SF 623

as introduced - 91st Legislature (2019 - 2020) Posted on 01/28/2019 04:33pm

A bill for an act
relating to taxation; individual income; modifying the working family credit;
amending Minnesota Statutes 2018, section 290.0671, subdivision 1; repealing
Minnesota Statutes 2018, section 290.0671, subdivision 7.

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

Section 1.

Minnesota Statutes 2018, section 290.0671, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual who is a resident of Minnesota is
allowed a credit against the tax imposed by this chapter equal to deleted text begin a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a deleted text end new text begin 75 percent of the new text end credit new text begin for
which the individual is eligible new text end under section 32 of the Internal Revenue Code, except that
a taxpayer with no qualifying children who has attained the age of 21, but not attained age
65 before the close of the taxable year and is otherwise eligible for a credit under section
32 of the Internal Revenue Code may also receive a credit.

deleted text begin (b) For individuals with no qualifying children, the credit equals 2.10 percent of the first
$6,180 of earned income. The credit is reduced by 2.01 percent of earned income or adjusted
gross income, whichever is greater, in excess of $8,130, but in no case is the credit less than
zero.
deleted text end

deleted text begin (c) For individuals with one qualifying child, the credit equals 9.35 percent of the first
$11,120 of earned income. The credit is reduced by 6.02 percent of earned income or adjusted
gross income, whichever is greater, in excess of $21,190, but in no case is the credit less
than zero.
deleted text end

deleted text begin (d) For individuals with two or more qualifying children, the credit equals 11 percent
of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned
income or adjusted gross income, whichever is greater, in excess of $25,130, but in no case
is the credit less than zero.
deleted text end

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

deleted text begin (f) deleted text end new text begin (c) new text end For a person who was a resident for the entire tax year and has earned income not
subject to tax under this chapter, including income excluded under section 290.0132,
subdivision 10, the credit must be allocated based on the ratio of federal adjusted gross
income reduced by the earned income not subject to tax under this chapter over federal
adjusted gross income. For purposes of this paragraph, the following clauses are not
considered "earned income not subject to tax under this chapter":

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

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

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

deleted text begin (g) For tax years beginning after December 31, 2013, the $8,130 in paragraph (b), the
$21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for inflation
under subdivision 7, are each increased by $5,000 for married taxpayers filing joint returns.
For tax years beginning after December 31, 2013, the commissioner shall annually adjust
the $5,000 by the percentage determined pursuant to the provisions of section 1(f) of the
Internal Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted
for the word "1992." For 2014, the commissioner shall then determine the percent change
from the 12 months ending on August 31, 2008, to the 12 months ending on August 31,
2013, and in each subsequent year, from the 12 months ending on August 31, 2008, to the
12 months ending on August 31 of the year preceding the taxable year. The earned income
thresholds as adjusted for inflation must be rounded to the nearest $10. If the amount ends
in $5, the amount is rounded up to the nearest $10. The determination of the commissioner
under this subdivision is not a rule under the Administrative Procedure Act.
deleted text end

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 2. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2018, section 290.0671, subdivision 7, new text end new text begin is 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, 2019.
new text end

APPENDIX

Repealed Minnesota Statutes: 19-1497

290.0671 MINNESOTA WORKING FAMILY CREDIT.

Subd. 7.

Inflation adjustment.

The earned income amounts used to calculate the credit and the income thresholds at which the maximum credit begins to be reduced in subdivision 1 must be adjusted for inflation. The commissioner shall adjust 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 "2013" shall be substituted for the word "1992." For 2015, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2013, to the 12 months ending on August 31, 2014, and in each subsequent year, from the 12 months ending on August 31, 2013, to the 12 months ending on August 31 of the year preceding the taxable year. The earned income thresholds as adjusted for inflation must be rounded to the nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest $10 amount. The determination of the commissioner under this subdivision is not a rule under the Administrative Procedure Act.