SF 4521

as introduced - 91st Legislature (2019 - 2020) Posted on 04/24/2020 07:49am

A bill for an act
relating to taxation; property; modifying the definition of income for purposes of
the property tax refund; amending Minnesota Statutes 2018, section 290A.03, by
adding subdivisions; Minnesota Statutes 2019 Supplement, section 290A.03,
subdivision 3.

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

Section 1.

Minnesota Statutes 2019 Supplement, section 290A.03, subdivision 3, is
amended to read:

Subd. 3.

Income.

(a) "Income" means the sum of the deleted text begin following deleted text end new text begin amounts enumerated in
clauses (1) and (2), less the sum of qualified retirement income as defined in subdivision
18 new text end :

(1) federal adjusted gross income as defined in the Internal Revenue Code; and

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

(i) all nontaxable income;

(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;

(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;

(iv) cash public assistance and relief;

(v) any pension or annuity (including railroad retirement benefits, all payments received
under the federal Social Security Act, Supplemental Security Income, and veterans benefits new text begin ,
excluding veterans disability benefits new text end ), 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;

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

(vii) workers' compensation;

(viii) nontaxable strike benefits;

(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;

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

(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, to the extent the sum of amounts exceeds the retirement base amount for
the claimant and spouse;

(xii) to the extent not included in federal adjusted gross income, distributions received
by the claimant or spouse from a traditional or Roth style retirement account or plan;

(xiii) nontaxable scholarship or fellowship grants;

(xiv) alimony received to the extent not included in the recipient's income;

(xv) the amount of deduction allowed under section 220 or 223 of the Internal Revenue
Code;

(xvi) the amount deducted for tuition expenses under section 222 of the Internal Revenue
Code; and

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

In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" shall mean federal adjusted gross income reflected in
the fiscal year ending in the calendar year. Federal adjusted gross income shall 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.

(b) "Income" does not include:

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

(2) amounts of any pension or annuity which was exclusively funded by the claimant
or spouse and which funding payments were not excluded from federal adjusted gross
income in the years when the payments were made;

(3) to the extent included in federal adjusted gross income, amounts contributed by the
claimant or spouse to a traditional or Roth style retirement account or plan, but not to exceed
the retirement base amount reduced by the amount of contributions excluded from federal
adjusted gross income, but not less than zero;

(4) surplus food or other relief in kind supplied by a governmental agency;

(5) relief granted under this chapter;

(6) child support payments received under a temporary or final decree of dissolution or
legal separation;

(7) 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 begin or
deleted text end

(8) alimony paid new text begin ;
new text end

new text begin (9) qualified retirement income as defined in subdivision 18; or
new text end

new text begin (10) veterans disability benefits to the extent not included in federal adjusted gross
income new text end .

(c) The sum of the following amounts may be subtracted from income:

(1) for the claimant's first dependent, the exemption amount multiplied by 1.4;

(2) for the claimant's second dependent, the exemption amount multiplied by 1.3;

(3) for the claimant's third dependent, the exemption amount multiplied by 1.2;

(4) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;

(5) for the claimant's fifth dependent, the exemption amount; and

(6) if the claimant or claimant's spouse had a disability or attained the age of 65 on or
before December 31 of the year for which the taxes were levied or rent paid, the exemption
amount.

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

(1) "exemption amount" means the exemption amount under section 290.0121,
subdivision 1, paragraph (b), for the taxable year for which the income is reported;

(2) "retirement base amount" means the deductible amount for the taxable year for the
claimant and spouse under section 219(b)(5)(A) of the Internal Revenue Code, adjusted for
inflation as provided in section 219(b)(5)(C) of the Internal Revenue Code, without regard
to whether the claimant or spouse claimed a deduction; and

(3) "traditional or Roth style retirement account or plan" means retirement plans under
sections 401, 403, 408, 408A, and 457 of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with refunds based on property
taxes payable in 2021 and rent paid in 2020.
new text end

Sec. 2.

Minnesota Statutes 2018, section 290A.03, is amended by adding a subdivision to
read:

new text begin Subd. 16. new text end

new text begin Public pension income. new text end

new text begin "Public pension income" means any amount received:
new text end

new text begin (1) by a basic member of any pension plan governed by chapter 3A, 352B, 353, 354, or
354A, or the basic member's survivor, 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) 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 (3) from a public retirement system of or created by another state or any of its political
subdivisions if the income tax laws of the other state 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 EFFECTIVE DATE. new text end

new text begin This section is effective beginning with refunds based on property
taxes payable in 2021 and rent paid in 2020.
new text end

Sec. 3.

Minnesota Statutes 2018, section 290A.03, is amended by adding a subdivision to
read:

new text begin Subd. 17. new text end

new text begin Social Security benefits. new text end

new text begin "Social Security benefits" has the meaning provided
under section 86(d)(1) of the Internal Revenue Code, without regard to whether the benefits
are subject to tax under the provisions of section 86 of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with refunds based on property
taxes payable in 2021 and rent paid in 2020.
new text end

Sec. 4.

Minnesota Statutes 2018, section 290A.03, is amended by adding a subdivision to
read:

new text begin Subd. 18. new text end

new text begin Qualified retirement income. new text end

new text begin "Qualified retirement income" means the lesser
of:
new text end

new text begin (1) the sum of public pension income, as defined in subdivision 16, and Social Security
benefits as defined in subdivision 17; or
new text end

new text begin (2)(i) for married filers filing joint or separate returns, $2,000; and
new text end

new text begin (ii) for single or head of household filers, or surviving spouses, $1,000.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with refunds based on property
taxes payable in 2021 and rent paid in 2020.
new text end