SF 4172

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/22/2022 08:51am

A bill for an act
relating to education; individual income; modifying eligibility for the student loan
credit; making the credit refundable; amending Minnesota Statutes 2021
Supplement, section 290.0682.

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

Section 1.

Minnesota Statutes 2021 Supplement, section 290.0682, is amended to read:

290.0682 STUDENT LOAN CREDIT.

Subdivision 1.

Definitions.

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

(b) "Adjusted gross income" means federal adjusted gross income as defined in section
62 of the Internal Revenue Code.

(c) "Earned income" has the meaning given in section 290.0675, subdivision 1, paragraph
(b).

(d) "Eligible individual" means a resident individual with one or more qualified education
loans related to deleted text begin an deleted text end new text begin the individual's new text end undergraduate or graduate degree program at a
postsecondary educational institution.

(e) new text begin "Eligible family member" means a resident individual who is the parent or grandparent
of an individual who has one or more qualified loans related to the individual's undergraduate
or graduate degree program at a postsecondary educational institution.
new text end

new text begin (f) new text end "Eligible loan payments" means the amount the eligible individual new text begin or eligible family
member new text end paid during the taxable year in principal and interest on qualified education loans.

deleted text begin (f) deleted text end new text begin (g) new text end "Postsecondary educational institution" means a public or nonprofit postsecondary
institution eligible for state student aid under section 136A.103 or, if the institution is not
located in this state, a public or nonprofit postsecondary institution participating in the
federal Pell Grant program under title IV of the Higher Education Act of 1965, Public Law
89-329, as amended.

deleted text begin (g) deleted text end new text begin (h) new text end "Qualified education loan" has the meaning given in section 221 of the Internal
Revenue Code deleted text begin , but is limited to indebtedness incurred on behalf of the eligible individual deleted text end .

Subd. 2.

Credit allowed.

(a) An eligible individual new text begin or an eligible family member new text end is
allowed a credit against the tax due under this chapter. new text begin An eligible individual may only
claim a credit for eligible loan payments made by the eligible individual, and an eligible
family member may only claim a credit for eligible loan payments made by the eligible
family member.
new text end

(b) The credit for an eligible individual equals the least of:

(1) eligible loan payments minus ten percent of an amount equal to adjusted gross income
in excess of $10,000, but in no case less than zero;

(2) the earned income for the taxable year of the eligible individual, if any;

(3) the sum of:

(i) the interest portion of eligible loan payments made during the taxable year; and

(ii) ten percent of the original loan amount of all qualified education loans of the eligible
individual; or

(4) deleted text begin $500 deleted text end new text begin $5,000 new text end .

(c) new text begin The credit for an eligible family member equals the amount calculated under paragraph
(b), reduced by the following amounts, but in no case less than zero:
new text end

new text begin (1) for married couples filing a joint return, the credit is reduced by $1 for every $6 of
adjusted gross income in excess of $130,000; and
new text end

new text begin (2) for all other filers, the credit is reduced by $1 for every $3 of modified adjusted gross
income in excess of $65,000.
new text end

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

deleted text begin (d) deleted text end new text begin (e) new text end In the case of a married couple, each spouse is eligible for the credit in this section.
For the purposes of paragraph (b), for married taxpayers filing joint returns, each spouse's
adjusted gross income equals the spouse's percentage share of the couple's earned income,
multiplied by the couple's combined adjusted gross income.

new text begin Subd. 3. new text end

new text begin Credit refundable. new text end

new text begin If the amount of credit that an eligible individual or eligible
family member is allowed under this section exceeds the tax liability of the eligible individual
or eligible family member under this chapter, the commissioner shall refund the excess to
the individual. The amount necessary to pay claims for the refund provided in this subdivision
is appropriated from the general fund to the commissioner of revenue.
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