SF 1841

as introduced - 88th Legislature (2013 - 2014) Posted on 03/06/2014 04:51pm

A bill for an act
relating to taxation; income and franchise; conforming to changes in the Internal
Revenue Code; extending the working family credit phaseout for married filers;
amending Minnesota Statutes 2012, sections 289A.02, subdivision 7; 290.0671,
subdivision 1.

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

Section 1.

Minnesota Statutes 2012, section 289A.02, subdivision 7, is amended to read:

Subd. 7.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin April
14, 2011 deleted text end new text begin January 3, 2013 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, 2012.
new text end

Sec. 2.

Minnesota Statutes 2012, section 290.0671, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual is allowed a credit against the tax
imposed by this chapter equal to a percentage of earned income. To receive a credit, a
taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.

(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
whichever is greater, in excess of $15,080, but in no case is the credit less than zero.

(d) For individuals with two or more qualifying children, the credit equals ten percent
of the first $9,720 of earned income and 20 percent of earned income over $14,860 but less
than $16,800. The credit is reduced by 10.3 percent of earned income or adjusted gross
income, whichever is greater, in excess of $17,890, but in no case is the credit less than zero.

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

(f) For a person who was a resident for the entire tax year and has earned income
not subject to tax under this chapter, including income excluded under section 290.01,
subdivision 19b, clause (9), the credit must be allocated based on the ratio of federal
adjusted gross income reduced by the earned income not subject to tax under this chapter
over federal adjusted gross income. For purposes of this paragraph, the subtractions
for military pay under section 290.01, subdivision 19b, clauses (10) and (11), are not
considered "earned income not subject to tax under this chapter."

For the purposes of this paragraph, the exclusion of combat pay under section 112
of the Internal Revenue Code is not considered "earned income not subject to tax under
this chapter."

(g) For tax years beginning after December 31, 2007, and before December 31,
2010, new text begin and for tax years beginning after December 31, 2017, new text end the $5,770 in paragraph (b),
the $15,080 in paragraph (c), and the $17,890 in paragraph (d), after being adjusted for
inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint
returns. For tax years beginning after December 31, 2008, the commissioner shall annually
adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f)
of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be
substituted for the word "1992." For 2009, the commissioner shall then determine the
percent change from the 12 months ending on August 31, 2007, to the 12 months ending on
August 31, 2008, and in each subsequent year, from the 12 months ending on August 31,
2007, to the 12 months ending on August 31 of the year preceding the taxable year. The
earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the
amount ends in $5, the amount is rounded up to the nearest $10. The determination of the
commissioner under this subdivision is not a rule under the Administrative Procedure Act.

(h) For tax years beginning after December 31, 2010, and before January 1, 2012,
new text begin and for tax years beginning after December 31, 2013, and before January 1, 2018, new text end the
$5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000
for married taxpayers filing joint returns. For tax years beginning after December 31,
2010, and before January 1, 2012, new text begin and for tax years beginning after December 31, 2013,
and before January 1, 2018, new text end the commissioner shall annually adjust the $5,000 by the
percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue
Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for the word
"1992." For 2011, the commissioner shall then determine the percent change from the 12
months ending on August 31, 2008, to the 12 months ending on August 31, 2010 new text begin , and in
each subsequent year, from the 12 months ending on August 31, 2008, to the 12 months
ending on August 31 of the year preceding the taxable year new text end . The earned income thresholds
as adjusted for inflation must be rounded to the nearest $10. If the amount ends in $5, the
amount is rounded up to the nearest $10. The determination of the commissioner under
this subdivision is not a rule under the Administrative Procedure Act.

(i) The commissioner shall construct tables showing the amount of the credit at
various income levels and make them available to taxpayers. The tables shall follow
the schedule contained in this subdivision, except that the commissioner may graduate
the transition between income brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2013.
new text end