, income
received as a Minnesota family investment program grant or allowance to or on behalf of
the child must not be taken into account in determining whether the child received more
than half of the child's support from the taxpayer; and
new text end

new text begin (3) "young child" means a qualifying individual who had not attained the age of five by
December 31 of the taxable year.
new text end

new text begin Subd. 1a. new text end

new text begin Eligible dependent care expenses. new text end

new text begin (a) A taxpayer's eligible dependent care
expenses equals the amount of employment-related expenses incurred by the taxable year,
subject to the limitations in paragraphs (b) and (c).
new text end

new text begin (b) Except as provided in subdivision 1b, a taxpayer's eligible dependent care expenses
are limited to:
new text end

new text begin (1) $3,000 if there was one qualifying individual with respect to the taxpayer; or
new text end

new text begin (2) $6,000 if there were two or more qualifying individuals with respect to the taxpayer.
new text end

new text begin Subd. 1b. new text end

new text begin Eligible expenses for taxpayers with young children. new text end

new text begin For a taxpayer with
a young child, the limit in paragraph (b) is increased as follows:
new text end

new text begin (1) for a taxpayer with one young child with respect to the taxpayer, the limit is increased
by $7,000;
new text end

new text begin (2) for a taxpayer with two young children with respect to the taxpayer, the limit is
increased by $14,000; and
new text end

new text begin (3) for a taxpayer with three or more young children with respect to the taxpayer, the
limit is increased by $19,000.
new text end

new text begin Subd. 1c. new text end

new text begin Credit percentage. new text end

new text begin (a) The credit percentage equals 50 percent, subject to
the reductions in paragraphs (b) and (c).
new text end

new text begin (b) A taxpayer's credit percentage is reduced by one percentage point for each $800, or
fraction thereof, by which the taxpayer's adjusted gross income exceeds $160,000.
new text end

new text begin (c) For a married taxpayer filing a separate return, the credit percentage must be calculated
under paragraphs (a) and (b), except the adjusted gross income thresholds are one-half the
amounts for other filers, as adjusted for inflation under subdivision 2b.
new text end

Subd. 2b.

Inflation adjustment.

The commissioner shall annually adjust the dollar
amount of the income threshold at which the deleted text begin maximumdeleted text end credit new text begin percentage new text end begins to be
reduced under subdivision deleted text begin 1deleted text end new text begin 1cnew text end as provided in section 270C.22. The statutory year is taxable
year deleted text begin 2019deleted text end new text begin 2023new text end .

new text begin Subd. 2c. new text end

new text begin Deemed expenses. new text end

new text begin (a) If a child who has not attained the age of six years at
the close of the taxable year is cared for at a licensed family day care home operated by the
child's parent, the taxpayer is deemed to have paid employment-related expenses. The
amount of expenses deemed to have been paid equals the amount the licensee would charge
for the care of a child of the same age for the same number of hours of care.
new text end

new text begin (b) If a married couple:
new text end

new text begin (1) has a child who has not attained the age of one year at the close of the taxable year;
and
new text end

new text begin (2) does not participate in a dependent care assistance program as defined in section 129
of the Internal Revenue Code; then in lieu of the actual employment-related expenses paid
for that child under or the deemed amount under paragraph (a), the amount deemed to be
the employment-related expense paid for that child equals the lesser of:
new text end

new text begin (i) the combined earned income of the couple; or
new text end

new text begin (ii) the amount of the maximum limit for one qualified individual under subdivision 1a,
as increased by subdivision 1b.
new text end

new text begin The earned income limitation of section 21(d) of the Internal Revenue Code shall not apply
to this deemed amount. These deemed amounts apply regardless of whether any
employment-related expenses have been paid.
new text end

new text begin Subd. 2d. new text end

new text begin Identifying information required. new text end

new text begin (a) No credit is allowed for any amount
paid to any person unless:
new text end

new text begin (1) the name, address, and taxpayer identification number of the person are included on
the return claiming the credit; or
new text end

new text begin (2) if the person is an organization described in section 501(c)(3) of the Internal Revenue
Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name
and address of the person are included on the return claiming the credit.
new text end

new text begin (b) The rule in section 21(e)(10) of the Internal Revenue Code applies for the credit
under this section.
new text end

Subd. 3.

Credit to be refundable.

If the amount of credit which a claimant would be
eligible to receive pursuant to this subdivision exceeds the claimant's tax liability under
chapter 290, the excess amount of the credit shall be refunded to the claimant by the
commissioner of revenue.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

Subd. 4.

Right to file claim.

The right to file a claim under this section shall be personal
to the claimant and shall not survive death, but such right may be exercised on behalf of a
claimant by the claimant's legal guardian or attorney-in-fact. When a claimant dies after
having filed a timely claim the amount thereof shall be disbursed to another member of the
household as determined by the commissioner of revenue. If the claimant was the only
member of a household, the claim may be paid to the claimant's personal representative,
but if neither is appointed and qualified within two years of the filing of the claim, the
amount of the claim shall escheat to the state.

new text begin Subd. 5. new text end

new text begin Employment-related expenses. new text end

new text begin For the purposes of determining
employment-related expenses, the provisions of sections 21(d) and 21(e)(6) of the Internal
Revenue Code apply.
new text end

new text begin Subd. 6. new text end

new text begin Rules for married couples filing separate returns. new text end

new text begin A married taxpayer filing
a separate return may claim the credit under this section, but only one spouse may claim
the credit.
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, 2022.
new text end

Sec. 29.

Minnesota Statutes 2022, 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, except that:

(1) a taxpayer with no qualifying children who has attained the age of 19, but not attained
age 65 before the close of the taxable year and is otherwise eligible for a credit under section
32 of the Internal Revenue Code may also receive a credit; deleted text begin and
deleted text end

(2) a taxpayer who is otherwise eligible for a credit under section 32 of the Internal
Revenue Code remains eligible for the credit even if the taxpayer's earned income or adjusted
gross income exceeds the income limitation under section 32 of the Internal Revenue Codedeleted text begin .deleted text end new text begin ;
and
new text end

new text begin (3) the requirements of section 32(m) of the Internal Revenue Code do not apply.
new text end

(b) For individuals with no qualifying children, the credit equals 3.9 percent of the first
$7,150 of earned income. The credit is reduced by 2.0 percent of earned income or adjusted
gross income, whichever is greater, in excess of the phaseout threshold, 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
$11,950 of earned income. The credit is reduced by 6.0 percent of earned income or adjusted
gross income, whichever is greater, in excess of the phaseout threshold, but in no case is
the credit less than zero.

(d) For individuals with two qualifying children, the credit equals 11 percent of the first
$19,600 of earned income. The credit is reduced by 10.5 percent of earned income or adjusted
gross income, whichever is greater, in excess of the phaseout threshold, but in no case is
the credit less than zero.

(e) For individuals with three or more qualifying children, the credit equals 12.5 percent
of the first $20,000 of earned income. The credit is reduced by 10.5 percent of earned income
or adjusted gross income, whichever is greater, in excess of the phaseout threshold, but in
no case is the credit less than zero.

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

(g) 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 following clauses are not
considered "earned income not subject to tax under this chapter":

(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12;

(2) the exclusion of combat pay under section 112 of the Internal Revenue Code; and

(3) income derived from an Indian reservation by an enrolled member of the reservation
while living on the reservation.

(h) For the purposes of this section, the phaseout threshold equals:

(1) $14,570 for married taxpayers filing joint returns with no qualifying children;

(2) $8,730 for all other taxpayers with no qualifying children;

(3) $28,610 for married taxpayers filing joint returns with one qualifying child;

(4) $22,770 for all other taxpayers with one qualifying child;

(5) $32,840 for married taxpayers filing joint returns with two qualifying children;

(6) $27,000 for all other taxpayers with two qualifying children;

(7) $33,140 for married taxpayers filing joint returns with three or more qualifying
children; and

(8) $27,300 for all other taxpayers with three or more qualifying children.

(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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 30.

Minnesota Statutes 2022, section 290.0674, is amended to read:

290.0674 MINNESOTA EDUCATION CREDIT.

Subdivision 1.

Credit alloweddeleted text begin ; definitionsdeleted text end .

An individual is allowed a credit against
the tax imposed by this chapter in an amount equal to 75 percent of the amount paid for
education-related expenses for a qualifying child in kindergarten through grade 12.

new text begin Subd. 1a. new text end

new text begin Definitions. new text end

new text begin (a) new text end For purposes of this section,new text begin the following terms have the
meanings given them.
new text end

new text begin (b)new text end "Education-related expenses" means:

(1) new text begin qualifying instructional new text end fees or tuition deleted text begin for instruction by an instructor under section
120A.22, subdivision 10, clause (1), (2), (3), (4), or (5), or a member of the Minnesota
Music Teachers Association, and who is not a lineal ancestor or sibling of the dependent
for instruction outside the regular school day or school year, including tutoring, driver's
education offered as part of school curriculum, regardless of whether it is taken from a
public or private entity or summer camps, in grade or age appropriate curricula that
supplement curricula and instruction available during the regular school year, that assists a
dependent to improve knowledge of core curriculum areas or to expand knowledge and
skills under the required academic standards under section 120B.021, subdivision 1, and
the world languages standards under section 120B.022, subdivision 1, and that do not include
the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such
tenets, doctrines, or worshipdeleted text end ;

(2) expenses for textbooks, including books and other instructional materials and
equipment purchased or leased for use in elementary and secondary schools in teaching
only those subjects legally and commonly taught in public elementary and secondary schools
in this state. "Textbooks" does not include instructional books and materials used in the
teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such
tenets, doctrines, or worship, nor does it include books or materials for extracurricular
activities including sporting events, musical or dramatic events, speech activities, driver's
education, or similar programs;

(3) a maximum expense of $200 per family for personal computer hardware, excluding
single purpose processors, and educational software that assists a dependent to improve
knowledge of core curriculum areas or to expand knowledge and skills under the required
academic standards under section 120B.021, subdivision 1, and the elective standard under
section 120B.022, subdivision 1, clause (2), purchased for use in the taxpayer's home and
not used in a trade or business regardless of whether the computer is required by the
dependent's school; and

(4) the amount paid to others for transportation of a qualifying child attending an
elementary or secondary school situated in Minnesota, North Dakota, South Dakota, Iowa,
or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory
attendance laws, which is not operated for profit, and which adheres to the provisions of
the Civil Rights Act of 1964 and chapter 363A. Amounts under this clause exclude any
expense the taxpayer incurred in using the taxpayer's or the qualifying child's vehicle.

new text begin (c) "Qualified instructor" means an individual who is not a lineal ancestor or sibling of
the dependent and who is:
new text end

new text begin (1) an instructor under section 120A.22, subdivision 10, clause (1), (2), (3), (4), or (5);
or
new text end

new text begin (2) a member of the Minnesota Music Teachers Association.
new text end

deleted text begin For purposes of this section,deleted text end new text begin (d)new text end "Qualifying child" has the meaning given in section
32(c)(3) of the Internal Revenue Code.

new text begin (e) "Qualifying instructional fees or tuition" means fees or tuition for instruction by a
qualified instructor outside the regular school day or school year, and that does not include
the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such
tenets, doctrines, or worship, including:
new text end

new text begin (1) driver's education offered as part of school curriculum, regardless of whether it is
taken from a public or private entity; or
new text end

new text begin (2) tutoring or summer camps that:
new text end

new text begin (i) are in grade or age appropriate curricula that supplement curricula and instruction
available during the regular school year;
new text end

new text begin (ii) assist a dependent to improve knowledge of core curriculum areas; or
new text end

new text begin (iii) expand knowledge and skills under:
new text end

new text begin (A) the required academic standards under section 120B.021, subdivision 1; and
new text end

new text begin (B) the world languages standards under section 120B.022, subdivision 1.
new text end

Subd. 2.

Limitations.

(a) For claimants with new text begin adjusted gross new text end income not greater than
deleted text begin $33,500deleted text end new text begin $70,000new text end , the maximum credit allowed for a family is deleted text begin $1,000deleted text end new text begin $1,500new text end multiplied by
the number of qualifying children in kindergarten through grade 12 in the family. The
maximum credit for families with one qualifying child in kindergarten through grade 12 is
reduced by $1 for each $4 of deleted text begin householddeleted text end new text begin adjusted grossnew text end income over deleted text begin $33,500deleted text end new text begin $70,000new text end , and
the maximum credit for families with two or more qualifying children in kindergarten
through grade 12 is reduced by $2 for each $4 of deleted text begin householddeleted text end new text begin adjusted grossnew text end income over
deleted text begin $33,500deleted text end new text begin $70,000new text end , but in no case is the credit less than zero.

(b) In the case of a married claimant, a credit is not allowed unless a joint income tax
return is filed.

(c) For a nonresident or part-year resident, the credit determined under subdivision 1
and the maximum credit amount in paragraph (a) must be allocated using the percentage
calculated in section 290.06, subdivision 2c, paragraph (e).

deleted text begin Subd. 2a. deleted text end

deleted text begin Income. deleted text end

deleted text begin (a) For purposes of this section, "income" means the sum of the
following:
deleted text end

deleted text begin (1) federal adjusted gross income as defined in section 62 of the Internal Revenue Code;
and
deleted text end

deleted text begin (2) the sum of the following amounts to the extent not included in clause (1):
deleted text end

deleted text begin (i) all nontaxable income;
deleted text end

deleted text begin (ii) the amount of a passive activity loss that is not disallowed as a result of section 469,
paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss
carryover allowed under section 469(b) of the Internal Revenue Code;
deleted text end

deleted text begin (iii) an amount equal to the total of any discharge of qualified farm indebtedness of a
solvent individual excluded from gross income under section 108(g) of the Internal Revenue
Code;
deleted text end

deleted text begin (iv) cash public assistance and relief;
deleted text end

deleted text begin (v) any pension or annuity (including railroad retirement benefits, all payments received
under the federal Social Security Act, Supplemental Security Income, and veterans benefits),
which was not exclusively funded by the claimant or spouse, or which was funded exclusively
by the claimant or spouse and which funding payments were excluded from federal adjusted
gross income in the years when the payments were made;
deleted text end

deleted text begin (vi) interest received from the federal or a state government or any instrumentality or
political subdivision thereof;
deleted text end

deleted text begin (vii) workers' compensation;
deleted text end

deleted text begin (viii) nontaxable strike benefits;
deleted text end

deleted text begin (ix) the gross amounts of payments received in the nature of disability income or sick
pay as a result of accident, sickness, or other disability, whether funded through insurance
or otherwise;
deleted text end

deleted text begin (x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
1986, as amended through December 31, 1995;
deleted text end

deleted text begin (xi) contributions made by the claimant to an individual retirement account, including
a qualified voluntary employee contribution; simplified employee pension plan;
self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of
the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal
Revenue Code;
deleted text end

deleted text begin (xii) nontaxable scholarship or fellowship grants;
deleted text end

deleted text begin (xiii) the amount of deduction allowed under section 199 of the Internal Revenue Code;
deleted text end

deleted text begin (xiv) the amount of deduction allowed under section 220 or 223 of the Internal Revenue
Code;
deleted text end

deleted text begin (xv) the amount deducted for tuition expenses under section 222 of the Internal Revenue
Code; and
deleted text end

deleted text begin (xvi) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code.
deleted text end

deleted text begin In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" means federal adjusted gross income reflected in the
fiscal year ending in the next calendar year. Federal adjusted gross income may not be
reduced by the amount of a net operating loss carryback or carryforward or a capital loss
carryback or carryforward allowed for the year.
deleted text end

deleted text begin (b) "Income" does not include:
deleted text end

deleted text begin (1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
deleted text end

deleted text begin (2) amounts of any pension or annuity that were exclusively funded by the claimant or
spouse if the funding payments were not excluded from federal adjusted gross income in
the years when the payments were made;
deleted text end

deleted text begin (3) surplus food or other relief in kind supplied by a governmental agency;
deleted text end

deleted text begin (4) relief granted under chapter 290A;
deleted text end

deleted text begin (5) child support payments received under a temporary or final decree of dissolution or
legal separation; and
deleted text end

deleted text begin (6) restitution payments received by eligible individuals and excludable interest as
defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 2001,
Public Law 107-16.
deleted text end

Subd. 4.

Credit to be refundable.

If the amount of credit that the claimant is eligible
to receive under this section exceeds the claimant's tax liability under this chapter, the
commissioner shall refund the excess to the claimant.

Subd. 5.

Appropriation.

An amount sufficient to pay the refunds required by this section
is appropriated to the commissioner from the general fund.

new text begin Subd. 6. new text end

new text begin Inflation adjustment. new text end

new text begin The commissioner shall annually adjust the adjusted
gross income amounts in subdivision 2, as provided in section 270C.22. The statutory year
is taxable year 2023.
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, 2022.
new text end

Sec. 31.

Minnesota Statutes 2022, section 290.0677, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed; current military service.

(a) An individual is allowed
a credit against the tax due under this chapter equal to $59 for each month or portion thereof
that the individual was in active military service in a designated area after September 11,
2001, and before January 1, 2009, while a Minnesota domiciliary.

(b) An individual is allowed a credit against the tax due under this chapter equal to $120
for each month or portion thereof that the individual was in active military service in a
designated area after December 31, 2008, while a Minnesota domiciliary.

(c) For active service performed after September 11, 2001, and before December 31,
2006, the individual may claim the credit in the taxable year beginning after December 31,
2005, and before January 1, 2007.

(d) For active service performed after December 31, 2006, the individual may claim the
credit for the deleted text begin taxabledeleted text end new text begin calendarnew text end year in which the active service was performed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 32.

Minnesota Statutes 2022, section 290.0681, subdivision 3, is amended to read:

Subd. 3.

Applications; allocations.

(a) To qualify for a credit or grant under this section,
the developer of a project must apply to the office before the rehabilitation begins. The
application must contain the information and be in the form prescribed by the office. The
office may collect a fee for application of up to 0.5 percent of qualified rehabilitation
expenditures, up to $40,000, based on estimated qualified rehabilitation expenditures, to
offset costs associated with personnel and administrative expenses related to administering
the credit and preparing the economic impact report in subdivision 9. Application fees are
deposited in the account. The application must indicate if the application is for a credit or
a grant in lieu of the credit or a combination of the two and designate the taxpayer qualifying
for the credit or the recipient of the grant.

(b) Upon approving an application for credit, the office shall issue allocation certificates
that:

(1) verify eligibility for the credit or grant;

(2) state the amount of credit or grant anticipated with the project, with the credit amount
equal to 100 percent and the grant amount equal to 90 percent of the federal credit anticipated
in the application;

(3) state that the credit or grant allowed may increase or decrease if the federal credit
the project receives at the time it is placed in service is different than the amount anticipated
at the time the allocation certificate is issued; and

(4) state the fiscal year in which the credit or grant is allocated, and that the taxpayer or
grant recipient is entitled to receive one-fifth of the total amount of either the credit or the
grant at the time the project is placed in service, provided that date is within deleted text begin threedeleted text end new text begin fivenew text end
calendar years following the issuance of the allocation certificate.

(c) The office, in consultation with the commissioner, shall determine if the project is
eligible for a credit or a grant under this section and must notify the developer in writing
of its determination. Eligibility for the credit is subject to review and audit by the
commissioner.

(d) The federal credit recapture and repayment requirements under section 50 of the
Internal Revenue Code do not apply to the credit allowed under this section.

(e) Any decision of the office under paragraph (c) may be challenged as a contested case
under chapter 14. The contested case proceeding must be initiated within 45 days of the
date of written notification by the office.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for allocation certificates
submitted after June 30, 2023.
new text end

Sec. 33.

Minnesota Statutes 2022, section 290.0681, subdivision 4, is amended to read:

Subd. 4.

Credit certificates; grants.

(a)(1) The developer of a project for which the
office has issued an allocation certificate must notify the office when the project is placed
in service. Upon verifying that the project has been placed in service, and was allowed a
federal credit, the office must issue a credit certificate to the taxpayer designated in the
application or must issue a grant to the recipient designated in the application. The credit
certificate must state the amount of the credit.

(2) The credit amount equals the federal credit allowed for the project.

(3) The grant amount equals 90 percent of the federal credit allowed for the project.

(b) The recipient of a credit certificate may assign the certificate to another taxpayer
before the first one-fifth payment is claimed, which is then allowed the credit under this
section or section 297I.20, subdivision 3. new text begin Before the payment is claimed, the first assignee
may subsequently assign the credit certificate in whole, but not in part, to a second assignee.
A second assignment may only be assigned to a financial institution. new text end An assignment is not
valid unless the assignee notifies the commissioner within 30 days of the date that the
assignment is made. The commissioner shall prescribe the forms necessary for notifying
the commissioner of the assignment of a credit certificate and for claiming a credit by
assignment.new text begin The original credit certificate recipient, and each assignee, must file a return
with the commissioner for the taxable year that the project is placed in service.
new text end

(c) Credits passed through to partners, members, shareholders, or owners pursuant to
subdivision 5 are not an assignment of a credit certificate under this subdivision.

(d) A grant agreement between the office and the recipient of a grant may allow the
grant to be issued to another individual or entity.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for projects placed in service after June
30, 2023.
new text end

Sec. 34.

Minnesota Statutes 2022, section 290.0685, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individualnew text begin who is a resident of Minnesotanew text end is
allowed a credit against the tax imposed by this chapter equal to $2,000 for each birthnew text begin :
new text end

new text begin (1) new text end for which a certificate of birth resulting in stillbirth has been issued under section
144.2151deleted text begin .deleted text end new text begin ; or
new text end

new text begin (2) outside of Minnesota for which there is a certificate similar to the certificate under
section 144.2151 that documents that the stillbirth occurred under the applicable local laws.
new text end

new text begin (b) new text end The credit under this section is allowed only in the taxable year in which the stillbirth
occurred and if the child would have been a dependent of the taxpayer as defined in section
152 of the Internal Revenue Code.

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 35.

new text begin [290.0687] MINNESOTA CHILD TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, the following terms have the
meanings given:
new text end

new text begin (1) "child" means a qualifying child, as defined in section 152(c) of the Internal Revenue
Code, who was under 18 years of age at the end of the taxable year;
new text end

new text begin (2) "credit" means the Minnesota Child Tax Credit allowed by this section;
new text end

new text begin (3) "disabled adult child" means a qualifying child, as defined in section 152(c) of the
Internal Revenue Code, who was:
new text end

new text begin (i) at least 18 years of age at the end of the taxable year; and
new text end

new text begin (ii) at any time during the taxable year was permanently and totally disabled, as defined
in section 22(e)(3) of the Internal Revenue Code; and
new text end

new text begin (4) "threshold amount" means:
new text end

new text begin (i) $33,300 for individuals who are not married;
new text end

new text begin (ii) $50,000 for married taxpayers filing a joint return; and
new text end

new text begin (iii) $25,000 for married taxpayers filing separate returns.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin Residents and part-year residents are allowed a credit against
the tax due under this chapter in an amount equal to $620 per child or disabled adult child.
new text end

new text begin Subd. 3. new text end

new text begin Limitations. new text end

new text begin (a) The maximum total credit allowed to a taxpayer for the taxable
year is $1,860.
new text end

new text begin (b) The maximum credit, as determined in paragraph (a), is reduced by $62 for each
$1,000 by which the taxpayer's adjusted gross income exceeds the threshold amount. In no
case is the credit less than zero.
new text end

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

new text begin (d) For purposes of this subdivision, marital status is determined under section 7703 of
the Internal Revenue Code.
new text end

new text begin Subd. 4. new text end

new text begin Credit refundable. new text end

new text begin If the amount of credit which the claimant is eligible to
receive under this section exceeds the claimant's tax liability under this chapter, the
commissioner shall refund the excess to the claimant.
new text end

new text begin Subd. 5. new text end

new text begin Inflation adjustment. new text end

new text begin The commissioner must annually adjust the credit amount
under subdivision 2, the dollar amount of the income threshold at which the maximum credit
begins to be reduced under subdivision 3, and the maximum credit, as provided in section
270C.22. The statutory year is taxable year 2023.
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 Subd. 7. new text end

new text begin Sunset. new text end

new text begin This section expires for taxable years beginning after December 31,
2030. The expiration of this section does not affect the commissioner's authority to audit
or power of examination and assessment for credits claimed under this section.
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, 2022.
new text end

Sec. 36.

new text begin [290.0693] NEW MARKETS TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, terms defined in section 116X.01
have the meanings given in that section.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An entity that makes a qualified equity investment is
allowed a credit against the tax imposed under this chapter equal to the amount calculated
under section 116X.01, subdivision 2. An entity may claim a credit on each credit allowance
date.
new text end

new text begin (b) Tax credits earned by or allocated to a partnership, a limited liability company taxed
as a partnership, or an S corporation are passed through to the partners, members,
shareholders, or owners, respectively, in accordance with the provisions of any agreement
among the partners, members, shareholders, or owners, or, in the absence of an agreement,
pro rata to each partner, member, shareholder, or owner based on their share of the entity's
assets as of the last day of the taxable year. A pass-through of a credit is not considered a
sale for the purposes of section 116X.01.
new text end

new text begin (c) If the amount of the credit under this section exceeds the taxpayer's liability for tax
under this chapter, the excess is a credit carryover to each of the five succeeding taxable
years. The entire amount of the excess unused credit for the taxable year must be carried
first to the earliest of the taxable years to which the credit may be carried and then to each
successive year to which the credit may be carried. The amount of the unused credit that
may be added under this paragraph may not exceed the taxpayer's liability for tax, less any
credit for the current taxable year.
new text end

new text begin Subd. 3. new text end

new text begin Credit recapture. new text end

new text begin (a) The commissioner must recapture credits should it
determine any of the following:
new text end

new text begin (1) any amount of the federal tax credit available with respect to a qualified equity
investment that is eligible for a credit under this section is recaptured under section 45D of
the Internal Revenue Code;
new text end

new text begin (2) the qualified community development entity redeems or makes principal repayment
with respect to a qualified equity investment prior to seven years after the date of issuance
of the qualified equity investment; or
new text end

new text begin (3) the qualified community development entity fails to invest at least 100 percent of
the cash purchase price of the qualified equity investment in qualified low-income community
investments in greater Minnesota counties or metropolitan counties, as applicable, within
12 months of the issuance of the qualified equity investment and maintains the investment
in qualified low-income community investments in greater Minnesota counties or
metropolitan counties, as applicable, until the last credit allowance date for the qualified
equity investment.
new text end

new text begin Upon verification of the event indicated in the notification, the commissioner must notify
the entity otherwise eligible for the credit allowed under this section and issue an assessment
and notify the entity and the commissioner of employment and economic development of
ineligibility for future credits with respect to the qualified equity investment. The recapture
under clause (1) must be proportionate to the federal recapture with respect to the qualified
equity investment. The recapture under clause (2) must be proportionate to the amount of
the redemption or repayment with respect to the qualified equity investment. The recapture
under clause (3) must be proportionate to the amount of qualified equity investment that
was failed to be invested or maintained.
new text end

new text begin (b) For purposes of paragraph (a), clause (3), an investment is considered maintained
by a qualified community development entity even if the investment has been sold or repaid,
provided that the qualified community development entity reinvests an amount equal to the
capital returned to or recovered by the qualified community development entity from the
original investment, exclusive of any profits realized, in another qualified low-income
community investment in this state as required under the greater Minnesota allocation or
metropolitan allocation within 12 months after the receipt of that capital, after notice and
written approval of both the sale and reinvestment by the commissioner of employment and
economic development. Periodic loan repayments received by a qualified community
development entity from a qualified active low-income community business within a calendar
year must be treated as maintained in qualified low-income community investments if a
qualified community development entity reinvests the repayments in qualified low-income
community investments by the end of the current taxable year.
new text end

new text begin (c) A qualified community development entity is not required to reinvest capital returned
from qualified low-income community investments after the sixth anniversary of the issuance
of the qualified equity investment, the proceeds of which were used to make the qualified
low-income community investment, and the qualified low-income community investment
is considered held by the qualified community development entity through the seventh
anniversary of the qualified equity investment's issuance.
new text end

new text begin (d) With respect to any one qualified active low-income community business, the
maximum amount of qualified low-income community investments made in that business
in aggregate with all of its affiliates that may be counted toward the satisfaction of paragraph
(a), clause (3), is $10,000,000, whether made by one or several qualified community
development entities but exclusive of redeemed or repaid qualified low-income community
investment by the qualified active low-income community business.
new text end

new text begin (e) The commissioner shall provide notice to the qualified community development
entity of any proposed recapture of credits pursuant to this subdivision. The notice must
specify the conditions under which the deficiency resulting in the proposed recapture occurred
and state that the credits will be recaptured within 90 days unless the qualified community
development entity complies with the conditions identified in the notice. If the entity does
not comply with the conditions identified in the notice within the 90-day period, the
commissioner shall provide the entity and the taxpayer from whom the credit is to be
recaptured with an order of assessment. Any credit amount that is recaptured must be
recaptured from the taxpayer who claimed the credit on a tax return. The qualified equity
investment authority of the recaptured credits must be returned to the commissioner of
employment and economic development, and must first be awarded pro rata to applicants
that have received awards of qualified equity investment authority and complied with this
subdivision.
new text end

new text begin (f) If credits are recaptured under this section, any remaining outstanding credit is
forfeited.
new text end

new text begin Subd. 4. new text end

new text begin Sunset. new text end

new text begin This section expires for taxable years beginning after December 31,
2031, except that the expiration of this section does not affect the commissioner of revenue's
authority to audit or power of examination and assessment for credits claimed under this
section.
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, 2023.
new text end

Sec. 37.

new text begin [290.0694] CREDIT FOR SALES OF MANUFACTURED HOME PARKS
TO COOPERATIVES.
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 following definitions
have the meanings given.
new text end

new text begin (b) "Qualified seller" means a taxpayer who sells qualified property to a manufactured
home park cooperative, a nonprofit organization organized under chapter 317A, or a
representative acting on behalf of residents as defined under section 327C.015, subdivision
13.
new text end

new text begin (c) "Qualified property" means a manufactured home park in Minnesota classified as
4c(5)(i) or 4c(5)(iii) under section 273.13, subdivision 25, paragraph (d), that qualifies as
section 1250 property, as calculated under section 1250(a) of the Internal Revenue Code.
new text end

new text begin (d) "Manufactured home park cooperative" has the meaning given in section 273.124,
subdivision 3a.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed; carryforward. new text end

new text begin (a) A qualified seller is allowed a credit against
the tax imposed under this chapter. The credit equals five percent of the amount of the sale
price of the qualified property.
new text end

new text begin (b) If the amount of the credit under this section exceeds the taxpayer's liability for tax
under this chapter, the excess is a credit carryover to each of the five succeeding taxable
years. The entire amount of the excess unused credit for the taxable year must be carried
first to the earliest of the taxable years to which the credit may be carried and then to each
successive year to which the credit may be carried. The amount of the unused credit that
may be added under this paragraph may not exceed the taxpayer's liability for tax, less any
credit for the current taxable year.
new text end

new text begin (c) For nonresidents and part-year residents, 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. 3. new text end

new text begin Partnerships; multiple owners. new text end

new text begin Credits granted to a partnership, a limited
liability company taxed as a partnership, an S corporation, or multiple owners of property
are passed through to the partners, members, shareholders, or owners, respectively, pro rata
to each partner, member, shareholder, or owner based on their share of the entity's assets
or as specially allocated in their organizational documents or any other executed document,
as of the last day of the taxable year.
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, 2022.
new text end

Sec. 38.

new text begin [290.0695] SHORT LINE RAILROAD INFRASTRUCTURE
MODERNIZATION CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purpose of this section, the following terms have the
meanings given them.
new text end

new text begin (b) "Eligible taxpayer" means any railroad that is classified by the United States Surface
Transportation Board as a Class II or Class III railroad.
new text end

new text begin (c) "Eligible transferee" means any taxpayer subject to tax under this chapter or chapter
297I.
new text end

new text begin (c) "Qualified railroad reconstruction or replacement expenditures" means gross
expenditures in the taxable year for maintenance, reconstruction, or replacement of railroad
infrastructure, including track, roadbed, bridges, industrial leads and sidings, and track-related
structures owned or leased by a Class II or Class III railroad in Minnesota as of January 1,
2021. Qualified railroad reconstruction or replacement expenditures also includes new
construction of industrial leads, switches, spurs and sidings and extensions of existing sidings
in Minnesota by a Class II or Class III railroad.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed; limitation; carryover. new text end

new text begin (a) An eligible taxpayer is allowed a
credit against the tax due under this chapter equal to 50 percent of:
new text end

new text begin (1) $3,000, multiplied by;
new text end

new text begin (2) the number of miles of railroad track owned or leased within the state by the eligible
taxpayer for which the taxpayer made qualified railroad reconstruction or replacement
expenditures as of the close of the taxable year for which the credit is claimed.
new text end

new text begin (b) If the amount of the credit determined under this section for any taxable year exceeds
the limitation under paragraph (b), the excess is a credit carryover to each of the five
succeeding taxable years. The entire amount of the excess unused credit for the taxable year
must be carried first to the earliest of the taxable years to which the credit may be carried
and then to each successive year to which the credit may be carried. The amount of the
unused credit that may be added under this paragraph must not exceed the taxpayer's liability
for tax less the credit for the taxable year.
new text end

new text begin (c) An eligible taxpayer claiming a credit under this section may not also claim the credit
under section 297I.20, subdivision 6, for the same qualified railroad reconstruction or
replacement expenditures.
new text end

new text begin Subd. 3. new text end

new text begin Transferability; written agreement required; credit certificate. new text end

new text begin (a) An
eligible taxpayer may transfer the credit allowed under this section by written agreement
to an eligible transferee. The amount of the transferred credit is limited to the unused,
remaining portion of the credit.
new text end

new text begin (b) The eligible taxpayer and the eligible transferee must jointly file a copy of the written
transfer agreement with the commissioner within 30 days of the transfer. The written
agreement must contain the name, address, and taxpayer identification number of the parties
to the transfer; the taxable year the eligible taxpayer incurred the qualified expenditures;
the amount of credit being transferred; and the taxable year or years for which the transferred
credit maybe claimed.
new text end

new text begin (c) The commissioner must issue a credit certificate to the transferee within 30 days of
the joint filing of a copy of the written transfer agreement with the commissioner.
new text end

new text begin (d) In the case of an audit or assessment, the transferee is liable for repayment of credits
claimed in excess of the allowed amount.
new text end

new text begin Subd. 4. new text end

new text begin Partnerships; multiple owners. new text end

new text begin Credits granted or transferred to a partnership,
a limited liability company taxed as a partnership, an S corporation, or multiple owners of
property are passed through to the partners, members, shareholders, or owners, respectively,
pro rata to each partner, member, shareholder, or owner based on their share of the entity's
assets or as specially allocated in their organizational documents or any other executed
agreement, as of the last day of the taxable year.
new text end

new text begin Subd. 5. new text end

new text begin Allocation for nonresidents and part-year residents. new text end

new text begin For a nonresident or
part-year resident, the credit determined under this section must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
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, 2022.
new text end

Sec. 39.

new text begin [290.0811] INCOME OF CERTAIN NONRESIDENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Exemption allowed. new text end

new text begin Notwithstanding section 290.081, compensation
received by a qualifying nonresident individual for employment duties in Minnesota is
excluded from gross income, subject to the limitations in this section.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have the
meanings given.
new text end

new text begin (b) "Employee" and "employer" have the meanings given in section 290.92, subdivision
1.
new text end

new text begin (c) "Employment duties" means professional or personal services performed for an
employer by an employee who is a qualifying nonresident individual.
new text end

new text begin (d) "Entertainer" has the meaning given in section 290.9201.
new text end

new text begin (e) "Qualifying nonresident individual" means an individual:
new text end

new text begin (1) whose residence, place of abode, and place customarily returned to at least once a
month is in another state;
new text end

new text begin (2) who is paid wages for employment duties, excluding duties performed as an
entertainer, in Minnesota on 30 or fewer days in the taxable year;
new text end

new text begin (3) who performed employment duties in more than one state during the calendar year;
and
new text end

new text begin (4) whose state of residence provides a substantially similar exclusion or does not impose
an individual income tax, or whose income is exempt from taxation in Minnesota under the
United States Constitution, or the Internal Revenue Code.
new text end

new text begin (f) "Time and attendance system" means a system through which an employee is required,
on a contemporaneous basis, to record the employee's work location for every day worked
outside the state where the employee's employment duties are primarily performed and is
designed to allow the employer to allocate the employee's compensation for income tax
purposes among all states in which the employee performs employment duties for the
employer.
new text end

new text begin Subd. 3. new text end

new text begin Withholding exemption; limitation. new text end

new text begin (a) Wages paid to a qualifying nonresident
individual are exempt from the withholding requirements under section 290.92, and the
filing requirements under section 289A.09, subject to the limitations of paragraph (b).
new text end

new text begin (b) If during the taxable year, the number of days an employee spends performing
employment duties in Minnesota exceeds the 30-day threshold under subdivision 1, the
withholding requirements under section 290.92, and the filing requirements under section
289A.09, apply for every day in that calendar year, including the first 30 days, on which
the employee performs employment duties in Minnesota.
new text end

new text begin Subd. 4. new text end

new text begin Employers; application of penalties. new text end

new text begin The commissioner shall not apply
penalties or interest otherwise applicable under chapter 289A for failing to deduct and
withhold income taxes as required under section 290.92, if when determining whether
withholding was required, the employer met either of the following conditions:
new text end

new text begin (1) the employer at its sole discretion maintains a time and attendance system and relied
on data from that system; or
new text end

new text begin (2) if the employer does not maintain a time and attendance system, and the employer
relies on either:
new text end

new text begin (i) the employer's own records maintained in the regular course of business of the
employee's location; or
new text end

new text begin (ii) the employee's reasonable determination of the time the employee expected to spend
performing employment duties in Minnesota, the employer has no actual knowledge of
fraud by employee in making the determination, and the employer and the employee did
not collude to evade taxation in making the determination.
new text end

new text begin Subd. 5. new text end

new text begin Timing of employment duties performed. new text end

new text begin For the purposes of this section,
an employee shall be considered to be performing employment duties within Minnesota for
a day if the employee performs more of the employee's employment duties in Minnesota
than in any other state during that day. Any portion of the day during which the employee
is in transit must not be considered in determining the location of an employee's performance
of employment duties.
new text end

new text begin Subd. 6. new text end

new text begin Severability. new text end

new text begin If any provision of this section or the application of a provision
of this section to any person or circumstance is held to be unconstitutional, then all other
provisions of this section shall remain valid and any rights, remedies, and privileges that
have been otherwise accrued by this section shall remain in effect, and may be proceeded
with and concluded under the provisions of this chapter or other applicable law.
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, 2025.
new text end

Sec. 40.

Minnesota Statutes 2022, section 290.091, subdivision 2, as amended by Laws
2023, chapter 1, section 18, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given.

(a) "Alternative minimum taxable income" means the sum of the following for the taxable
year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(1)(D) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a person with a disability;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue
Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
to the extent not included in federal alternative minimum taxable income, the excess of the
deduction for depletion allowable under section 611 of the Internal Revenue Code for the
taxable year over the adjusted basis of the property at the end of the taxable year (determined
without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount
of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2;

(6) the amount of addition required by section 290.0131, subdivisions 9, 10, and 16;

(7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
not included in the addition required under clause (6); and

(8) to the extent not included in federal alternative minimum taxable income, the amount
of foreign-derived intangible income deducted under section 250 of the Internal Revenue
Code;

less the sum of the amounts determined under the following:

(i) interest income as defined in section 290.0132, subdivision 2;

(ii) an overpayment of state income tax as provided by section 290.0132, subdivision
3, to the extent included in federal alternative minimum taxable income;

(iii) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as defined
in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
in computing federal adjusted gross income;

(iv) amounts subtracted from federal taxable or adjusted gross income as provided by
section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, 26 to 29, deleted text begin anddeleted text end 31new text begin , and 35new text end ;

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c); and

(vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
subdivision 7.

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Code, except alternative minimum
taxable income must be increased by the addition in section 290.0131, subdivision 16.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of
the Internal Revenue Code.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
under this chapter.

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 41.

Minnesota Statutes 2022, section 290.17, subdivision 4, is amended to read:

Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly within
this state or partly within and partly without this state is part of a unitary business, the entire
new text begin worldwide new text end income of the unitary business is subject to apportionment pursuant to section
290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source and none may be allocated
to a particular place except as provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to business income subject to subdivision 5,
income of an insurance company, or income of an investment company determined under
section 290.36.

(b) The term "unitary business" means business activities or operations which result in
a flow of value between them. The term may be applied within a single legal entity or
between multiple entities and without regard to whether each entity is a sole proprietorship,
a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use, evidenced
by centralized management or executive force, centralized purchasing, advertising,
accounting, or other controlled interaction, but the absence of these centralized activities
will not necessarily evidence a nonunitary business. Unity is also presumed when business
activities or operations are of mutual benefit, dependent upon or contributory to one another,
either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business entity
that carries on business activity outside the state different in kind from that conducted within
this state, and the other business is conducted entirely outside the state, it is presumed that
the two business operations are unitary in nature, interrelated, connected, and interdependent
unless it can be shown to the contrary.

(e) Unity of ownership does not exist when two or more corporations are involved unless
more than 50 percent of the voting stock of each corporation is directly or indirectly owned
by a common owner or by common owners, either corporate or noncorporate, or by one or
more of the member corporations of the group. For this purpose, the term "voting stock"
shall include membership interests of mutual insurance holding companies formed under
section 66A.40.

deleted text begin (f) The net income and apportionment factors under section 290.191 or 290.20 of foreign
corporations and other foreign entities, but excluding a disqualified captive insurance
company, which are part of a unitary business shall not be included in the net income or
the apportionment factors of the unitary business; except that the income and apportionment
factors of a foreign entity, other than an entity treated as a C corporation for federal income
tax purposes, that are included in the federal taxable income, as defined in section 63 of the
Internal Revenue Code as amended through the date named in section 290.01, subdivision
19, of a domestic corporation, domestic entity, or individual must be included in determining
net income and the factors to be used in the apportionment of net income pursuant to section
290.191 or 290.20. A foreign corporation or other foreign entity which is not included on
a combined report and which is required to file a return under this chapter shall file on a
separate return basis.
deleted text end

deleted text begin (g)deleted text end new text begin (f)new text end For purposes of determining the net income of a unitary business and the factors
to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
must be included deleted text begin onlydeleted text end the income and apportionment factors of domesticnew text begin and foreignnew text end
corporations or other domesticnew text begin and foreignnew text end entities that are determined to be part of the
unitary business pursuant to this subdivisiondeleted text begin , notwithstanding that foreign corporations or
other foreign entities might be included in the unitary business; except that the income and
apportionment factors of a foreign entity, other than an entity treated as a C corporation for
federal income tax purposes, that is included in the federal taxable income, as defined in
section 63 of the Internal Revenue Code as amended through the date named in section
290.01, subdivision 19, of a domestic corporation, domestic entity, or individual must be
included in determining net income and the factors to be used in the apportionment of net
income pursuant to section 290.191 or 290.20deleted text end new text begin . For foreign corporations and other foreign
entities not subject to a federal income tax filing requirement under United States Code,
title 26, subtitle A, net income must be determined as required under section 290.01,
subdivision 19new text end .

deleted text begin (h)deleted text end new text begin (g)new text end Each corporation or other entity, except a sole proprietorship, that is part of a
unitary business must file combined reports as the commissioner determines. On the reports,
all intercompany transactions between entities included pursuant to paragraph deleted text begin (g)deleted text end new text begin (f)new text end must
be eliminated and the entire net income of the unitary business determined in accordance
with this subdivision is apportioned among the entities by using each entity's Minnesota
factors for apportionment purposes in the numerators of the apportionment formula and the
total factors for apportionment purposes of all entities included pursuant to paragraph deleted text begin (g)deleted text end new text begin
(f)new text end in the denominators of the apportionment formula. Except as otherwise provided by
paragraph (f), all sales of the unitary business made within this state pursuant to section
290.191 or 290.20 must be included on the combined report of a corporation or other entity
that is a member of the unitary business and is subject to the jurisdiction of this state to
impose tax under this chapter.

deleted text begin (i)deleted text end new text begin (h)new text end If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:

(1) its income includable in the combined report is its income incurred for that part of
the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must be prorated
or accounted for separately.

deleted text begin (j)deleted text end new text begin (i)new text end For purposes of this subdivision, "insurance company" means an insurance
company, as defined in section 290.01, subdivision 5b, that is not a disqualified captive
insurance company.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2023.
new text end

Sec. 42.

Minnesota Statutes 2022, section 290.17, is amended by adding a subdivision to
read:

new text begin Subd. 4a. new text end

new text begin Foreign corporations and other foreign entities. new text end

new text begin (a) For purposes of imposing
a tax under this chapter, the federal taxable income of a foreign corporation or other foreign
entity must be computed as follows:
new text end

new text begin (1) a profit and loss statement must be prepared in the currency in which the books of
account of the foreign corporation or other foreign entity are regularly maintained;
new text end

new text begin (2) except as determined by the commissioner, adjustments must be made to the profit
and loss statement to conform the statement to the accounting principles generally accepted
in the United States for the preparation of those statements;
new text end

new text begin (3) adjustments must be made to the profit and loss statement to conform it to the tax
accounting standards required by the commissioner;
new text end

new text begin (4) unless otherwise authorized by the commissioner, the profit and loss statement of
each member of the combined group, and the apportionment factors related to the combined
group, whether domestic or foreign, must be converted into United States dollars; and
new text end

new text begin (5) income apportioned to this state must be expressed in United States dollars.
new text end

new text begin (b) Notwithstanding paragraph (a), if the commissioner determines that the information
required in the statements under that paragraph may only be obtained through a burdensome
effort and expense, the commissioner may allow reasonable approximations of the
information.
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, 2023.
new text end

Sec. 43.

Minnesota Statutes 2022, section 297I.20, subdivision 4, is amended to read:

Subd. 4.

Film production credit.

(a) A taxpayer may claim a credit against the premiums
tax imposed under this chapter equal to the amount indicated on the credit certificate
statement issued to the company under section 116U.27. If the amount of the credit exceeds
the taxpayer's liability for tax under this chapter, the excess is a credit carryover to each of
the five succeeding taxable years. The entire amount of the excess unused credit for the
taxable year must be carried first to the earliest of the taxable years to which the credit may
be carried and then to each successive year to which the credit may be carried. This credit
does not affect the calculation of fire state aid under section 477B.03 and police state aid
under section 477C.03.

(b) This subdivision expires January 1, deleted text begin 2025deleted text end new text begin 2033new text end , for taxable years beginning after and
premiums received after December 31, deleted text begin 2024deleted text end new text begin 2032new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 44.

Minnesota Statutes 2022, section 297I.20, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Short line railroad infrastructure modernization credit. new text end

new text begin A taxpayer may
claim a credit against the premiums tax imposed under this chapter equal to the amount
indicated on the credit certificate statement issued to the company under section 290.0695,
provided that the taxpayer is not also claiming a credit under that section for the same
qualified railroad reconstruction or replacement expenditures. If the amount of the credit
exceeds the taxpayer's liability for tax under this chapter, the excess is a credit carryover to
each of the five succeeding taxable years. The entire amount of the excess unused credit
for the taxable year must be carried first to the earliest of the taxable years to which the
credit may be carried and then to each successive year to which the credit may be carried.
This credit does not affect the calculation of fire state aid under section 477B.03 and police
state aid under section 477C.03.
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, 2022.
new text end

Sec. 45.

Minnesota Statutes 2022, section 297I.20, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin New markets tax credit. new text end

new text begin (a) A taxpayer may claim a credit against the premiums
tax imposed under this chapter equal to the amount calculated under section 116X.01,
subdivision 2. The credit is claimed beginning in the taxable year of the third credit allowance
date. If the amount of the credit exceeds the liability for tax under this chapter, the excess
is a credit carryover to each of the five succeeding taxable years. The entire amount of the
excess unused credit for the taxable year must be carried first to the earliest of the taxable
years to which the credit may be carried and then to each successive year to which the credit
may be carried. This credit does not affect the calculation of fire state aid under section
477B.03 and police state aid under section 477C.03.
new text end

new text begin (b) This subdivision expires January 1, 2032, for taxable years beginning after and
premiums received after December 31, 2031.
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, 2023.
new text end

Sec. 46. new text begin 2023 ADVANCE PAYMENT AND ONE-TIME REFUNDABLE CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed; eligibility. new text end

new text begin (a) An individual is allowed a credit against
the tax imposed under Minnesota Statutes, chapter 290. The credit equals $279 for an
individual who files an income tax return as a single person or as a married person who
files a married filing separate income tax return and $558 for all other income tax filers.
new text end

new text begin (b) For an individual, or a married couple filing a joint income tax return, with a
dependent, as defined in sections 151 and 152 of the Internal Revenue Code, the credit is
increased by $56 per dependent up to a maximum additional credit of $168.
new text end

new text begin (c) The maximum combined credit under this subdivision is $447 for an individual who
files an income tax return as a single person or as a married individual who files a married
filing separate income tax return and $726 for all other income tax filers.
new text end

new text begin (d) The credit is not available to an individual who:
new text end

new text begin (1) is not a resident of Minnesota, as defined in Minnesota Statutes, section 290.01,
subdivision 7, during any part of 2023;
new text end

new text begin (2) is a dependent, as defined in sections 151 and 152 of the Internal Revenue Code, for
2023; and
new text end

new text begin (3) has adjusted gross income, as defined in Minnesota Statutes, section 290.01,
subdivision 21a, for 2023 greater than:
new text end

new text begin (i) $75,000 for an individual who files an income tax return as a single person or as a
married person who files a married filing separate income tax return; and
new text end

new text begin (ii) $150,000 for all other income tax filers.
new text end

new text begin (e) For an individual who was a Minnesota resident for only part of 2023, or for a married
couple filing a joint return where one or both individuals were Minnesota residents for only
part of 2023, the credit equals the credit allowed under paragraph (a) times the percentage
calculated under Minnesota Statutes, section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin (f) If the amount of the credit under this subdivision exceeds the individual's or the
married couple's liability for tax under Minnesota Statutes, chapter 290, the commissioner
shall refund the excess to the taxpayer.
new text end

new text begin (g) The credit applies to taxable years beginning after December 31, 2022, and before
January 1, 2024.
new text end

new text begin Subd. 2. new text end

new text begin Advance payment of credit. new text end

new text begin (a) The commissioner of revenue may issue a
taxpayer an advance payment of the credit provided in subdivision 1. To be eligible for an
advance payment, the commissioner must reasonably believe the taxpayer will be eligible
for the credit, and the taxpayer must have filed, before January 1, 2023:
new text end

new text begin (1) an individual income tax return for tax year 2021; or
new text end

new text begin (2) a property tax refund return under Minnesota Statutes, chapter 290A, based on
property taxes payable in 2022 or rent constituting property taxes paid in 2021.
new text end

new text begin (b) The commissioner may contract with a third party to implement all or part of the
payment process.
new text end

new text begin (c) The commissioner must not issue an advance payment to any taxpayer who:
new text end

new text begin (1) was not a resident of Minnesota on December 31, 2021;
new text end

new text begin (2) was a dependent, as defined in sections 151 and 152 of the Internal Revenue Code,
for 2021;
new text end

new text begin (3) had adjusted gross income, as defined in Minnesota Statutes, section 290.01,
subdivision 21a, for 2021 greater than (i) $50,000 for an individual who filed an income
tax return as a single person or as a married individual who filed a married filing separate
income tax return, or (ii) $100,000 for all other income tax filers; or
new text end

new text begin (4) died before January 1, 2023.
new text end

new text begin (d) The advance payment under this section shall be paid by the commissioner of revenue
based on information available in the commissioner's records, and individuals are not
required to file a claim with the commissioner. The decision of the commissioner to not
make an advance payment to a taxpayer is not appealable.
new text end

new text begin (e) The commissioner of revenue must make a joint advance payment to individuals
who filed a joint income tax return for 2021. If individuals who receive a joint advance
payment do not file a joint tax return with each other for 2023, each spouse is deemed to
have received an advance payment equal to one-half of the joint payment.
new text end

new text begin Subd. 3. new text end

new text begin Payments to taxpayers who do not receive an advance payment. new text end

new text begin (a) A
taxpayer may claim any amount of unpaid credit on an individual income tax return for
2023 if the taxpayer was eligible for:
new text end

new text begin (1) the credit under subdivision 1 and did not receive an advance payment under
subdivision 2; or
new text end

new text begin (2) the additional credit under subdivision 1, paragraph (a), clause (2), and did not receive
an advance payment for the full amount of the credit.
new text end

new text begin (b) The credit allowed to a taxpayer under this subdivision is reduced by any advance
payment received under subdivision 2. The credit allowed for married taxpayers who file
a joint return in 2023 is reduced by any advance payment received under subdivision 2 by
either spouse.
new text end

new text begin (c) No credit under paragraph (a), clause (2), is allowed unless the TIN of the dependent,
as defined in section 7701(a)(41) of the Internal Revenue Code, is included on the tax return
that lists the individual as a dependent.
new text end

new text begin Subd. 4. new text end

new text begin Repayment of advance payment. new text end

new text begin (a) An individual or married couple who
receives an advance payment under subdivision 2 but who does not meet eligibility for the
credit under subdivision 1, paragraph (a), or does not meet eligibility for the amount of the
advance payment of the credit allowed under subdivision (1), paragraph (b), must repay the
amount of the overpayment to the commissioner of revenue. Repayment is due on April
15, 2024.
new text end

new text begin (b) All provisions not inconsistent with this section under Minnesota Statutes, chapters
270C and 289A, relating to collection, audit, assessment, refunds, penalty, interest,
enforcement, collection remedies, appeal, and administration of individual income tax apply
to this section.
new text end

new text begin (c) The commissioner may issue an order of assessment under Minnesota Statutes,
section 270C.33, to recover an advance payment made under subdivision 2 that is issued
to a person not eligible for the credit. The assessment must be made within the period for
assessing tax for the 2023 individual income tax under Minnesota Statutes, section 289A.38.
new text end

new text begin Subd. 5. new text end

new text begin Internal Revenue Code. new text end

new text begin References to the Internal Revenue Code in this
section are to the Internal Revenue Code of 1986, as amended, that is in effect under
Minnesota Statutes, section 290.01, for the taxable year to which the reference relates.
new text end

new text begin Subd. 6. new text end

new text begin Data classification. new text end

new text begin Data classified as nonpublic data or private data on
individuals, including return information, as defined in Minnesota Statutes, section 270B.01,
subdivision 3, may be shared or disclosed between the commissioner of revenue and any
third-party vendor contracted with under this section, to the extent necessary to administer
advance payments under this section.
new text end

new text begin Subd. 7. new text end

new text begin Advance payment not subject to set off. new text end

new text begin The commissioner of revenue must
not apply, and must not certify to another agency to apply, an advance payment to any
unpaid tax or nontax debt.
new text end

new text begin Subd. 8. new text end

new text begin Not income. new text end

new text begin (a) An advance payment or refund of a credit under this section
is not considered income in determining Minnesota income tax, Minnesota income tax
credits, the Minnesota property tax refund, or the Minnesota senior citizen property tax
deferral.
new text end

new text begin (b) Notwithstanding any law to the contrary, the advance payment or credit under this
section must not be considered income, assets, or personal property for purposes of
determining eligibility or recertifying eligibility for:
new text end

new text begin (1) child care assistance programs under Minnesota Statutes, chapter 119B;
new text end

new text begin (2) general assistance, Minnesota supplemental aid, and food support under Minnesota
Statutes, chapter 256D;
new text end

new text begin (3) housing support under Minnesota Statutes, chapter 256I;
new text end

new text begin (4) the Minnesota family investment program and diversionary work program under
Minnesota Statutes, chapter 256J; and
new text end

new text begin (5) economic assistance programs under Minnesota Statutes, chapter 256P.
new text end

new text begin (c) The commissioner of human services must not consider an advance payment or credit
under this section as income or assets under Minnesota Statutes, section 256B.056,
subdivisions 1a, paragraph (a); 3; or 3c, or for persons with eligibility determined under
Minnesota Statutes, section 256B.057, subdivisions 3, 3a, or 3b.
new text end

new text begin Subd. 9. new text end

new text begin Procurement. new text end

new text begin The commissioner of revenue is exempt from the requirements
of Minnesota Statutes, section 16A.15, subdivision 3; 16B.97; and 16B.98, subdivisions 5,
7, and 8; and chapter 16C, and any other state procurement laws and procedures in
administering this section.
new text end

new text begin Subd. 10. new text end

new text begin Appropriation. new text end

new text begin The amount necessary to make the advance payments and
refunds payable under this section is appropriated to the commissioner of revenue from the
general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 47. new text begin HISTORIC STRUCTURE REHABILITATION CREDIT; SPECIAL
PROVISION.
new text end

new text begin For the purposes of the credit under Minnesota Statutes, section 290.0681, projects that
have started rehabilitation work after June 30, 2022, and before July 1, 2023, that otherwise
meet all other requirements of Minnesota Statutes, section 290.0681, subdivision 3, may
be eligible for the credit if the application is received within 60 days of July 1, 2023.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 48. new text begin REVIVAL AND REENACTMENT OF EXPIRED PROVISIONS.
new text end

new text begin (a) The expired provisions of Minnesota Statutes, section 116J.8737, subdivisions 1 to
9, 11, and 12, as amended by Laws 2021, First Special Session chapter 14, article 1, sections
1 and 2, and sections 7 and 8 of this act, are revived and reenacted.
new text end

new text begin (b) The expired provisions of Minnesota Statutes, section 290.0692, are revived and
reenacted.
new text end

new text begin (c) The expired provisions of Minnesota Statutes, section 290.0681, subdivisions 1 to
9, as amended by sections 29 and 30, are revived and reenacted.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 49. new text begin SUBTRACTION; CERTAIN UNEMPLOYMENT COMPENSATION.
new text end

new text begin (a) For the purposes of this section, "subtraction" has the meaning given in Minnesota
Statutes, section 290.0132, subdivision 1, and the rules in that subdivision apply for this
section.
new text end

new text begin (b) Unemployment compensation received by individuals in taxable years beginning
after December 31, 2020, and before January 1, 2022, as a result of the decision issued by
the Minnesota Court of Appeals, 956 N.W. 2d 1, filed February 22, 2021, is a subtraction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2020, and before January 1, 2022.
new text end

Sec. 50. new text begin REPEALER; REPEAL OF EXPIRATION AND REVIVAL OF EXPIRED
PROVISIONS.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2022, section 290.0681, subdivision 10, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2022, section 41B.0391, subdivision 7, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective the day following final enactment and
applies to applications for allocation certificates submitted after June 30, 2023. Paragraph
(b) is effective the day following final enactment.
new text end

ARTICLE 3

PROPERTY TAX

Section 1.

Minnesota Statutes 2022, section 103D.905, subdivision 3, is amended to read:

Subd. 3.

General fund.

A general fund, consisting of an ad valorem tax levy, may not
exceed deleted text begin 0.048deleted text end new text begin 0.096new text end percent of estimated market value, or deleted text begin $250,000deleted text end new text begin $500,000new text end , whichever
is less. The money in the fund shall be used for general administrative expenses and for the
construction or implementation and maintenance of projects of common benefit to the
watershed district. The managers may make an annual levy for the general fund as provided
in section 103D.911. In addition to the annual general levy, the managers may annually
levy a tax not to exceed 0.00798 percent of estimated market value for a period not to exceed
15 consecutive years to pay the cost attributable to the basic water management features of
projects initiated by petition of a political subdivision within the watershed district or by
petition of at least 50 resident owners whose property is within the watershed district.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2024
and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2022, section 272.02, subdivision 24, is amended to read:

Subd. 24.

Solar energy generating systems.

Personal property consisting of solar energy
generating systems, as defined in section 272.0295, is exempt. If the real property upon
which a solar energy generating system is located is used primarily for solar energy
production subject to the production tax under section 272.0295, the real property shall be
classified as class 3a. If the real property upon which a solar energy generating system is
located is not used primarily for solar energy production subject to the production tax under
section 272.0295, the real property shall be classified without regard to the system.new text begin If real
property contains more than one solar energy generating system that cannot be combined
with the nameplate capacity of another solar energy generating system for the purposes of
the production tax under section 272.0295, but is in aggregate over one megawatt, then the
real property upon which the systems are located shall be classified as class 3a.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2024.
new text end

Sec. 3.

Minnesota Statutes 2022, section 272.02, subdivision 98, is amended to read:

Subd. 98.

Certain property owned by an Indian tribe.

(a) Property is exempt that:

(1) was classified as 3a under section 273.13, subdivision 24, for taxes payable in 2013;

(2) is located in a city of the first class with a population greater than 300,000 as of the
2010 federal census;

(3) was on January 2, 2012, and is for the current assessment owned by a federally
recognized Indian tribe, or its instrumentality, that is located within the state of Minnesota;
and

(4) is used exclusively for tribal purposes or institutions of purely public charity as
defined in subdivision 7.

(b) For purposes of this subdivision, a "tribal purpose" means a public purpose as defined
in subdivision 8 and includes noncommercial tribal government activities. Property that
qualifies for the exemption under this subdivision is limited to no more than two contiguous
parcels and structures that do not exceed in the aggregate 20,000 square feet. Property
acquired for single-family housing, market-rate apartments, agriculture, or forestry does
not qualify for this exemption. deleted text begin The exemption created bydeleted text end This subdivision expires with
taxes payable in deleted text begin 2024deleted text end new text begin 2034new text end .

new text begin (c) Property exempt under this section is exempt from the requirements of section
272.025. Upon the written request of an assessor, all books and records relating to the
ownership or use of the property which are reasonably necessary to verify that the property
qualifies for exemption shall be made available to the assessor.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes payable in 2023 and
thereafter.
new text end

Sec. 4.

Minnesota Statutes 2022, section 272.02, is amended by adding a subdivision to
read:

new text begin Subd. 105. new text end

new text begin Elderly living facility. new text end

new text begin An elderly living facility is exempt from taxation if
it meets all of the following requirements:
new text end

new text begin (1) the facility is located in a city of the first class with a population of fewer than
110,000;
new text end

new text begin (2) the facility is owned and operated by a nonprofit corporation organized under chapter
317A;
new text end

new text begin (3) construction of the facility was completed between January 1, 1963, and January 1,
1964;
new text end

new text begin (4) the facility is an assisted living facility licensed by the state of Minnesota;
new text end

new text begin (5) residents of the facility must be (i) at least 55 years of age, or (ii) disabled; and
new text end

new text begin (6) at least 30 percent of the units in the facility are occupied by persons whose annual
income does not exceed 50 percent of the median family income for the area.
new text end

new text begin For assessment year 2022 only, an exemption application under this section must be filed
with the county assessor by June 15, 2023.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2023.
new text end

Sec. 5.

Minnesota Statutes 2022, section 272.02, is amended by adding a subdivision to
read:

new text begin Subd. 106. new text end

new text begin Energy storage systems. new text end

new text begin (a) Personal property consisting of an energy
storage system is exempt, provided that:
new text end

new text begin (1) the property is not located in an energy community, as defined in the Inflation
Redution Act of 2022, Public Law 117-169, section 13101; and
new text end

new text begin (2) the storage capacity of the system does not exceed 300 megawatt-hours.
new text end

new text begin (b) For the purposes of this subdivision, "energy storage system" has the meaning given
in section 216B.2422, subdivision 1, paragraph (f).
new text end

new text begin (c) A taxpayer requesting an exemption under this subdivision must file an application
with the commissioner of revenue. The commissioner shall prescribe the content, format,
and manner of the application pursuant to section 270C.30, except that a "law administered
by the commissioner" includes the property tax laws. In determining eligibility for the
exemption under this section, the commissioner of revenue may request information and
advice from the commissioner of commerce. On determining that property qualifies for
exemption, the commissioner of revenue shall issue an order exempting the property from
taxation. The commissioner of revenue shall develop an electronic means to notify interested
parties when the commissioner has issued an order exempting property from taxation under
this section. The energy storage system shall continue to be exempt from taxation as long
as the order issued by the commissioner of revenue remains in effect.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2024.
new text end

Sec. 6.

Minnesota Statutes 2022, section 272.025, subdivision 1, is amended to read:

Subdivision 1.

Statement of exemption.

(a) Except in the case of property owned by
the state of Minnesota or any political subdivision thereof, a taxpayer claiming an exemption
from taxation on property described in section 272.02 must file a statement of exemption
with the assessor of the assessment district in which the property is located. By January 2,
2018, and each third year thereafter, the commissioner of revenue shall publish on its website
a list of the exemptions for which a taxpayer claiming an exemption must file a statement
of exemption. The commissioner's requirement that a taxpayer file a statement of exemption
pursuant to this subdivision shall not be considered a rule and is not subject to the
Administrative Procedure Act, chapter 14.

(b) A taxpayer claiming an exemption from taxation on property described in section
272.02, deleted text begin subdivisiondeleted text end new text begin subdivisionsnew text end 10new text begin and 106new text end , must file a statement of exemption with the
commissioner of revenue, on or before February 15 of each year for which the taxpayer
claims an exemption.

(c) In case of sickness, absence or other disability or for good cause, the assessor or the
commissioner may extend the time for filing the statement of exemption for a period not to
exceed 60 days.

(d) The commissioner of revenue shall prescribe the content, format, and manner of the
statement of exemption pursuant to section 270C.30, except that a "law administered by
the commissioner" includes the property tax laws.

(e) If a statement is made by electronic means, the taxpayer's signature is defined pursuant
to section 270C.304, except that a "law administered by the commissioner" includes the
property tax laws.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2024.
new text end

Sec. 7.

Minnesota Statutes 2022, section 273.11, subdivision 12, is amended to read:

Subd. 12.

Community land trusts.

(a) A community land trust, as defined under chapter
462A, is (i) a community-based nonprofit corporation organized under chapter 317A, which
qualifies for tax exempt status under 501(c)(3), or (ii) a "city" as defined in section 462C.02,
subdivision 6, which has received funding from the Minnesota housing finance agency for
purposes of the community land trust program. The Minnesota Housing Finance Agency
shall set the criteria for community land trusts.

(b) Before the community land trust can rent or sell a unit to an applicant, the community
land trust shall verify to the satisfaction of the administering agency or the city that the
family income of each person or family applying for a unit in the community land trust
building is within the income criteria provided in section 462A.30, subdivision 9. The
administering agency or the city shall verify to the satisfaction of the county assessor that
the occupant meets the income criteria under section 462A.30, subdivision 9. The property
tax benefits under paragraph (c) shall be granted only to property owned or rented by persons
or families within the qualifying income limits. The family income criteria and verification
is only necessary at the time of initial occupancy in the property.

(c) A unit which is owned by the occupant and used as a homestead by the occupant
qualifies for homestead treatment as class 1a under section 273.13, subdivision 22new text begin ,new text end new text begin unless
the unit meets the requirements of section 273.13, subdivision 25, paragraph (e), clause (2),
in which case the unit shall be classified as 4d(2)new text end . A unit which is rented by the occupant
and used as a homestead by the occupant shall be class 4a or 4b property, under section
273.13, subdivision 25, whichever is applicable. Any remaining portion of the property not
used for residential purposes shall be classified by the assessor in the appropriate class based
upon the use of that portion of the property owned by the community land trust. The land
upon which the building is located shall be assessed at the same classification rate as the
units within the building, provided that if the building contains some units assessed as class
1anew text begin or class 4d(1)new text end and some units assessed as class 4a or 4b, the market value of the land
will be assessed in the same proportions as the value of the building.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2024.
new text end

Sec. 8.

Minnesota Statutes 2022, section 273.11, subdivision 23, is amended to read:

Subd. 23.

First tier valuation limit; agricultural homestead property.

(a) The
commissioner of revenue shall annually certify the first tier limit for agricultural homestead
property. For assessment year deleted text begin 2010deleted text end new text begin 2024new text end , the limit is deleted text begin $1,140,000deleted text end new text begin $3,500,000new text end . Beginning
with assessment year deleted text begin 2011deleted text end new text begin 2025new text end , the limit is the product of (i) the first tier limit for the
preceding assessment year, and (ii) the ratio of the statewide average taxable market value
of agricultural property per acre of deeded farm land in the preceding assessment year to
the statewide average taxable market value of agricultural property per acre of deeded farm
land for the second preceding assessment year. The limit shall be rounded to the nearest
$10,000.

(b) For the purposes of this subdivision, "agricultural property" means all class 2a
property under section 273.13, subdivision 23, except for property consisting of the house,
garage, and immediately surrounding one acre of land of an agricultural homestead.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2024.
new text end

Sec. 9.

Minnesota Statutes 2022, section 273.111, is amended by adding a subdivision to
read:

new text begin Subd. 3b. new text end

new text begin Property no longer eligible for deferment. new text end

new text begin (a) Real estate that received the
tax deferment under this section for assessment year 2012 and would have continued to
qualify for tax deferment for assessment years from 2013 to 2023 but for an eminent domain
action that reduced the real estate to less than ten acres, shall reapply as provided in paragraph
(b) and, if determined eligible, shall qualify for the tax deferment under this section for
assessment year 2024 and thereafter until:
new text end

new text begin (1) the property no longer qualifies for classification as class 2a under section 273.13;
new text end

new text begin (2) the property is voluntarily withdrawn from the program; or
new text end

new text begin (3) the property is sold, transferred, or subdivided.
new text end

new text begin (b) Application for deferment under this subdivision shall be filed by May 1 of the year
prior to the year in which the taxes are payable. The application must be filed with the
assessor of the taxing district in which the real property is located on the form prescribed
by the commissioner of revenue. The assessor may request additional information necessary
to determine eligibility under this subdivision.
new text end

new text begin (c) Property assessed under this subdivision is subject to additional taxes, as provided
in subdivision 9, when the property:
new text end

new text begin (1) no longer qualifies for classification as class 2a under section 273.13;
new text end

new text begin (2) is voluntarily withdrawn from the program; or
new text end

new text begin (3) is sold, transferred, or subdivided.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2024 and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2022, section 273.124, subdivision 6, is amended to read:

Subd. 6.

Leasehold cooperatives.

When one or more dwellings or one or more buildings
which each contain several dwelling units is owned by a nonprofit corporation subject to
the provisions of chapter 317A and qualifying under section 501(c)(3) or 501(c)(4) of the
Internal Revenue Code, or a limited partnership which corporation or partnership operates
the property in conjunction with a cooperative association, and has received public financing,
homestead treatment may be claimed by the cooperative association on behalf of the members
of the cooperative for each dwelling unit occupied by a member of the cooperative. The
cooperative association must provide the assessor with the Social Security numbers new text begin or
individual taxpayer identification numbers new text end of those members. To qualify for the treatment
provided by this subdivision, the following conditions must be met:

(a) the cooperative association must be organized under chapter 308A or 308B and all
voting members of the board of directors must be resident tenants of the cooperative and
must be elected by the resident tenants of the cooperative;

(b) the cooperative association must have a lease for occupancy of the property for a
term of at least 20 years, which permits the cooperative association, while not in default on
the lease, to participate materially in the management of the property, including material
participation in establishing budgets, setting rent levels, and hiring and supervising a
management agent;

(c) to the extent permitted under state or federal law, the cooperative association must
have a right under a written agreement with the owner to purchase the property if the owner
proposes to sell it; if the cooperative association does not purchase the property it is offered
for sale, the owner may not subsequently sell the property to another purchaser at a price
lower than the price at which it was offered for sale to the cooperative association unless
the cooperative association approves the sale;

(d) a minimum of 40 percent of the cooperative association's members must have incomes
at or less than 60 percent of area median gross income as determined by the United States
Secretary of Housing and Urban Development under section 142(d)(2)(B) of the Internal
Revenue Code. For purposes of this clause, "member income" means the income of a member
existing at the time the member acquires cooperative membership;

(e) if a limited partnership owns the property, it must include as the managing general
partner a nonprofit organization operating under the provisions of chapter 317A and
qualifying under section 501(c)(3) or 501(c)(4) of the Internal Revenue Code and the limited
partnership agreement must provide that the managing general partner have sufficient powers
so that it materially participates in the management and control of the limited partnership;

(f) prior to becoming a member of a leasehold cooperative described in this subdivision,
a person must have received notice that (1) describes leasehold cooperative property in plain
language, including but not limited to the effects of classification under this subdivision on
rents, property taxes and tax credits or refunds, and operating expenses, and (2) states that
copies of the articles of incorporation and bylaws of the cooperative association, the lease
between the owner and the cooperative association, a sample sublease between the
cooperative association and a tenant, and, if the owner is a partnership, a copy of the limited
partnership agreement, can be obtained upon written request at no charge from the owner,
and the owner must send or deliver the materials within seven days after receiving any
request;

(g) if a dwelling unit of a building was occupied on the 60th day prior to the date on
which the unit became leasehold cooperative property described in this subdivision, the
notice described in paragraph (f) must have been sent by first class mail to the occupant of
the unit at least 60 days prior to the date on which the unit became leasehold cooperative
property. For purposes of the notice under this paragraph, the copies of the documents
referred to in paragraph (f) may be in proposed version, provided that any subsequent
material alteration of those documents made after the occupant has requested a copy shall
be disclosed to any occupant who has requested a copy of the document. Copies of the
articles of incorporation and certificate of limited partnership shall be filed with the secretary
of state after the expiration of the 60-day period unless the change to leasehold cooperative
status does not proceed;

(h) the county attorney of the county in which the property is located must certify to the
assessor that the property meets the requirements of this subdivision;

(i) the public financing received must be from at least one of the following sources:

(1) tax increment financing proceeds used for the acquisition or rehabilitation of the
building or interest rate write-downs relating to the acquisition of the building;

(2) government issued bonds exempt from taxes under section 103 of the Internal Revenue
Code, the proceeds of which are used for the acquisition or rehabilitation of the building;

(3) programs under section 221(d)(3), 202, or 236, of Title II of the National Housing
Act;

(4) rental housing program funds under Section 8 of the United States Housing Act of
1937, as amended, or the market rate family graduated payment mortgage program funds
administered by the Minnesota Housing Finance Agency that are used for the acquisition
or rehabilitation of the building;

(5) low-income housing credit under section 42 of the Internal Revenue Code;

(6) public financing provided by a local government used for the acquisition or
rehabilitation of the building, including grants or loans from (i) federal community
development block grants; (ii) HOME block grants; or (iii) residential rental bonds issued
under chapter 474A; or

(7) other rental housing program funds provided by the Minnesota Housing Finance
Agency for the acquisition or rehabilitation of the building;

(j) at the time of the initial request for homestead classification or of any transfer of
ownership of the property, the governing body of the municipality in which the property is
located must hold a public hearing and make the following findings:

(1) that the granting of the homestead treatment of the apartment's units will facilitate
safe, clean, affordable housing for the cooperative members that would otherwise not be
available absent the homestead designation;

(2) that the owner has presented information satisfactory to the governing body showing
that the savings garnered from the homestead designation of the units will be used to reduce
tenant's rents or provide a level of furnishing or maintenance not possible absent the
designation; and

(3) that the requirements of paragraphs (b), (d), and (i) have been met.

Homestead treatment must be afforded to units occupied by members of the cooperative
association and the units must be assessed as provided in subdivision 3, provided that any
unit not so occupied shall be classified and assessed pursuant to the appropriate class. No
more than three acres of land may, for assessment purposes, be included with each dwelling
unit that qualifies for homestead treatment under this subdivision.

When dwelling units no longer qualify under this subdivision, the current owner must
notify the assessor within 60 days. Failure to notify the assessor within 60 days shall result
in the loss of benefits under this subdivision for taxes payable in the year that the failure is
discovered. For these purposes, "benefits under this subdivision" means the difference in
the net tax capacity of the units which no longer qualify as computed under this subdivision
and as computed under the otherwise applicable law, times the local tax rate applicable to
the building for that taxes payable year. Upon discovery of a failure to notify, the assessor
shall inform the auditor of the difference in net tax capacity for the building or buildings in
which units no longer qualify, and the auditor shall calculate the benefits under this
subdivision. Such amount, plus a penalty equal to 100 percent of that amount, shall then be
demanded of the building's owner. The property owner may appeal the county's determination
by serving copies of a petition for review with county officials as provided in section 278.01
and filing a proof of service as provided in section 278.01 with the Minnesota Tax Court
within 60 days of the date of the notice from the county. The appeal shall be governed by
the Tax Court procedures provided in chapter 271, for cases relating to the tax laws as
defined in section 271.01, subdivision 5; disregarding sections 273.125, subdivision 5, and
278.03, but including section 278.05, subdivision 2. If the amount of the benefits under this
subdivision and penalty are not paid within 60 days, and if no appeal has been filed, the
county auditor shall certify the amount of the benefit and penalty to the succeeding year's
tax list to be collected as part of the property taxes on the affected buildings.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for homestead applications
filed in 2023 and thereafter.
new text end

Sec. 11.

Minnesota Statutes 2022, section 273.124, subdivision 13, is amended to read:

Subd. 13.

Homestead application.

(a) A person who meets the homestead requirements
under subdivision 1 must file a homestead application with the county assessor to initially
obtain homestead classification.

(b) The commissioner shall prescribe the content, format, and manner of the homestead
application required to be filed under this chapter pursuant to section 270C.30. The
application must clearly inform the taxpayer that this application must be signed by all
owners who occupy the property or by the qualifying relative and returned to the county
assessor in order for the property to receive homestead treatment.

(c) Every property owner applying for homestead classification must furnish to the
county assessor the Social Security number new text begin or individual tax identification number new text end of each
occupant who is listed as an owner of the property on the deed of record, the name and
address of each owner who does not occupy the property, and the name and Social Security
number new text begin or individual tax identification number new text end of the spouse of each occupying owner. The
application must be signed by each owner who occupies the property and by each owner's
spouse who occupies the property, or, in the case of property that qualifies as a homestead
under subdivision 1, paragraph (c), by the qualifying relative.

If a property owner occupies a homestead, the property owner's spouse may not claim
another property as a homestead unless the property owner and the property owner's spouse
file with the assessor an affidavit or other proof required by the assessor stating that the
property qualifies as a homestead under subdivision 1, paragraph (e).

Owners or spouses occupying residences owned by their spouses and previously occupied
with the other spouse, either of whom fail to include the other spouse's name and Social
Security number new text begin or individual tax identification number new text end on the homestead application or
provide the affidavits or other proof requested, will be deemed to have elected to receive
only partial homestead treatment of their residence. The remainder of the residence will be
classified as nonhomestead residential. When an owner or spouse's name and Social Security
number new text begin or individual tax identification number new text end appear on homestead applications for two
separate residences and only one application is signed, the owner or spouse will be deemed
to have elected to homestead the residence for which the application was signed.

(d) If residential real estate is occupied and used for purposes of a homestead by a relative
of the owner and qualifies for a homestead under subdivision 1, paragraph (c), in order for
the property to receive homestead status, a homestead application must be filed with the
assessor. The Social Security number new text begin or individual tax identification number new text end of each relative
occupying the property and the name and Social Security number new text begin or individual tax
identification number new text end of the spouse of a relative occupying the property shall be required
on the homestead application filed under this subdivision. If a different relative of the owner
subsequently occupies the property, the owner of the property must notify the assessor
within 30 days of the change in occupancy. The Social Security number new text begin or individual tax
identification number new text end of a relative occupying the property or the spouse of a relative
occupying the property is private data on individuals as defined by section 13.02, subdivision
12, but may be disclosed to the commissioner of revenue, or, for the purposes of proceeding
under the Revenue Recapture Act to recover personal property taxes owing, to the county
treasurer.

(e) The homestead application shall also notify the property owners that if the property
is granted homestead status for any assessment year, that same property shall remain
classified as homestead until the property is sold or transferred to another person, or the
owners, the spouse of the owner, or the relatives no longer use the property as their
homestead. Upon the sale or transfer of the homestead property, a certificate of value must
be timely filed with the county auditor as provided under section 272.115. Failure to notify
the assessor within 30 days that the property has been sold, transferred, or that the owner,
the spouse of the owner, or the relative is no longer occupying the property as a homestead,
shall result in the penalty provided under this subdivision and the property will lose its
current homestead status.

(f) If a homestead application has not been filed with the county by December 31, the
assessor shall classify the property as nonhomestead for the current assessment year for
taxes payable in the following year, provided that the owner may be entitled to receive the
homestead classification by proper application under section 375.192.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for applications for
homestead filed in 2023 and thereafter.
new text end

Sec. 12.

Minnesota Statutes 2022, section 273.124, subdivision 13a, is amended to read:

Subd. 13a.

Occupant list.

At the request of the commissioner, each county must give
the commissioner a list that includes the name and Social Security number new text begin or individual
taxpayer identification number new text end of each occupant of homestead property who is the property
owner, property owner's spouse, qualifying relative of a property owner, or a spouse of a
qualifying relative. The commissioner shall use the information provided on the lists as
appropriate under the law, including for the detection of improper claims by owners, or
relatives of owners, under chapter 290A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for homestead data provided to the
commissioner in 2024 and thereafter.
new text end

Sec. 13.

Minnesota Statutes 2022, section 273.124, subdivision 13c, is amended to read:

Subd. 13c.

Property lists.

In addition to lists of homestead properties, the commissioner
may ask the counties to furnish lists of all properties and the record owners. The Social
Security numbersnew text begin , individual taxpayer identification numbers,new text end and federal identification
numbers that are maintained by a county or city assessor for property tax administration
purposes, and that may appear on the lists retain their classification as private or nonpublic
data; but may be viewed, accessed, and used by the county auditor or treasurer of the same
county for the limited purpose of assisting the commissioner in the preparation of microdata
samples under section 270C.12. The commissioner shall use the information provided on
the lists as appropriate under the law, including for the detection of improper claims by
owners, or relatives of owners, under chapter 290A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for homestead data provided to the
commissioner in 2024 and thereafter.
new text end

SF 1811

Bill Text Versions

Current Version - 1st Engrossment

ARTICLE 1

INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

new text begin Subd. 9. new text end

new text begin New markets tax credit. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 2.

Subdivision 1.

Definitions.

new text begin EFFECTIVE DATE. new text end

Sec. 3.

Subd. 2.

Tax credit for owners of agricultural assets.

new text begin EFFECTIVE DATE. new text end

Sec. 4.

Subd. 4.

Authority duties.

new text begin EFFECTIVE DATE. new text end

Sec. 5.

Subd. 6.

Report to legislature.

new text begin EFFECTIVE DATE. new text end

Sec. 6.

Subd. 3.

Classificationnew text begin and releasenew text end of data on individuals.

new text begin EFFECTIVE DATE. new text end

Sec. 7.

Subd. 5.

Credit allowed.

new text begin EFFECTIVE DATE. new text end

Sec. 8.

Subd. 12.

Sunset.

new text begin EFFECTIVE DATE. new text end

Sec. 9.

Subdivision 1.

Definitions.

new text begin EFFECTIVE DATE. new text end

Sec. 10.

Subd. 4.

Applications; allocations.

new text begin EFFECTIVE DATE. new text end

Sec. 11.

Subd. 7.

Expiration.

new text begin EFFECTIVE DATE. new text end

Sec. 12.

new text begin [116X.01] NEW MARKETS TAX CREDIT. new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin Subd. 2. new text end

new text begin Credit allowed; qualification; limitation. new text end

new text begin Subd. 3. new text end

new text begin Requirements. new text end

new text begin Subd. 4. new text end

new text begin Application. new text end

new text begin Subd. 5. new text end

new text begin Certification and timing of qualified equity investments. new text end

new text begin Subd. 6. new text end

new text begin Examination. new text end

new text begin Subd. 7. new text end

new text begin Annual reporting by community development entities. new text end

new text begin Subd. 8. new text end

new text begin Program report. new text end

new text begin Subd. 9. new text end

new text begin Expiration. new text end

new text begin Subd. 10. new text end

new text begin Account created; appropriation. new text end

new text begin EFFECTIVE DATE. new text end

Sec. 13.

Subd. 2.

Disclosure to Department of Employment and Economic Development.

new text begin EFFECTIVE DATE. new text end

Sec. 14.

Subd. 7.

Composite income tax returns for nonresident partners, shareholders, and beneficiaries.

new text begin EFFECTIVE DATE. new text end

new text begin [116X.01] NEW MARKETS TAX CREDIT.
new text end

Composite income tax returns for nonresident partners, shareholders, and
beneficiaries.

Reporting and payment requirements for partnerships and tiered
partners.

290.067 deleted text begin DEPENDENTdeleted text end new text begin GREAT START CHILD CARE AND DEPENDENTnew text end CARE
CREDIT.