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SF 5

as introduced - 91st Legislature (2019 - 2020) Posted on 04/25/2019 06:30pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; providing for conformity and nonconformity to certain federal
provisions; modifying certain individual income tax and other miscellaneous
provisions; amending Minnesota Statutes 2018, sections 289A.02, subdivision 7;
289A.08, subdivisions 1, 7; 289A.12, subdivision 14; 289A.35; 290.01, subdivisions
19, 22, 29a, 31, by adding subdivisions; 290.0131, subdivisions 1, 3, 10, 12, 13,
by adding subdivisions; 290.0132, subdivisions 1, 7, 20, 21, 26, by adding
subdivisions; 290.0133, subdivision 12, by adding a subdivision; 290.0134, by
adding subdivisions; 290.06, subdivisions 2c, 2d; 290.0672, subdivisions 1, 2;
290.0681, subdivisions 1, 2, 3, 4; 290.0802, subdivision 2; 290.091, subdivision
2; 290.095, subdivision 4; 290.17, subdivision 2; 290.21, subdivision 4; 290.34,
by adding a subdivision; 290.92, subdivision 1; 290A.03, subdivisions 3, 12, 15;
290A.04, subdivisions 2, 2a, 4; 291.005, subdivision 1; 297A.68, subdivision 25;
297B.03; 462D.06, subdivisions 1, 2; 469.316, subdivision 1; proposing coding
for new law in Minnesota Statutes, chapter 290; repealing Minnesota Statutes
2018, sections 290.0131, subdivisions 7, 11; 290.0133, subdivisions 13, 14; 290.10,
subdivision 2.

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

Section 1.

Minnesota Statutes 2018, 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 beginDecember
16, 2016
deleted text endnew text begin March 31, 2018new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 2.

Minnesota Statutes 2018, section 289A.08, subdivision 1, is amended to read:


Subdivision 1.

Generally; individuals.

(a) A taxpayer must file a return for each taxable
year the taxpayer is required to file a return under section 6012 of the Internal Revenue
Codenew text begin or meets the requirements under paragraph (d) to file a returnnew text end, except that:

(1) an individual who is not a Minnesota resident for any part of the year is not required
to file a Minnesota income tax return if the individual's gross income derived from Minnesota
sources as determined under sections 290.081, paragraph (a), and 290.17, is less than the
filing requirements for a single individual who is a full year resident of Minnesota; deleted text beginand
deleted text end

(2) an individual who is a Minnesota resident is not required to file a Minnesota income
tax return if the individual's gross income derived from Minnesota sources as determined
under section 290.17, less the subtractions allowed under section 290.0132, subdivisions
12
and 15, is less than the filing requirements for a single individual who is a full-year
resident of Minnesota.

(b) The decedent's final income tax return, and other income tax returns for prior years
where the decedent had gross income in excess of the minimum amount at which an
individual is required to file and did not file, must be filed by the decedent's personal
representative, if any. If there is no personal representative, the return or returns must be
filed by the transferees, as defined in section 270C.58, subdivision 3, who receive property
of the decedent.

(c) The term "gross income," as it is used in this section, has the same meaning given it
in section 290.01, subdivision 20.

new text begin (d) The commissioner of revenue shall annually determine the gross income levels at
which individuals are required to file a return for each taxable year based on the amounts
that may be deducted under section 290.0803 and the personal and dependent exemptions
under section 290.0138.
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, 2018.
new text end

Sec. 3.

Minnesota Statutes 2018, section 289A.08, subdivision 7, 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 and other electing partnerships. 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" 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 deleted text begin11deleted text endnew text begin 10 and 15new text end, and the subtractions provided in: (1) section
290.0132, subdivision 9, 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 begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 4.

Minnesota Statutes 2018, section 289A.12, subdivision 14, is amended to read:


Subd. 14.

Reporting exempt interest and exempt-interest dividends.

(a) A regulated
investment company paying $10 or more in exempt-interest dividends to an individual who
is a resident of Minnesota, or any person receiving $10 or more of exempt interest or
exempt-interest dividends and paying as nominee to an individual who is a resident of
Minnesota, must make a return indicating the amount of the exempt interest or
exempt-interest dividends, the name, address, and Social Security number of the recipient,
and any other information that the commissioner specifies. The return must be provided to
the recipient by February 15 of the year following the year of the payment. The return
provided to the recipient must include a clear statement, in the form prescribed by the
commissioner, that the exempt interest or exempt-interest dividends must be included in
the computation of Minnesota taxable income. By June 1 of each year, the payer must file
a copy of the return with the commissioner.

(b) For purposes of this subdivision, the following definitions apply.

(1) "Exempt-interest dividends" mean exempt-interest dividends as defined in section
852(b)(5) of the Internal Revenue Code, but does not include the portion of exempt-interest
dividends that are not required to be added to federal deleted text begintaxabledeleted text endnew text begin adjusted grossnew text end income under
section 290.0131, subdivision 2, paragraph (b).

(2) "Regulated investment company" means regulated investment company as defined
in section 851(a) of the Internal Revenue Code or a fund of the regulated investment company
as defined in section 851(g) of the Internal Revenue Code.

(3) "Exempt interest" means income on obligations of any state other than Minnesota,
or a political or governmental subdivision, municipality, or governmental agency or
instrumentality of any state other than Minnesota, and exempt from federal income taxes
under the Internal Revenue Code or any other federal statute.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 5.

Minnesota Statutes 2018, section 289A.35, is amended to read:


289A.35 ASSESSMENTS ON RETURNS.

(a) The commissioner may audit and adjust the taxpayer's computation of new text beginfederal adjusted
gross income,
new text endfederal taxable income, items of federal tax preferences, or federal credit
amounts to make them conform with the provisions of chapter 290 or section 298.01. If a
return has been filed, the commissioner shall enter the liability reported on the return and
may make any audit or investigation that is considered necessary.

(b) Upon petition by a taxpayer, and when the commissioner determines that it is in the
best interest of the state, the commissioner may allow S corporations and partnerships to
receive orders of assessment issued under section 270C.33, subdivision 4, on behalf of their
owners, and to pay liabilities shown on such orders. In such cases, the owners' liability must
be calculated using the method provided in section 289A.08, subdivision 7, paragraph (b).

(c) A taxpayer may petition the commissioner for the use of the method described in
paragraph (b) after the taxpayer is notified that an audit has been initiated and before an
order of assessment has been issued.

(d) A determination of the commissioner under paragraph (b) to grant or deny the petition
of a taxpayer cannot be appealed to the Tax Court or any other court.

(e) The commissioner may audit and adjust the taxpayer's computation of tax under
chapter 291. In the case of a return filed pursuant to section 289A.10, the commissioner
shall notify the estate no later than nine months after the filing date, as provided by section
289A.38, subdivision 2, whether the return is under examination or the return has been
processed as filed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 6.

Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:


new text begin Subd. 14a. new text end

new text begin Surviving spouse. new text end

new text begin The term "surviving spouse" means an individual who is
a surviving spouse under section 2(a) of the Internal Revenue Code for 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, 2018.
new text end

Sec. 7.

Minnesota Statutes 2018, section 290.01, subdivision 19, is amended to read:


Subd. 19.

Net income.

new text begin(a) For a corporation taxable under section 290.02, and an estate
or a trust taxable under section 290.03,
new text endthe 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.

new text begin (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.
new text end

new text begin (c) new text endIn 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.

new text begin (d) new text endThe 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.

new text begin (e) new text endThe 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.

new text begin (f) new text endThe Internal Revenue Code of 1986, as amended through deleted text beginDecember 16, 2016deleted text endnew text begin March
31, 2018
new text end, shall be in effect for taxable years beginning after December 31, 1996.

new text begin (g) new text endExcept 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 EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment, except
the changes incorporated by federal changes are effective retroactively at the same time as
the changes were effective for federal purposes and the changes amending the new paragraph
(a) and adding paragraph (b) are effective for taxable years beginning after December 31,
2018.
new text end

Sec. 8.

Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:


new text begin Subd. 21a. new text end

new text begin Adjusted gross income; federal adjusted gross income. new text end

new text begin The terms "adjusted
gross income" and "federal adjusted gross income" mean adjusted gross income, as defined
in section 62 of the Internal Revenue Code, as amended through the date named in
subdivision 19, paragraph (f), incorporating the federal effective date of changes to the
Internal Revenue Code and any elections made by the taxpayer under the Internal Revenue
Code in determining federal adjusted gross income for federal income tax purposes.
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. 9.

Minnesota Statutes 2018, section 290.01, subdivision 22, is amended to read:


Subd. 22.

Taxable net income.

For tax years beginning after December 31, deleted text begin1986deleted text endnew text begin 2017new text end,
the term "taxable net income" means:

(1) for resident individuals deleted text beginthe same asdeleted text endnew text begin,new text end net incomenew text begin less the deductions allowed under
section 290.0803
new text end;

(2) for individuals who were deleted text beginnotdeleted text end residents of Minnesota for new text beginless than new text endthe entire year, deleted text beginthe
same as
deleted text end net incomenew text begin less the deductions allowed under section 290.0803,new text end except that the tax
is imposed only on the Minnesota apportioned share of that income as determined pursuant
to section 290.06, subdivision 2c, paragraph (e);

(3) for all other taxpayers, the part of net income that is allocable to Minnesota by
assignment or apportionment under one or more of sections 290.17, 290.191, 290.20, and
290.36new text begin, except that for nonresident individuals net income is reduced by the amount of the
standard deduction allowable under section 290.0803, subdivision 2, before allocation of
net income to Minnesota
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, 2018.
new text end

Sec. 10.

Minnesota Statutes 2018, section 290.01, subdivision 29a, is amended to read:


Subd. 29a.

State itemized deduction.

new text begin(a) new text end"State itemized deduction" means federal
itemized deductions, as defined in section 63(d) of the Internal Revenue Code, disregarding
any deleted text beginlimitation under section 68 of the Internal Revenue Code, and reduced by the amount
of the addition required under section 290.0131, subdivision 13.
deleted text endnew text begin changes to itemized
deductions made by Public Law 115-97 other than the changes made by section 11027, and
disregarding the federal itemized deduction of income or sales taxes under section 164 of
the Internal Revenue Code.
new text end

new text begin (b) For taxable years beginning after December 31, 2017, the amount that would have
been allowable as interest under section 163(h)(3)(E) of the Internal Revenue Code,
disregarding subparagraph 163(h)(3)(E)(iv), is allowed as a state itemized deduction.
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, 2018.
new text end

Sec. 11.

Minnesota Statutes 2018, section 290.01, is amended by adding a subdivision to
read:


new text begin Subd. 29b. new text end

new text begin State standard deduction. new text end

new text begin "State standard deduction" means the federal
standard deduction computed under section 63(c) and (f) of the Internal Revenue Code, as
amended through December 16, 2016, except that for purposes of adjusting the amounts
under this subdivision, the provisions of section 1(f) of the Internal Revenue Code, as
amended through March 31, 2018, apply.
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, 2018.
new text end

Sec. 12.

Minnesota Statutes 2018, section 290.01, subdivision 31, is amended to read:


Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text beginDecember
16, 2016
deleted text endnew text begin March 31, 2018new text end. Internal Revenue Code also includes any uncodified provision
in federal law that relates to provisions of the Internal Revenue Code that are incorporated
into Minnesota law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies to the same taxable years as the changes incorporated by federal changes are effective
for federal purposes, including any provisions that are retroactive to taxable years beginning
after December 31, 2016.
new text end

Sec. 13.

Minnesota Statutes 2018, section 290.0131, subdivision 1, is amended to read:


Subdivision 1.

Definition; scope.

(a) For the purposes of this section, "addition" means
an amount that must be added to federal deleted text begintaxabledeleted text endnew text begin adjusted grossnew text end incomenew text begin, or for estates and
trusts, federal taxable income,
new text end in computing net income for the taxable year to which the
amounts relate.

(b) The additions in this section apply to individuals, estates, and trusts.

(c) Unless specifically indicated or unless the context clearly indicates otherwise, only
amounts that were deducted or excluded in computing federal deleted text begintaxabledeleted text endnew text begin adjusted grossnew text end incomenew text begin,
or for estates and trusts, federal taxable income,
new text end are an addition under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 14.

Minnesota Statutes 2018, section 290.0131, subdivision 3, is amended to read:


Subd. 3.

Income, sales and use, motor vehicle sales, or excise taxes paid.

deleted text begin(a)deleted text endnew text begin For trusts
and estates,
new text end the amount of income, sales and use, motor vehicle sales, or excise taxes paid
or accrued within the taxable year under this chapter and the amount of taxes based on net
income, sales and use, motor vehicle sales, or excise taxes paid to any other state or to any
province or territory of Canada is an addition to the extent deducted under section 63(d) of
the Internal Revenue Code.

deleted text begin (b) The addition under paragraph (a) may not be more than the amount by which the
state itemized deduction exceeds the amount of the standard deduction as defined in section
63(c) of the Internal Revenue Code. For the purpose of this subdivision, income, sales and
use, motor vehicle sales, or excise taxes are the last itemized deductions disallowed under
subdivision 12.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 15.

Minnesota Statutes 2018, section 290.0131, subdivision 10, is amended to read:


Subd. 10.

Section 179 expensing.

new text beginEffective for property placed in service in taxable
years beginning before January 1, 2020,
new text end80 percent of the amount by which the deduction
allowed under the dollar limits of section 179 of the Internal Revenue Code exceeds the
deduction allowable by section 179 of the Internal Revenue Code, as amended through
December 31, 2003, is an addition.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2019.
new text end

Sec. 16.

Minnesota Statutes 2018, section 290.0131, subdivision 12, is amended to read:


Subd. 12.

Disallowed itemized deductions.

(a) The amount of disallowed itemized
deductions is an addition. The amount of disallowed itemized deductionsdeleted text begin, plus the addition
required under subdivision 3,
deleted text end may not be more than the amount by which thenew text begin statenew text end itemized
deductionsdeleted text begin, as allowed under section 63(d) of the Internal Revenue Code,deleted text end exceeds the amount
of the new text beginstate new text endstandard deduction deleted text beginas defined in section 63(c) of the Internal Revenue Codedeleted text end.

(b) The amount of disallowed itemized deductions is equal to the lesser of:

(1) three percent of the excess of the taxpayer's federal adjusted gross income over the
applicable amount; or

(2) 80 percent of the amount of the new text beginstate new text enditemized deductions otherwise allowable to the
taxpayer under the Internal Revenue Code for the taxable year.

(c) "Applicable amount" means $100,000, or $50,000 for a married individual filing a
separate return. Each dollar amount is increased by an amount equal to:

(1) that dollar amount, multiplied by

(2) the cost-of-living adjustment determined under section 1(f)(3) of the Internal Revenue
Code for the calendar year in which the taxable year begins, by substituting deleted text begin"calendar year
1990" for "calendar year 1992" in subparagraph (B) of section 1(f)(3)
deleted text endnew text begin "1990" for "2016" in
section 1(f)(3)(B)(ii) of the Internal Revenue Code
new text end.

(d) "Itemized deductions" excludes:

(1) the deduction for medical expenses under section 213 of the Internal Revenue Code;

(2) any deduction for investment interest as defined in section 163(d) of the Internal
Revenue Code; and

(3) the deduction under section 165(a) of the Internal Revenue Code for casualty or theft
losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue Code or
for losses described in section 165(d) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 17.

Minnesota Statutes 2018, section 290.0131, subdivision 13, is amended to read:


Subd. 13.

Disallowed personal exemption amount.

(a) The amount of disallowed
personal exemptions for taxpayers with federal adjusted gross income over the threshold
amount is an addition.

(b) The disallowed personal exemption amount is equal to the deleted text beginnumber ofdeleted text end personal
deleted text begin exemptionsdeleted text endnew text begin and dependent exemption subtractionnew text end allowed under section deleted text begin151(b) and (c) of
the Internal Revenue Code
deleted text endnew text begin 290.0132, subdivision 20,new text end multiplied by the deleted text begindollar amount for
personal exemptions under section 151(d)(1) and (2) of the Internal Revenue Code, as
adjusted for inflation by section 151(d)(4) of the Internal Revenue Code, and by the
deleted text end
applicable percentage.

(c) For a married individual filing a separate return, "applicable percentage" means two
percentage points for each $1,250, or fraction of that amount, by which the taxpayer's federal
adjusted gross income for the taxable year exceeds the threshold amount. For all other filers,
applicable percentage means two percentage points for each $2,500, or fraction of that
amount, by which the taxpayer's federal adjusted gross income for the taxable year exceeds
the threshold amount. The applicable percentage must not exceed 100 percent.

(d) "Threshold amount" means:

(1) $150,000 for a joint return or a surviving spouse;

(2) $125,000 for a head of a household;

(3) $100,000 for an individual who is not married and who is not a surviving spouse or
head of a household; and

(4) $75,000 for a married individual filing a separate return.

(e) The thresholds must be increased by an amount equal to:

(1) the threshold dollar amount, multiplied by

(2) the cost-of-living adjustment determined under section 1(f)(3) of the Internal Revenue
Code for the calendar year in which the taxable year begins, by substituting deleted text begin"calendar year
1990" for "calendar year 1992" in subparagraph (B) of section 1(f)(3)
deleted text endnew text begin "1990" for "2016" in
section 1(f)(3)(B)(ii) of the Internal Revenue Code
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, 2018.
new text end

Sec. 18.

Minnesota Statutes 2018, section 290.0131, is amended by adding a subdivision
to read:


new text begin Subd. 15. new text end

new text begin Qualified business income addition. new text end

new text begin For a trust or estate, the amount deducted
under section 199A of the Internal Revenue Code in computing the federal taxable income
of the trust or estate 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, 2018.
new text end

Sec. 19.

Minnesota Statutes 2018, section 290.0131, is amended by adding a subdivision
to read:


new text begin Subd. 16. new text end

new text begin Foreign-derived intangible income. new text end

new text begin The amount of foreign-derived intangible
income deducted under section 250 of the Internal Revenue Code for the taxable year 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, 2018.
new text end

Sec. 20.

Minnesota Statutes 2018, section 290.0132, subdivision 1, is amended to read:


Subdivision 1.

Definition; scope.

(a) For the purposes of this section, "subtraction"
means an amount that deleted text beginshalldeleted text endnew text begin is allowed tonew text end be subtracted from federal deleted text begintaxabledeleted text endnew text begin adjusted grossnew text end
incomenew text begin, or for estates and trusts, federal taxable income,new text end in computing net income for the
taxable year to which the amounts relate.

(b) The subtractions in this section apply to individuals, estates, and trusts.

(c) Unless specifically indicated or unless the context clearly indicates otherwise, no
amount deducted, subtracted, or otherwise excluded in computing federal deleted text begintaxabledeleted text endnew text begin adjusted
gross
new text end incomenew text begin, or for estates and trusts, federal taxable income,new text end is a subtraction under this
section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 21.

Minnesota Statutes 2018, section 290.0132, subdivision 7, is amended to read:


Subd. 7.

Charitable contributions for taxpayers who do not itemize.

deleted text beginTo the extent
not deducted or not deductible under section 408(d)(8)(E) of the Internal Revenue Code in
determining federal taxable income by
deleted text endnew text begin Fornew text end an individual who does not itemize deductions
deleted text begin for federal income tax purposesdeleted text endnew text begin under section 290.0803new text end for the taxable year, an amount
equal to 50 percent of the excess of charitable contributions over $500 allowable as a new text beginstate
itemized
new text enddeduction for the taxable year deleted text beginunder section 170(a) of the Internal Revenue Codedeleted text end
is a subtraction.new text begin The subtraction under this subdivision must not include a distribution that
is excluded from federal adjusted gross income and that is not deductible under section
408(d)(8)(E) of the Internal Revenue Code.
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, 2018.
new text end

Sec. 22.

Minnesota Statutes 2018, section 290.0132, subdivision 20, is amended to read:


Subd. 20.

deleted text beginDisalloweddeleted text end Personal new text beginand dependent new text endexemption.

deleted text begin The amount of the phaseout
of personal exemptions under section 151(d) of the Internal Revenue Code is a subtraction.
deleted text end new text begin
The amount of personal and dependent exemptions calculated under section 290.0138 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, 2018.
new text end

Sec. 23.

Minnesota Statutes 2018, section 290.0132, subdivision 21, is amended to read:


Subd. 21.

Military service pension; retirement pay.

To the extent included in federal
deleted text begin taxabledeleted text endnew text begin adjusted grossnew text end income, compensation received from a pension or other retirement
pay from the federal government for service in the military, as computed under United
States Code, title 10, sections 1401 to 1414, 1447 to 1455, and 12733, is a subtraction. The
subtraction is limited to individuals who do not claim the credit under section 290.0677.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 24.

Minnesota Statutes 2018, section 290.0132, subdivision 26, is amended to read:


Subd. 26.

Social Security benefits.

(a) A portion of Social Security benefits is allowed
as a subtraction. The subtraction equals the deleted text beginlesserdeleted text endnew text begin greaternew text end of deleted text beginSocial Security benefits or a
maximum
deleted text endnew text begin thenew text end subtraction deleted text beginsubject to the limitsdeleted text end under paragraphs (b), (c), and (d)new text begin, or the
percentage of Social Security benefits calculated under paragraph (e)
new text end.

(b) For married taxpayers filing a joint return and surviving spouses, the maximum
subtraction equals deleted text begin$4,500deleted text endnew text begin $4,590new text end. The maximum subtraction is reduced by 20 percent of
provisional income over deleted text begin$77,000deleted text endnew text begin $78,530new text end. In no case is the subtraction less than zero.

(c) For single or head-of-household taxpayers, the maximum subtraction equals deleted text begin$3,500deleted text endnew text begin
$3,570
new text end. The maximum subtraction is reduced by 20 percent of provisional income over
deleted text begin $60,200deleted text endnew text begin $61,400new text end. In no case is the subtraction less than zero.

(d) For married taxpayers filing separate returns, the maximum subtraction equals deleted text begin$2,250deleted text endnew text begin
one-half the maximum subtraction for joint returns under paragraph (b)
new text end. The maximum
subtraction is reduced by 20 percent of provisional income over deleted text begin$38,500deleted text endnew text begin one-half the
maximum subtraction for joint returns under paragraph (b)
new text end. In no case is the subtraction
less than zero.

(e) new text beginFor taxable years beginning after December 31, 2019, for all taxpayers, the subtraction
equals ten percent of Social Security benefits, and in each taxable year thereafter, the
subtraction is increased by ten percentage points until the total subtraction amount equals
100 percent of Social Security benefits.
new text end

new text begin (f) new text endFor 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 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 endnew text begin (g)new text end The commissioner shall adjust the maximum subtraction and threshold amounts
in paragraphs (b) to (d) 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) of the Internal Revenue
Code the word deleted text begin"2016"deleted text endnew text begin "2018"new text end shall be substituted for the word deleted text begin"1992." For 2018, the
commissioner shall then determine the percentage change from the 12 months ending on
August 31, 2016, to the 12 months ending on August 31, 2017, and in each subsequent year,
from the 12 months ending on August 31, 2016, to the 12 months ending on August 31 of
the year preceding the taxable year.
deleted text endnew text begin "2016." new text endThe determination of the commissioner pursuant
to this subdivision must not be considered a rule and is not subject to the Administrative
Procedure Act contained in chapter 14, including section 14.386. 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, 2018.
new text end

Sec. 25.

Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 27. new text end

new text begin Moving expenses. new text end

new text begin The amount of expenses that qualify as a deduction under
section 217(a) through (f) of the Internal Revenue Code, disregarding paragraph (k), and
only to the extent the expenses are not deducted in computing federal taxable income 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, 2018.
new text end

Sec. 26.

Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 28. new text end

new text begin Global intangible low-taxed income. new text end

new text begin The taxpayer's global intangible
low-taxed income included under section 951A of the Internal Revenue Code for the taxable
year 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, 2018.
new text end

Sec. 27.

Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 29. new text end

new text begin Deferred foreign income. new text end

new text begin The amount of deferred foreign income recognized
because of section 965 of the Internal Revenue Code, and before any deduction under section
965(c) 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 retroactively for taxable years beginning
after December 31, 2017, and before January 1, 2020.
new text end

Sec. 28.

Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 30. new text end

new text begin Standard or itemized deduction. new text end

new text begin The amount allowed under section 290.0803
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, 2018.
new text end

Sec. 29.

Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 31. new text end

new text begin Tuition subtraction. new text end

new text begin The amount that would have been allowable under
section 222 of the Internal Revenue Code, disregarding paragraph (e) and only to the extent
the amount is not deducted in computing federal adjusted gross income, 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, 2019.
new text end

Sec. 30.

Minnesota Statutes 2018, section 290.0133, subdivision 12, is amended to read:


Subd. 12.

Section 179 expensing.

new text beginEffective for property placed in service in taxable
years beginning before January 1, 2020,
new text end80 percent of the amount by which the deduction
allowed under the dollar limits of section 179 of the Internal Revenue Code exceeds the
deduction allowable by section 179 of the Internal Revenue Code, as amended through
December 31, 2003, is an addition.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2019.
new text end

Sec. 31.

Minnesota Statutes 2018, section 290.0133, is amended by adding a subdivision
to read:


new text begin Subd. 15. new text end

new text begin Foreign-derived intangible income. new text end

new text begin The amount of foreign-derived intangible
income deducted under section 250 of the Internal Revenue Code for the taxable year 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, 2018.
new text end

Sec. 32.

Minnesota Statutes 2018, section 290.0134, is amended by adding a subdivision
to read:


new text begin Subd. 17. new text end

new text begin Global intangible low-taxed income. new text end

new text begin The taxpayer's global intangible
low-taxed income included under section 951A of the Internal Revenue Code for the taxable
year 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, 2018.
new text end

Sec. 33.

Minnesota Statutes 2018, section 290.0134, is amended by adding a subdivision
to read:


new text begin Subd. 18. new text end

new text begin Deferred foreign income. new text end

new text begin The amount of deferred foreign income recognized
because of section 965 of the Internal Revenue Code, and before any deduction under section
965(c) 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 retroactively for taxable years beginning
after December 31, 2017, and before January 1, 2020.
new text end

Sec. 34.

new text begin [290.0138] PERSONAL AND DEPENDENT EXEMPTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Personal and dependent exemptions. new text end

new text begin (a) A taxpayer is allowed: (1) a
personal exemption in the amount of $4,150, and in the case of a married couple filing a
joint return an additional personal exemption of $4,150; plus (2) a dependent exemption of
$4,150 multiplied by the number of dependents of the taxpayer, as defined under sections
151 and 152 of the Internal Revenue Code.
new text end

new text begin (b) The personal and dependent exemptions are not allowed to an individual who is
eligible to be claimed as a dependent, as defined in sections 151 or 152 of the Internal
Revenue Code, by another taxpayer.
new text end

new text begin Subd. 2. new text end

new text begin Cost-of-living adjustment. new text end

new text begin For taxable years beginning after December 31,
2019, the commissioner shall annually adjust the amounts in subdivision 1 by the percentage
determined pursuant to the provisions of section 1(f) of the Internal Revenue Code as
amended through March 31, 2018, except that in section 1(f)(3)(B), the word "2018" shall
be substituted for the word "1992." The exemption amount as adjusted for inflation must
be rounded to the nearest $50. If the amount is not a multiple of $50, the commissioner shall
round down to the next lowest multiple of $50. The determination of the commissioner
under this subdivision is not a rule under the Administrative Procedure Act.
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, 2018.
new text end

Sec. 35.

Minnesota Statutes 2018, section 290.06, subdivision 2c, is amended to read:


Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income taxes
imposed by this chapter upon married individuals filing joint returns and surviving spouses
deleted text begin as defined in section 2(a) of the Internal Revenue Codedeleted text end must be computed by applying to
their taxable net income the following schedule of rates:

(1) On the first deleted text begin$35,480deleted text endnew text begin $37,850new text end, deleted text begin5.35deleted text endnew text begin 5.05new text end percent;

(2) On all over deleted text begin$35,480deleted text endnew text begin $37,850new text end, but not over deleted text begin$140,960deleted text endnew text begin $150,380new text end, 7.05 percent;

(3) On all over deleted text begin$140,960deleted text endnew text begin $150,380new text end, but not over deleted text begin$250,000deleted text endnew text begin $266,700new text end, 7.85 percent;

(4) On all over deleted text begin$250,000deleted text endnew text begin $266,700new text end, 9.85 percent.

Married individuals filing separate returns, estates, and trusts must compute their income
tax by applying the above rates to their taxable income, except that the income brackets
will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first deleted text begin$24,270deleted text endnew text begin $25,890new text end, deleted text begin5.35deleted text endnew text begin 5.05new text end percent;

(2) On all over deleted text begin$24,270deleted text endnew text begin $25,890new text end, but not over deleted text begin$79,730deleted text endnew text begin $85,060new text end, 7.05 percent;

(3) On all over deleted text begin$79,730deleted text endnew text begin $85,060new text end, but not over deleted text begin$150,000deleted text endnew text begin $160,020new text end, 7.85 percent;

(4) On all over deleted text begin$150,000deleted text endnew text begin $160,020new text end, 9.85 percent.

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying as
a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first deleted text begin$29,880deleted text endnew text begin $31,880new text end, deleted text begin5.35deleted text endnew text begin 5.05new text end percent;

(2) On all over deleted text begin$29,880deleted text endnew text begin $31,880new text end, but not over deleted text begin$120,070deleted text endnew text begin $128,090new text end, 7.05 percent;

(3) On all over deleted text begin$120,070deleted text endnew text begin $128,090new text end, but not over deleted text begin$200,000deleted text endnew text begin $213,360new text end, 7.85 percent;

(4) On all over deleted text begin$200,000deleted text endnew text begin $213,360new text end, 9.85 percent.

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax
of any individual taxpayer whose taxable net income for the taxable year is less than an
amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not more
than $100. The amount of tax for each bracket shall be computed at the rates set forth in
this subdivision, provided that the commissioner may disregard a fractional part of a dollar
unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute the
individual's Minnesota income tax as provided in this subdivision. After the application of
the nonrefundable credits provided in this chapter, the tax liability must then be multiplied
by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income deleted text beginas
defined in section 62 of the Internal Revenue Code
deleted text end and increased by the additions required
under section 290.0131, subdivisions 2 and 6 to deleted text begin11deleted text endnew text begin 10new text end, and reduced by the Minnesota
assignable portion of the subtraction for United States government interest under section
290.0132, subdivision 2, and the subtractions under section 290.0132, subdivisions 9, 10,
14, 15, 17, deleted text beginanddeleted text end 18, new text beginand 27 to 29, new text endafter applying the allocation and assignability provisions
of section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income deleted text beginas defined in section
62 of the Internal Revenue Code
deleted text end, increased by the amounts specified in section 290.0131,
subdivisions 2
and 6 to deleted text begin11deleted text endnew text begin 10new text end, and reduced by the amounts specified in section 290.0132,
subdivisions 2, 9, 10, 14, 15, 17, deleted text beginanddeleted text end 18new text begin, and 27 to 29new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 36.

Minnesota Statutes 2018, section 290.06, subdivision 2d, is amended to read:


Subd. 2d.

Inflation adjustment of brackets.

(a) For taxable years beginning after
December 31, 2013, the minimum and maximum dollar amounts for each rate bracket for
which a tax is imposed in subdivision 2c shall be adjusted for inflation by the percentage
determined under paragraph (b). deleted text beginFor the purpose of making the adjustment as provided in
this subdivision all of the rate brackets provided in subdivision 2c shall be the rate brackets
as they existed for taxable years beginning after December 31, 2012, and before January 1,
2014.
deleted text end The rate applicable to any rate bracket must not be changed. The dollar amounts
setting forth the tax shall be adjusted to reflect the changes in the rate brackets. The rate
brackets as adjusted must be rounded to the nearest $10 amount. If the rate bracket ends in
$5, it must be rounded up to the nearest $10 amount.

(b) The commissioner shall adjust the rate brackets and 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 deleted text begin"2012"deleted text endnew text begin "2018"new text end shall be substituted for the word deleted text begin"1992." For 2014, the
commissioner shall then determine the percent change from the 12 months ending on August
31, 2012, to the 12 months ending on August 31, 2013, and in each subsequent year, from
the 12 months ending on August 31, 2012, to the 12 months ending on August 31 of the
year preceding the taxable year.
deleted text endnew text begin "2017."new text end The determination of the commissioner pursuant
to this subdivision shall not be considered a "rule" and shall not be subject to the
Administrative Procedure Act contained in chapter 14.

No later than December 15 of each year, the commissioner shall announce the specific
percentage that will be used to adjust the tax rate brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 37.

Minnesota Statutes 2018, section 290.0672, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

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

(b) "Long-term care insurance" means a policy that:

(1) qualifies for a deduction under section 213 of the Internal Revenue Code, disregarding
the adjusted gross income test; or meets the requirements given in section 62A.46; or provides
similar coverage issued under the laws of another jurisdiction; and

(2) has a lifetime long-term care benefit limit of not less than $100,000; and

(3) has been offered in compliance with the inflation protection requirements of section
62S.23.

(c) "Qualified beneficiary" means the taxpayer or the taxpayer's spouse.

(d) "Premiums deducted in determining deleted text beginfederaldeleted text end taxablenew text begin netnew text end income" means the lesser of
(1) long-term care insurance premiums that qualify as deductions under section 213 of the
Internal Revenue Code; and (2) the total amount deductible for medical deleted text begincaredeleted text endnew text begin expensesnew text end under
section 213 of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 38.

Minnesota Statutes 2018, section 290.0672, subdivision 2, is amended to read:


Subd. 2.

Credit.

A taxpayer is allowed a credit against the tax imposed by this chapter
for long-term care insurance policy premiums paid during the tax year. The credit for each
policy equals 25 percent of premiums paid to the extent not deducted in determining deleted text beginfederaldeleted text end
taxablenew text begin netnew text end income. A taxpayer may claim a credit for only one policy for each qualified
beneficiary. A maximum of $100 applies to each qualified beneficiary. The maximum total
credit allowed per year is $200 for married couples filing joint returns and $100 for all other
filers. 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 begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 39.

Minnesota Statutes 2018, section 290.0681, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

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

(b) "Account" means the historic credit administration account in the special revenue
fund.

(c) "Office" means the State Historic Preservation Office of the Department of
Administration.

(d) "Project" means rehabilitation of a certified historic structure, as defined in section
47(c)(3)(A) of the Internal Revenue Code, that is located in Minnesota and is allowed a
federal credit.

(e) "Federal credit" means the credit allowed under section deleted text begin47(a)(2)deleted text endnew text begin 47(a)new text end of the Internal
Revenue Codenew text begin, except that the amount allowed is deemed to be allocated in the taxable year
that the project is placed in service
new text end.

(f) "Placed in service" has the meaning used in section 47 of the Internal Revenue Code.

(g) "Qualified rehabilitation expenditures" has the meaning given in section 47 of the
Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for allocation certificates
submitted after December 31, 2018.
new text end

Sec. 40.

Minnesota Statutes 2018, section 290.0681, subdivision 2, is amended to read:


Subd. 2.

Credit or grant allowed; certified historic structure.

(a) A credit is allowed
against the tax imposed under this chapter equal to not more than 100 percent of the credit
allowed under section deleted text begin47(a)(2)deleted text endnew text begin 47(a)new text end of the Internal Revenue Code for a project. new text beginThe credit
is payable in an amount equal to one-fifth of the total credit amount allowed in the five
taxable years beginning with the year the project is placed in service.
new text endTo qualify for the
credit:

(1) the project must receive Part 3 certification and be placed in service during the taxable
year; and

(2) the taxpayer must be allowed the federal credit and be issued a credit certificate for
the taxable year as provided in subdivision 4.

(b) The commissioner of administration may pay a grant in lieu of the credit. The grant
equals 90 percent of the credit that would be allowed for the project.new text begin The grant is payable
in an amount equal to one-fifth of 90 percent of the credit that would be allowed for the
project in the five taxable years beginning with the year the project is placed in service.
new text end

(c) In lieu of the credit under paragraph (a), an insurance company may claim a credit
against the insurance premiums tax imposed under chapter 297I.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for applications for allocation certificates
submitted after December 31, 2018.
new text end

Sec. 41.

Minnesota Statutes 2018, 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 new text beginone-fifth of the total amount of either new text endthe credit or new text beginthe
new text end grant at the time the project is placed in service, provided that date is within three 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 December 31, 2018.
new text end

Sec. 42.

Minnesota Statutes 2018, 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 taxpayernew text begin
before the first one-fifth payment is claimed
new text end, which is then allowed the credit under this
section or section 297I.20, subdivision 3. 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.

(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 applications for allocation certificates
submitted after December 31, 2018.
new text end

Sec. 43.

Minnesota Statutes 2018, section 290.0802, subdivision 2, is amended to read:


Subd. 2.

Subtraction.

(a) A qualified individual is allowed a subtraction from federal
deleted text begin taxabledeleted text endnew text begin adjusted grossnew text end income of the individual's subtraction base amount. The excess of
the subtraction base amount over the taxable net income computed without regard to the
subtraction for the elderly or disabled under section 290.0132, subdivision 5, may be used
to reduce the amount of a lump sum distribution subject to tax under section 290.032.

(b)(1) The initial subtraction base amount equals

(i) $12,000 for a married taxpayer filing a joint return if a spouse is a qualified individual,

(ii) $9,600 for a single taxpayer, and

(iii) $6,000 for a married taxpayer filing a separate federal return.

(2) The qualified individual's initial subtraction base amount, then, must be reduced by
the sum of nontaxable retirement and disability benefits and one-half of the amount of
adjusted gross income in excess of the following thresholds:

(i) $18,000 for a married taxpayer filing a joint return if both spouses are qualified
individuals,

(ii) $14,500 for a single taxpayer or for a married couple filing a joint return if only one
spouse is a qualified individual, and

(iii) $9,000 for a married taxpayer filing a separate federal return.

(3) In the case of a qualified individual who is under the age of 65, the maximum amount
of the subtraction base may not exceed the taxpayer's disability income.

(4) The resulting amount is the subtraction base amount.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 44.

new text begin [290.0803] STANDARD OR ITEMIZED DEDUCTION.
new text end

new text begin Subdivision 1. new text end

new text begin Election. new text end

new text begin An individual may elect to claim a state standard deduction in
lieu of state itemized deductions. However, in the case of a married individual filing a
separate return, if one spouse elects to claim state itemized deductions, the other spouse is
not allowed a state standard deduction.
new text end

new text begin Subd. 2. new text end

new text begin Subtraction. new text end

new text begin Based on the election under subdivision 1, individuals are allowed
to subtract from federal adjusted gross income the state standard deduction or the state
itemized deduction.
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, 2018.
new text end

Sec. 45.

Minnesota Statutes 2018, section 290.091, subdivision 2, 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)(2) 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 disabled person;

(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; and

(6) the amount of addition required by section 290.0131, subdivisions 9 deleted text beginto 11deleted text endnew text begin, 10, and
16
new text end;

new text begin (7) the deduction allowed under section 199A of the Internal Revenue Code;
new text end

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 deleted text begintaxabledeleted text endnew text begin adjusted grossnew text end income as provided by
section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, and 26new text begin to 29new text end; deleted text beginand
deleted text end

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c)deleted text begin.deleted text endnew text begin; and
new text end

new text begin (vi) the amount that would have been an allowable deduction under section 165(h) of
the Internal Revenue Code, as amended through December 16, 2016, and that was taken as
a Minnesota itemized deduction under section 290.01, subdivision 29.
new text end

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 Codenew text begin, except that alternative minimum
taxable income must be increased by the amount of the addition under section 290.0131,
subdivision 15
new text end.

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

(c) "Net minimum tax" means the minimum tax imposed by this section.

(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, 2018.
new text end

Sec. 46.

Minnesota Statutes 2018, section 290.095, subdivision 4, is amended to read:


Subd. 4.

Computation and modifications.

The following modifications shall be made
in computing a net operating loss in any taxable year and also in computing the taxable net
income for any taxable year before a net operating loss deduction shall be allowed:

(a) No deduction shall be allowed for or with respect to losses connected with income
producing activities if the income therefrom would not be required to be either assignable
to this state or included in computing the taxpayer's taxable net income.

(b) A net operating loss deduction shall not be allowed.

(c) The amount deductible on account of losses from sales or exchanges of capital assets
shall not exceed the amount includable on account of gains from sales or exchanges of
capital assets.

(d) Renegotiation of profits for a prior taxable year under the renegotiation laws of the
United States of America, including renegotiation of the profits with a subcontractor, shall
not enter into the computation.

(e) Federal income and excess profits taxes shall not be allowed as a deduction.

new text begin (f) The 80-percent limitation under section 172(a)(2) of the Internal Revenue Code does
not apply to the computations for corporate taxpayers 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, 2018.
new text end

Sec. 47.

Minnesota Statutes 2018, section 290.17, subdivision 2, is amended to read:


Subd. 2.

Income not derived from conduct of a trade or business.

The income of a
taxpayer subject to the allocation rules that is not derived from the conduct of a trade or
business must be assigned in accordance with paragraphs (a) to (f):

(a)(1) Subject to paragraphs (a)(2) and (a)(3), income from wages as defined in section
3401(a) deleted text beginanddeleted text endnew text begin,new text end (f)new text begin, and (i)new text end of the Internal Revenue Code is assigned to this state if, and to the
extent that, the work of the employee is performed within it; all other income from such
sources is treated as income from sources without this state.

Severance pay shall be considered income from labor or personal or professional services.

(2) In the case of an individual who is a nonresident of Minnesota and who is an athlete
or entertainer, income from compensation for labor or personal services performed within
this state shall be determined in the following manner:

(i) the amount of income to be assigned to Minnesota for an individual who is a
nonresident salaried athletic team employee shall be determined by using a fraction in which
the denominator contains the total number of days in which the individual is under a duty
to perform for the employer, and the numerator is the total number of those days spent in
Minnesota. For purposes of this paragraph, off-season training activities, unless conducted
at the team's facilities as part of a team imposed program, are not included in the total number
of duty days. Bonuses earned as a result of play during the regular season or for participation
in championship, play-off, or all-star games must be allocated under the formula. Signing
bonuses are not subject to allocation under the formula if they are not conditional on playing
any games for the team, are payable separately from any other compensation, and are
nonrefundable; and

(ii) the amount of income to be assigned to Minnesota for an individual who is a
nonresident, and who is an athlete or entertainer not listed in item (i), for that person's athletic
or entertainment performance in Minnesota shall be determined by assigning to this state
all income from performances or athletic contests in this state.

(3) For purposes of this section, amounts received by a nonresident as "retirement income"
as defined in section (b)(1) of the State Income Taxation of Pension Income Act, Public
Law 104-95, are not considered income derived from carrying on a trade or business or
from wages or other compensation for work an employee performed in Minnesota, and are
not taxable under this chapter.

(b) Income or gains from tangible property located in this state that is not employed in
the business of the recipient of the income or gains must be assigned to this state.

(c) Income or gains from intangible personal property not employed in the business of
the recipient of the income or gains must be assigned to this state if the recipient of the
income or gains is a resident of this state or is a resident trust or estate.

Gain on the sale of a partnership interest is allocable to this state in the ratio of the
original cost of partnership tangible property in this state to the original cost of partnership
tangible property everywhere, determined at the time of the sale. If more than 50 percent
of the value of the partnership's assets consists of intangibles, gain or loss from the sale of
the partnership interest is allocated to this state in accordance with the sales factor of the
partnership for its first full tax period immediately preceding the tax period of the partnership
during which the partnership interest was sold.

Gain on the sale of an interest in a single member limited liability company that is
disregarded for federal income tax purposes is allocable to this state as if the single member
limited liability company did not exist and the assets of the limited liability company are
personally owned by the sole member.

Gain on the sale of goodwill or income from a covenant not to compete that is connected
with a business operating all or partially in Minnesota is allocated to this state to the extent
that the income from the business in the year preceding the year of sale was allocable to
Minnesota under subdivision 3.

When an employer pays an employee for a covenant not to compete, the income allocated
to this state is in the ratio of the employee's service in Minnesota in the calendar year
preceding leaving the employment of the employer over the total services performed by the
employee for the employer in that year.

(d) Income from winnings on a bet made by an individual while in Minnesota is assigned
to this state. In this paragraph, "bet" has the meaning given in section 609.75, subdivision
2
, as limited by section 609.75, subdivision 3, clauses (1), (2), and (3).

(e) All items of gross income not covered in paragraphs (a) to (d) and not part of the
taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.

(f) For the purposes of this section, working as an employee shall not be considered to
be conducting a trade or business.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for wages paid after December 31, 2017.
new text end

Sec. 48.

Minnesota Statutes 2018, section 290.21, subdivision 4, is amended to read:


Subd. 4.

Dividends received from another corporation.

(a)(1) Eighty percent of
dividends received by a corporation during the taxable year from another corporation, in
which the recipient owns 20 percent or more of the stock, by vote and value, not including
stock described in section 1504(a)(4) of the Internal Revenue Code when the corporate
stock with respect to which dividends are paid does not constitute the stock in trade of the
taxpayer or would not be included in the inventory of the taxpayer, or does not constitute
property held by the taxpayer primarily for sale to customers in the ordinary course of the
taxpayer's trade or business, or when the trade or business of the taxpayer does not consist
principally of the holding of the stocks and the collection of the income and gains therefrom;
and

(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
an affiliated company transferred in an overall plan of reorganization and the dividend is
eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as amended
through December 31, 1989;

(ii) the remaining 20 percent of dividends if the dividends are received from a corporation
which is subject to tax under section 290.36 and which is a member of an affiliated group
of corporations as defined by the Internal Revenue Code and the dividend is eliminated in
consolidation under Treasury Department Regulation 1.1502-14(a), as amended through
December 31, 1989, or is deducted under an election under section 243(b) of the Internal
Revenue Code; or

(iii) the remaining 20 percent of the dividends if the dividends are received from a
property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
member of an affiliated group of corporations as defined by the Internal Revenue Code and
either: (A) the dividend is eliminated in consolidation under Treasury Regulation
1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
under an election under section 243(b) of the Internal Revenue Code.

(b) Seventy percent of dividends received by a corporation during the taxable year from
another corporation in which the recipient owns less than 20 percent of the stock, by vote
or value, not including stock described in section 1504(a)(4) of the Internal Revenue Code
when the corporate stock with respect to which dividends are paid does not constitute the
stock in trade of the taxpayer, or does not constitute property held by the taxpayer primarily
for sale to customers in the ordinary course of the taxpayer's trade or business, or when the
trade or business of the taxpayer does not consist principally of the holding of the stocks
and the collection of income and gain therefrom.

(c) The dividend deduction provided in this subdivision shall be allowed only with
respect to dividends that are included in a corporation's Minnesota taxable net income for
the taxable year.

The dividend deduction provided in this subdivision does not apply to a dividend from
a corporation which, for the taxable year of the corporation in which the distribution is made
or for the next preceding taxable year of the corporation, is a corporation exempt from tax
under section 501 of the Internal Revenue Code.

The dividend deduction provided in this subdivision does not apply to a dividend received
from a real estate investment trust as defined in section 856 of the Internal Revenue Code.

The dividend deduction provided in this subdivision applies to the amount of regulated
investment company dividends only to the extent determined under section 854(b) of the
Internal Revenue Code.

The dividend deduction provided in this subdivision shall not be allowed with respect
to any dividend for which a deduction is not allowed under the provisions of section 246(c)new text begin
or 246A
new text end of the Internal Revenue Code.

(d) If dividends received by a corporation that does not have nexus with Minnesota under
the provisions of Public Law 86-272 are included as income on the return of an affiliated
corporation permitted or required to file a combined report under section 290.17, subdivision
4
, or 290.34, subdivision 2, then for purposes of this subdivision the determination as to
whether the trade or business of the corporation consists principally of the holding of stocks
and the collection of income and gains therefrom shall be made with reference to the trade
or business of the affiliated corporation having a nexus with Minnesota.

(e) The deduction provided by this subdivision does not apply if the dividends are paid
by a FSC as defined in section 922 of the Internal Revenue Code.

(f) If one or more of the members of the unitary group whose income is included on the
combined report received a dividend, the deduction under this subdivision for each member
of the unitary business required to file a return under this chapter is the product of: (1) 100
percent of the dividends received by members of the group; (2) the percentage allowed
pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business income
apportionable to this state for the taxable year under section 290.191 or 290.20.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 49.

Minnesota Statutes 2018, section 290.34, is amended by adding a subdivision to
read:


new text begin Subd. 5. new text end

new text begin Insurance companies; interest expense limitation. new text end

new text begin To be consistent with the
federal treatment of the interest expense limitation under section 163(j) of the Internal
Revenue Code for an affiliated group that includes an insurance company taxable under
chapter 297I and exempt from taxation under section 290.05, subdivision 1, clause (c), the
rules under this subdivision apply. In that case, the interest expense limitation under section
163(j) of the Internal Revenue Code must be computed for the corporation subject to tax
under this chapter using the adjusted taxable income of the insurance companies that are
part of the affiliated group and taxed under chapter 297I.
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, 2018.
new text end

Sec. 50.

Minnesota Statutes 2018, section 290.92, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(1) Wages. For purposes of this section, the term "wages"
means the same as that term is defined in section 3401(a) deleted text beginanddeleted text endnew text begin,new text end (f)new text begin, and (i)new text end of the Internal
Revenue Code.

(2) Payroll period. For purposes of this section the term "payroll period" means a period
for which a payment of wages is ordinarily made to the employee by the employee's
employer, and the term "miscellaneous payroll period" means a payroll period other than a
daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual payroll
period.

(3) Employee. For purposes of this section the term "employee" means any resident
individual performing services for an employer, either within or without, or both within and
without the state of Minnesota, and every nonresident individual performing services within
the state of Minnesota, the performance of which services constitute, establish, and determine
the relationship between the parties as that of employer and employee. As used in the
preceding sentence, the term "employee" includes an officer of a corporation, and an officer,
employee, or elected official of the United States, a state, or any political subdivision thereof,
or the District of Columbia, or any agency or instrumentality of any one or more of the
foregoing.

(4) Employer. For purposes of this section the term "employer" means any person,
including individuals, fiduciaries, estates, trusts, partnerships, limited liability companies,
and corporations transacting business in or deriving any income from sources within the
state of Minnesota for whom an individual performs or performed any service, of whatever
nature, as the employee of such person, except that if the person for whom the individual
performs or performed the services does not have control of the payment of the wages for
such services, the term "employer," except for purposes of paragraph (1), means the person
having control of the payment of such wages. As used in the preceding sentence, the term
"employer" includes any corporation, individual, estate, trust, or organization which is
exempt from taxation under section 290.05 and further includes, but is not limited to, officers
of corporations who have control, either individually or jointly with another or others, of
the payment of the wages.

(5) Number of withholding exemptions claimed. For purposes of this section, the term
"number of withholding exemptions claimed" means the number of withholding exemptions
claimed in a withholding exemption certificate in effect under subdivision 5, except that if
no such certificate is in effect, the number of withholding exemptions claimed shall be
considered to be zero.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for wages paid after July 1, 2019.
new text end

Sec. 51.

Minnesota Statutes 2018, section 290A.03, subdivision 3, is amended to read:


Subd. 3.

Income.

(a) "Income" means the sum of the following:

(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),
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) deleted text beginthe amount of deduction allowed under section 199 of the Internal Revenue Codedeleted text endnew text begin
alimony received to the extent not included in the recipient's income
new text end;

(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; deleted text beginand
deleted text end

(xvii) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Codedeleted text begin.deleted text endnew text begin;
new text end

new text begin (xviii) the amount excluded from federal adjusted gross income for qualified moving
expense reimbursements under section 132(a)(6) of the Internal Revenue Code, as amended
through December 16, 2016; and
new text end

new text begin (xix) the amount deducted from federal adjusted gross income for moving expenses
under section 217 of the Internal Revenue Code, as amended through December 16, 2016.
new text end

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; or

(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.

(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 was disabled 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)new text begin(1)new text end For purposes of this subdivision, the "exemption amount" means deleted text beginthe exemption
amount under section 151(d) of the Internal Revenue Code for the taxable year for which
the income is reported; "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 "traditional
or Roth style retirement account or plan" means retirement plans under sections 401, 403,
408, 408A, and 457 of the Internal Revenue Code.
deleted text endnew text begin $4,150. For taxable years beginning after
December 31, 2018, the commissioner shall annually adjust the $4,150 by the percentage
determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, as
amended through March 31, 2018. The exemption amount as adjusted for inflation must be
rounded to the nearest $50. If the amount is not a multiple of $50, the commissioner shall
round down to the next lowest multiple of $50. The determination of the commissioner
under this subdivision is not a rule under the Administrative Procedure Act, including section
14.386; and
new text end

new text begin (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 "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 end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on property
taxes payable after December 31, 2019, and rent paid after December 31, 2018.
new text end

Sec. 52.

Minnesota Statutes 2018, section 290A.03, subdivision 12, is amended to read:


Subd. 12.

Gross rent.

(a) "Gross rent" means rental paid for the right of occupancy, at
arm's length, of a homestead, exclusive of charges for any medical services furnished by
the landlord as a part of the rental agreement, whether expressly set out in the rental
agreement or not.

(b) The gross rent of a resident of a nursing home or intermediate care facility is deleted text begin$350deleted text endnew text begin
$490
new text end per month. The gross rent of a resident of an adult foster care home is deleted text begin$550deleted text endnew text begin $760new text end per
month. Beginning for rent paid in deleted text begin2002deleted text endnew text begin 2019new text end, the commissioner shall annually adjust for
inflation the gross rent amounts stated in this paragraph. The adjustment must be made in
accordance with section 1(f) of the Internal Revenue Code, except that for purposes of this
paragraph the percentage increase shall be determined from the year ending on June 30,
deleted text begin 2001deleted text endnew text begin 2017new text end, to the year ending on June 30 of the year in which the rent is paid. The
commissioner shall round the gross rents to the nearest $10 amount. If the amount ends in
$5, the commissioner shall round it up to the next $10 amount. The determination of the
commissioner under this paragraph is not a rule under the Administrative Procedure Act.

(c) If the landlord and tenant have not dealt with each other at arm's length and the
commissioner determines that the gross rent charged was excessive, the commissioner may
adjust the gross rent to a reasonable amount for purposes of this chapter.

(d) Any amount paid by a claimant residing in property assessed pursuant to section
273.124, subdivision 3, 4, 5, or 6 for occupancy in that property shall be excluded from
gross rent for purposes of this chapter. However, property taxes imputed to the homestead
of the claimant or the dwelling unit occupied by the claimant that qualifies for homestead
treatment pursuant to section 273.124, subdivision 3, 4, 5, or 6 shall be included within the
term "property taxes payable" as defined in subdivision 13, notwithstanding the fact that
ownership is not in the name of the claimant.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refunds based on rent paid after
December 31, 2018, and property taxes payable after December 31, 2019.
new text end

Sec. 53.

Minnesota Statutes 2018, section 290A.03, subdivision 15, is amended to read:


Subd. 15.

Internal Revenue Code.

"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through deleted text beginDecember 16, 2016deleted text endnew text begin March 31, 2018new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on property
taxes payable after December 31, 2019, and rent paid after December 31, 2018.
new text end

Sec. 54.

Minnesota Statutes 2018, section 290A.04, subdivision 2, is amended to read:


Subd. 2.

Homeowners; homestead credit refund.

A claimant whose property taxes
payable are in excess of the percentage of the household income stated below shall pay an
amount equal to the percent of income shown for the appropriate household income level
along with the percent to be paid by the claimant of the remaining amount of property taxes
payable. The state refund equals the amount of property taxes payable that remain, up to
the state refund amount shown below.

deleted text begin Household Income
deleted text end
deleted text begin Percent of Income
deleted text end
deleted text begin Percent Paid by
deleted text end deleted text begin Claimant
deleted text end
deleted text begin Maximum
deleted text end deleted text begin State
deleted text end deleted text begin Refund
deleted text end
deleted text begin $0 to 1,619
deleted text end
deleted text begin 1.0 percent
deleted text end
deleted text begin 15 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 1,620 to 3,229
deleted text end
deleted text begin 1.1 percent
deleted text end
deleted text begin 15 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 3,230 to 4,889
deleted text end
deleted text begin 1.2 percent
deleted text end
deleted text begin 15 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 4,890 to 6,519
deleted text end
deleted text begin 1.3 percent
deleted text end
deleted text begin 20 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 6,520 to 8,129
deleted text end
deleted text begin 1.4 percent
deleted text end
deleted text begin 20 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 8,130 to 11,389
deleted text end
deleted text begin 1.5 percent
deleted text end
deleted text begin 20 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 11,390 to 13,009
deleted text end
deleted text begin 1.6 percent
deleted text end
deleted text begin 20 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 13,010 to 14,649
deleted text end
deleted text begin 1.7 percent
deleted text end
deleted text begin 20 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 14,650 to 16,269
deleted text end
deleted text begin 1.8 percent
deleted text end
deleted text begin 20 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 16,270 to 17,879
deleted text end
deleted text begin 1.9 percent
deleted text end
deleted text begin 25 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 17,880 to 22,779
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 25 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 22,780 to 24,399
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 30 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 24,400 to 27,659
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 30 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 27,660 to 39,029
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 35 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,580
deleted text end
deleted text begin 39,030 to 56,919
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 35 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,090
deleted text end
deleted text begin 56,920 to 65,049
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 40 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,830
deleted text end
deleted text begin 65,050 to 73,189
deleted text end
deleted text begin 2.1 percent
deleted text end
deleted text begin 40 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,510
deleted text end
deleted text begin 73,190 to 81,319
deleted text end
deleted text begin 2.2 percent
deleted text end
deleted text begin 40 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,350
deleted text end
deleted text begin 81,320 to 89,449
deleted text end
deleted text begin 2.3 percent
deleted text end
deleted text begin 40 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,180
deleted text end
deleted text begin 89,450 to 94,339
deleted text end
deleted text begin 2.4 percent
deleted text end
deleted text begin 45 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,000
deleted text end
deleted text begin 94,340 to 97,609
deleted text end
deleted text begin 2.5 percent
deleted text end
deleted text begin 45 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 830
deleted text end
deleted text begin 97,610 to 101,559
deleted text end
deleted text begin 2.5 percent
deleted text end
deleted text begin 50 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 680
deleted text end
deleted text begin 101,560 to 105,499
deleted text end
deleted text begin 2.5 percent
deleted text end
deleted text begin 50 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 500
deleted text end
new text begin Household Income
new text end
new text begin Percent of Income
new text end
new text begin Percent Paid by
Claimant
new text end
new text begin Maximum
State
Refund
new text end
new text begin $0 to 1,729
new text end
new text begin 1.0 percent
new text end
new text begin 15 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 1,730 to 3,449
new text end
new text begin 1.1 percent
new text end
new text begin 15 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 3,450 to 5,229
new text end
new text begin 1.2 percent
new text end
new text begin 15 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 5,230 to 6,969
new text end
new text begin 1.3 percent
new text end
new text begin 20 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 6,970 to 8,689
new text end
new text begin 1.4 percent
new text end
new text begin 20 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 8,690 to 12,169
new text end
new text begin 1.5 percent
new text end
new text begin 20 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 12,170 to 13,899
new text end
new text begin 1.6 percent
new text end
new text begin 20 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 13,900 to 15,659
new text end
new text begin 1.7 percent
new text end
new text begin 20 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 15,660 to 17,389
new text end
new text begin 1.8 percent
new text end
new text begin 20 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 17,390 to 19,109
new text end
new text begin 1.9 percent
new text end
new text begin 25 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 19,110 to 24,349
new text end
new text begin 2.0 percent
new text end
new text begin 25 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 24,350 to 26,079
new text end
new text begin 2.0 percent
new text end
new text begin 30 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 26,080 to 29,559
new text end
new text begin 2.0 percent
new text end
new text begin 30 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 29,560 to 41,709
new text end
new text begin 2.0 percent
new text end
new text begin 35 percent
new text end
new text begin $
new text end
new text begin 2,760
new text end
new text begin 41,710 to 60,829
new text end
new text begin 2.0 percent
new text end
new text begin 35 percent
new text end
new text begin $
new text end
new text begin 2,230
new text end
new text begin 60,830 to 69,519
new text end
new text begin 2.0 percent
new text end
new text begin 40 percent
new text end
new text begin $
new text end
new text begin 1,960
new text end
new text begin 69,520 to 78,219
new text end
new text begin 2.1 percent
new text end
new text begin 40 percent
new text end
new text begin $
new text end
new text begin 1,610
new text end
new text begin 78,220 to 86,909
new text end
new text begin 2.2 percent
new text end
new text begin 40 percent
new text end
new text begin $
new text end
new text begin 1,440
new text end
new text begin 86,910 to 95,599
new text end
new text begin 2.3 percent
new text end
new text begin 40 percent
new text end
new text begin $
new text end
new text begin 1,260
new text end
new text begin 95,600 to 100,819
new text end
new text begin 2.4 percent
new text end
new text begin 45 percent
new text end
new text begin $
new text end
new text begin 1,070
new text end
new text begin 100,820 to 104,319
new text end
new text begin 2.5 percent
new text end
new text begin 45 percent
new text end
new text begin $
new text end
new text begin 890
new text end
new text begin 104,320 to 108,539
new text end
new text begin 2.5 percent
new text end
new text begin 50 percent
new text end
new text begin $
new text end
new text begin 730
new text end
new text begin 108,540 to 112,749
new text end
new text begin 2.5 percent
new text end
new text begin 50 percent
new text end
new text begin $
new text end
new text begin 530
new text end

The payment made to a claimant shall be the amount of the state refund calculated under
this subdivision. No payment is allowed if the claimant's household income is deleted text begin$105,500deleted text endnew text begin
$112,750
new text end or more.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refunds based on property taxes
payable after December 31, 2018.
new text end

Sec. 55.

Minnesota Statutes 2018, section 290A.04, subdivision 2a, is amended to read:


Subd. 2a.

Renters.

A claimant whose rent constituting property taxes exceeds the
percentage of the household income stated below must pay an amount equal to the percent
of income shown for the appropriate household income level along with the percent to be
paid by the claimant of the remaining amount of rent constituting property taxes. The state
refund equals the amount of rent constituting property taxes that remain, up to the maximum
state refund amount shown below.

deleted text begin Household Income
deleted text end
deleted text begin Percent of Income
deleted text end
deleted text begin Percent Paid by
deleted text end deleted text begin Claimant
deleted text end
deleted text begin Maximum
deleted text end deleted text begin State
deleted text end deleted text begin Refund
deleted text end
deleted text begin $0 to 4,909
deleted text end
deleted text begin 1.0 percent
deleted text end
deleted text begin 5 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,000
deleted text end
deleted text begin 4,910 to 6,529
deleted text end
deleted text begin 1.0 percent
deleted text end
deleted text begin 10 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 2,000
deleted text end
deleted text begin 6,530 to 8,159
deleted text end
deleted text begin 1.1 percent
deleted text end
deleted text begin 10 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,950
deleted text end
deleted text begin 8,160 to 11,439
deleted text end
deleted text begin 1.2 percent
deleted text end
deleted text begin 10 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,900
deleted text end
deleted text begin 11,440 to 14,709
deleted text end
deleted text begin 1.3 percent
deleted text end
deleted text begin 15 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,850
deleted text end
deleted text begin 14,710 to 16,339
deleted text end
deleted text begin 1.4 percent
deleted text end
deleted text begin 15 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,800
deleted text end
deleted text begin 16,340 to 17,959
deleted text end
deleted text begin 1.4 percent
deleted text end
deleted text begin 20 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,750
deleted text end
deleted text begin 17,960 to 21,239
deleted text end
deleted text begin 1.5 percent
deleted text end
deleted text begin 20 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,700
deleted text end
deleted text begin 21,240 to 22,869
deleted text end
deleted text begin 1.6 percent
deleted text end
deleted text begin 20 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,650
deleted text end
deleted text begin 22,870 to 24,499
deleted text end
deleted text begin 1.7 percent
deleted text end
deleted text begin 25 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,650
deleted text end
deleted text begin 24,500 to 27,779
deleted text end
deleted text begin 1.8 percent
deleted text end
deleted text begin 25 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,650
deleted text end
deleted text begin 27,780 to 29,399
deleted text end
deleted text begin 1.9 percent
deleted text end
deleted text begin 30 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,650
deleted text end
deleted text begin 29,400 to 34,299
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 30 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,650
deleted text end
deleted text begin 34,300 to 39,199
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 35 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,650
deleted text end
deleted text begin 39,200 to 45,739
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 40 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,650
deleted text end
deleted text begin 45,740 to 47,369
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 45 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,500
deleted text end
deleted text begin 47,370 to 49,009
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 45 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,350
deleted text end
deleted text begin 49,010 to 50,649
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 45 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,150
deleted text end
deleted text begin 50,650 to 52,269
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 50 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 1,000
deleted text end
deleted text begin 52,270 to 53,909
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 50 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 900
deleted text end
deleted text begin 53,910 to 55,539
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 50 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 500
deleted text end
deleted text begin 55,540 to 57,169
deleted text end
deleted text begin 2.0 percent
deleted text end
deleted text begin 50 percent
deleted text end
deleted text begin $
deleted text end
deleted text begin 200
deleted text end
new text begin Household Income
new text end
new text begin Percent of Income
new text end
new text begin Percent Paid by
Claimant
new text end
new text begin Maximum
State
Refund
new text end
new text begin $0 to 5,249
new text end
new text begin 1.0 percent
new text end
new text begin 5 percent
new text end
new text begin $
new text end
new text begin 2,140
new text end
new text begin 5,250 to 6,979
new text end
new text begin 1.0 percent
new text end
new text begin 10 percent
new text end
new text begin $
new text end
new text begin 2,140
new text end
new text begin 6,980 to 8,719
new text end
new text begin 1.1 percent
new text end
new text begin 10 percent
new text end
new text begin $
new text end
new text begin 2,080
new text end
new text begin 8,720 to 12,229
new text end
new text begin 1.2 percent
new text end
new text begin 10 percent
new text end
new text begin $
new text end
new text begin 2,030
new text end
new text begin 12,230 to 15,719
new text end
new text begin 1.3 percent
new text end
new text begin 15 percent
new text end
new text begin $
new text end
new text begin 1,980
new text end
new text begin 15,720 to 17,459
new text end
new text begin 1.4 percent
new text end
new text begin 15 percent
new text end
new text begin $
new text end
new text begin 1,920
new text end
new text begin 17,460 to 19,189
new text end
new text begin 1.4 percent
new text end
new text begin 20 percent
new text end
new text begin $
new text end
new text begin 1,870
new text end
new text begin 19,190 to 22,699
new text end
new text begin 1.5 percent
new text end
new text begin 20 percent
new text end
new text begin $
new text end
new text begin 1,820
new text end
new text begin 22,700 to 24,439
new text end
new text begin 1.6 percent
new text end
new text begin 20 percent
new text end
new text begin $
new text end
new text begin 1,760
new text end
new text begin 24,440 to 26,179
new text end
new text begin 1.7 percent
new text end
new text begin 25 percent
new text end
new text begin $
new text end
new text begin 1,760
new text end
new text begin 26,180 to 29,689
new text end
new text begin 1.8 percent
new text end
new text begin 25 percent
new text end
new text begin $
new text end
new text begin 1,760
new text end
new text begin 29,690 to 31,419
new text end
new text begin 1.9 percent
new text end
new text begin 30 percent
new text end
new text begin $
new text end
new text begin 1,760
new text end
new text begin 31,420 to 36,659
new text end
new text begin 2.0 percent
new text end
new text begin 30 percent
new text end
new text begin $
new text end
new text begin 1,760
new text end
new text begin 36,660 to 41,889
new text end
new text begin 2.0 percent
new text end
new text begin 35 percent
new text end
new text begin $
new text end
new text begin 1,760
new text end
new text begin 41,890 to 48,879
new text end
new text begin 2.0 percent
new text end
new text begin 40 percent
new text end
new text begin $
new text end
new text begin 1,760
new text end
new text begin 48,880 to 50,629
new text end
new text begin 2.0 percent
new text end
new text begin 45 percent
new text end
new text begin $
new text end
new text begin 1,600
new text end
new text begin 50,630 to 52,379
new text end
new text begin 2.0 percent
new text end
new text begin 45 percent
new text end
new text begin $
new text end
new text begin 1,440
new text end
new text begin 52,380 to 54,129
new text end
new text begin 2.0 percent
new text end
new text begin 45 percent
new text end
new text begin $
new text end
new text begin 1,230
new text end
new text begin 54,130 to 55,859
new text end
new text begin 2.0 percent
new text end
new text begin 50 percent
new text end
new text begin $
new text end
new text begin 1,070
new text end
new text begin 55,860 to 57,619
new text end
new text begin 2.0 percent
new text end
new text begin 50 percent
new text end
new text begin $
new text end
new text begin 960
new text end
new text begin 57,620 to 59,359
new text end
new text begin 2.0 percent
new text end
new text begin 50 percent
new text end
new text begin $
new text end
new text begin 530
new text end
new text begin 59,360 to 61,099
new text end
new text begin 2.0 percent
new text end
new text begin 50 percent
new text end
new text begin $
new text end
new text begin 210
new text end

The payment made to a claimant is the amount of the state refund calculated under this
subdivision. No payment is allowed if the claimant's household income is deleted text begin$57,170deleted text endnew text begin $61,100new text end
or more.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refunds based on rent paid after
December 31, 2016.
new text end

Sec. 56.

Minnesota Statutes 2018, section 290A.04, subdivision 4, is amended to read:


Subd. 4.

Inflation adjustment.

(a) Beginning for property tax refunds payable in calendar
year 2002, the commissioner shall annually adjust the dollar amounts of the income thresholds
and the maximum refunds under subdivisions 2 and 2a for inflation. The commissioner
shall make the inflation adjustments in accordance with section 1(f) of the Internal Revenue
Code, except that for purposes of this subdivision the percentage increase shall be determined
as provided in this subdivision.

(b) In adjusting the dollar amounts of the income thresholds and the maximum refunds
under subdivision 2 for inflation, the percentage increase shall be determined from the year
ending on June 30, deleted text begin2013deleted text endnew text begin 2018new text end, to the year ending on June 30 of the year preceding that in
which the refund is payable.

(c) In adjusting the dollar amounts of the income thresholds and the maximum refunds
under subdivision 2a for inflation, the percentage increase shall be determined from the
year ending on June 30, deleted text begin2013deleted text endnew text begin 2018new text end, to the year ending on June 30 of the year preceding that
in which the refund is payable.

(d) The commissioner shall use the appropriate percentage increase to annually adjust
the income thresholds and maximum refunds under subdivisions 2 and 2a for inflation
without regard to whether or not the income tax brackets are adjusted for inflation in that
year. The commissioner shall round the thresholds and the maximum amounts, as adjusted
to the nearest $10 amount. If the amount ends in $5, the commissioner shall round it up to
the next $10 amount.

(e) The commissioner shall annually announce the adjusted refund schedule at the same
time provided under section 290.06. The determination of the commissioner under this
subdivision is not a rule under the Administrative Procedure Act.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for refunds based on property taxes paid
after December 31, 2019, and rent paid after December 31, 2018.
new text end

Sec. 57.

Minnesota Statutes 2018, section 291.005, subdivision 1, is amended to read:


Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following terms
used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code,
increased by the value of any property in which the decedent had a qualifying income interest
for life and for which an election was made under section 291.03, subdivision 1d, for
Minnesota estate tax purposes, but was not made for federal estate tax purposes.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986,
as amended through deleted text beginDecember 16, 2016deleted text endnew text begin March 31, 2018new text end.

(4) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included in the estate which has its situs outside Minnesota,
and (b) including any property omitted from the federal gross estate which is includable in
the estate, has its situs in Minnesota, and was not disclosed to federal taxing authorities.

(5) "Nonresident decedent" means an individual whose domicile at the time of death
was not in Minnesota.

(6) "Personal representative" means the executor, administrator or other person appointed
by the court to administer and dispose of the property of the decedent. If there is no executor,
administrator or other person appointed, qualified, and acting within this state, then any
person in actual or constructive possession of any property having a situs in this state which
is included in the federal gross estate of the decedent shall be deemed to be a personal
representative to the extent of the property and the Minnesota estate tax due with respect
to the property.

(7) "Resident decedent" means an individual whose domicile at the time of death was
in Minnesota. The provisions of section 290.01, subdivision 7, paragraphs (c) and (d), apply
to determinations of domicile under this chapter.

(8) "Situs of property" means, with respect to:

(i) real property, the state or country in which it is located;

(ii) tangible personal property, the state or country in which it was normally kept or
located at the time of the decedent's death or for a gift of tangible personal property within
three years of death, the state or country in which it was normally kept or located when the
gift was executed;

(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
Code, owned by a nonresident decedent and that is normally kept or located in this state
because it is on loan to an organization, qualifying as exempt from taxation under section
501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and

(iv) intangible personal property, the state or country in which the decedent was domiciled
at death or for a gift of intangible personal property within three years of death, the state or
country in which the decedent was domiciled when the gift was executed.

For a nonresident decedent with an ownership interest in a pass-through entity with
assets that include real or tangible personal property, situs of the real or tangible personal
property, including qualified works of art, is determined as if the pass-through entity does
not exist and the real or tangible personal property is personally owned by the decedent. If
the pass-through entity is owned by a person or persons in addition to the decedent, ownership
of the property is attributed to the decedent in proportion to the decedent's capital ownership
share of the pass-through entity.

(9) "Pass-through entity" includes the following:

(i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;

(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;

(iii) a single-member limited liability company or similar entity, regardless of whether
it is taxed as an association or is disregarded for federal income tax purposes under Code
of Federal Regulations, title 26, section 301.7701-3; or

(iv) a trust to the extent the property is includible in the decedent's federal gross estate;
but excludes

(v) an entity whose ownership interest securities are traded on an exchange regulated
by the Securities and Exchange Commission as a national securities exchange under section
6 of the Securities Exchange Act, United States Code, title 15, section 78f.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for estates of decedents
dying after December 31, 2018.
new text end

Sec. 58.

Minnesota Statutes 2018, section 297A.68, subdivision 25, is amended to read:


Subd. 25.

Sale of property used in a trade or business.

(a) The sale of tangible personal
property primarily used in a trade or business is exempt if the sale is not made in the normal
course of business of selling that kind of property and if one of the following conditions is
satisfied:

(1) the sale occurs in a transaction subject to or described in section 118, 331, 332, 336,
337, 338, 351, 355, 368, 721, 731, 1031, or 1033 of the Internal Revenue Codenew text begin, as amended
through December 16, 2016
new text end;

(2) the sale is between members of a controlled group as defined in section 1563(a) of
the Internal Revenue Code;

(3) the sale is a sale of farm machinery;

(4) the sale is a farm auction sale;

(5) the sale is a sale of substantially all of the assets of a trade or business; or

(6) the total amount of gross receipts from the sale of trade or business property made
during the calendar month of the sale and the preceding 11 calendar months does not exceed
$1,000.

The use, storage, distribution, or consumption of tangible personal property acquired as
a result of a sale exempt under this subdivision is also exempt.

(b) For purposes of this subdivision, the following terms have the meanings given.

(1) A "farm auction" is a public auction conducted by a licensed auctioneer if substantially
all of the property sold consists of property used in the trade or business of farming and
property not used primarily in a trade or business.

(2) "Trade or business" includes the assets of a separate division, branch, or identifiable
segment of a trade or business if, before the sale, the income and expenses attributable to
the separate division, branch, or identifiable segment could be separately ascertained from
the books of account or record (the lease or rental of an identifiable segment does not qualify
for the exemption).

(3) A "sale of substantially all of the assets of a trade or business" must occur as a single
transaction or a series of related transactions within the 12-month period beginning on the
date of the first sale of assets intended to qualify for the exemption provided in paragraph
(a), clause (5).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after December 31, 2018.
new text end

Sec. 59.

Minnesota Statutes 2018, section 297B.03, is amended to read:


297B.03 EXEMPTIONS.

There is specifically exempted from the provisions of this chapter and from computation
of the amount of tax imposed by it the following:

(1) purchase or use, including use under a lease purchase agreement or installment sales
contract made pursuant to section 465.71, of any motor vehicle by the United States and its
agencies and instrumentalities and by any person described in and subject to the conditions
provided in section 297A.67, subdivision 11;

(2) purchase or use of any motor vehicle by any person who was a resident of another
state or country at the time of the purchase and who subsequently becomes a resident of
Minnesota, provided the purchase occurred more than 60 days prior to the date such person
began residing in the state of Minnesota and the motor vehicle was registered in the person's
name in the other state or country;

(3) purchase or use of any motor vehicle by any person making a valid election to be
taxed under the provisions of section 297A.90;

(4) purchase or use of any motor vehicle previously registered in the state of Minnesota
when such transfer constitutes a transfer within the meaning of section 118, 331, 332, 336,
337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal Revenue Codenew text begin,
as amended through December 16, 2016
new text end;

(5) purchase or use of any vehicle owned by a resident of another state and leased to a
Minnesota-based private or for-hire carrier for regular use in the transportation of persons
or property in interstate commerce provided the vehicle is titled in the state of the owner or
secured party, and that state does not impose a sales tax or sales tax on motor vehicles used
in interstate commerce;

(6) purchase or use of a motor vehicle by a private nonprofit or public educational
institution for use as an instructional aid in automotive training programs operated by the
institution. "Automotive training programs" includes motor vehicle body and mechanical
repair courses but does not include driver education programs;

(7) purchase of a motor vehicle by an ambulance service licensed under section 144E.10
when that vehicle is equipped and specifically intended for emergency response or for
providing ambulance service;

(8) purchase of a motor vehicle by or for a public library, as defined in section 134.001,
subdivision 2
, as a bookmobile or library delivery vehicle;

(9) purchase of a ready-mixed concrete truck;

(10) purchase or use of a motor vehicle by a town for use exclusively for road
maintenance, including snowplows and dump trucks, but not including automobiles, vans,
or pickup trucks;

(11) purchase or use of a motor vehicle by a corporation, society, association, foundation,
or institution organized and operated exclusively for charitable, religious, or educational
purposes, except a public school, university, or library, but only if the vehicle is:

(i) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
passenger automobile, as defined in section 168.002, if the automobile is designed and used
for carrying more than nine persons including the driver; and

(ii) intended to be used primarily to transport tangible personal property or individuals,
other than employees, to whom the organization provides service in performing its charitable,
religious, or educational purpose;

(12) purchase of a motor vehicle for use by a transit provider exclusively to provide
transit service is exempt if the transit provider is either (i) receiving financial assistance or
reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29,
473.388, or 473.405;

(13) purchase or use of a motor vehicle by a qualified business, as defined in section
469.310, located in a job opportunity building zone, if the motor vehicle is principally
garaged in the job opportunity building zone and is primarily used as part of or in direct
support of the person's operations carried on in the job opportunity building zone. The
exemption under this clause applies to sales, if the purchase was made and delivery received
during the duration of the job opportunity building zone. The exemption under this clause
also applies to any local sales and use tax;

(14) purchase of a leased vehicle by the lessee who was a participant in a lease-to-own
program from a charitable organization that is:

(i) described in section 501(c)(3) of the Internal Revenue Code; and

(ii) licensed as a motor vehicle lessor under section 168.27, subdivision 4; and

(15) purchase of a motor vehicle used exclusively as a mobile medical unit for the
provision of medical or dental services by a federally qualified health center, as defined
under title 19 of the Social Security Act, as amended by Section 4161 of the Omnibus Budget
Reconciliation Act of 1990.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for sales and purchases
made after December 31, 2018.
new text end

Sec. 60.

Minnesota Statutes 2018, section 462D.06, subdivision 1, is amended to read:


Subdivision 1.

Subtraction.

(a) As provided in section 290.0132, subdivision 25, an
account holder is allowed a subtraction from deleted text beginthedeleted text end federal deleted text begintaxabledeleted text endnew text begin adjusted grossnew text end income equal
to interest or dividends earned on the first-time home buyer savings account during the
taxable year.

(b) The subtraction under paragraph (a) is allowed each year for the taxable years
including and following the taxable year in which the account was established. No person
other than the account holder is allowed a subtraction under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 61.

Minnesota Statutes 2018, section 462D.06, subdivision 2, is amended to read:


Subd. 2.

Addition.

(a) As provided in section 290.0131, subdivision 14, an account
holder must add to federal deleted text begintaxabledeleted text endnew text begin adjusted grossnew text end income the following amounts:

(1) the amount in excess of the total contributions for all taxable years that is withdrawn
and used for other than eligible costs, or for a transfer permitted under section 462D.04,
subdivision 2; and

(2) the amount remaining in the first-time home buyer savings account at the close of
the tenth taxable year that exceeds the total contributions to the account for all taxable years.

(b) For an account that received a transfer under section 462D.04, subdivision 2, the
ten-year period under paragraph (a), clause (2), ends at the close of the earliest taxable year
that applies to either account under that clause.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 62.

Minnesota Statutes 2018, section 469.316, subdivision 1, is amended to read:


Subdivision 1.

Application.

An individual, estate, or trust operating a trade or business
in a job opportunity building zone, and an individual, estate, or trust making a qualifying
investment in a qualified business operating in a job opportunity building zone qualifies for
the exemptions from taxes imposed under chapter 290, as provided in this section. The
exemptions provided under this section apply only to the extent that the income otherwise
would be taxable under chapter 290. Subtractions under this section from new text beginfederal adjusted
gross income,
new text endfederal taxable income, alternative minimum taxable income, or any other
base subject to tax are limited to the amount that otherwise would be included in the tax
base absent the exemption under this section. This section applies only to taxable years
beginning during the duration of the job opportunity building zone.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end

Sec. 63. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2018, sections 290.0131, subdivisions 7 and 11; 290.0133,
subdivisions 13 and 14; and 290.10, subdivision 2,
new text end new text begin are repealed.
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, 2018.
new text end

APPENDIX

Repealed Minnesota Statutes: 19-1750

290.0131 INDIVIDUALS; ADDITIONS TO FEDERAL TAXABLE INCOME.

Subd. 7.

Fines, fees, and penalties.

The amount of expenses disallowed under section 290.10, subdivision 2, is an addition.

Subd. 11.

Income attributable to domestic production activities.

The amount of the deduction allowable under section 199 of the Internal Revenue Code is an addition.

290.0133 CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE INCOME.

Subd. 13.

Income attributable to domestic production activities.

The amount of the deduction allowable under section 199 of the Internal Revenue Code is an addition.

Subd. 14.

Fines, fees, and penalties.

The amount of expenses disallowed under section 290.10, subdivision 2, is an addition.

290.10 NONDEDUCTIBLE ITEMS.

Subd. 2.

Fines, fees, and penalties.

(a) Except as provided in this subdivision, no deduction from taxable income for a trade or business expense under section 162(a) of the Internal Revenue Code shall be allowed for any amount paid or incurred, whether by suit, agreement, or otherwise, to, or at the direction of, a government or entity described in paragraph (d) in relation to the violation of any law or the investigation or inquiry by such government or entity into the potential violation of any law.

(b) Exception for amounts constituting restitution or paid to come into compliance with the law. Paragraph (a) does not apply to any amount which:

(1) the taxpayer establishes:

(i) constitutes restitution, including remediation of property for damage or harm caused by or which may be caused by the violation of any law or the potential violation of any law; or

(ii) is paid to come into compliance with any law which was violated or involved in the investigation or inquiry; and

(2) is identified as restitution or as an amount paid to come into compliance with the law, as the case may be, in the court order or settlement agreement.

This paragraph does not apply to any amount paid or incurred as reimbursement to the government or entity for the costs of any investigation or litigation.

(c) Paragraph (a) does not apply to any amount paid or incurred by order of a court in a suit in which no government or entity described in paragraph (d) is a party.

(d) An entity is described in this paragraph if it is:

(1) a nongovernmental entity which exercises self-regulatory powers, including imposing sanctions, in connection with a qualified board or exchange, as defined in section 1256(g)(7) of the Internal Revenue Code; or

(2) to the extent provided in federal regulations, a nongovernmental entity which exercises self-regulatory powers, including imposing sanctions, as part of performing an essential governmental function.

(e) Paragraph (a) does not apply to any amount paid or incurred as taxes due.