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Minnesota Legislature

Office of the Revisor of Statutes

SF 2501

as introduced - 91st Legislature (2019 - 2020) Posted on 03/15/2019 09:39am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; individual income; modifying the working family credit;
amending Minnesota Statutes 2018, section 290.0671, subdivisions 1, 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 a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Code, except thatnew text begin:
new text end

new text begin (1)new text end 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 creditdeleted text begin.deleted text endnew text begin; and
new text end

new text begin (2) a taxpayer who is otherwise eligible for a credit under section 32 of the Internal
Revenue Code remains eligible for this credit even if the taxpayer's earned income or adjusted
gross income exceeds the income limitation under section 32 of the Internal Revenue Code.
new text end

(b) For individuals with no qualifying children, the credit equals deleted text begin2.10deleted text endnew text begin threenew text end percent of
the first deleted text begin$6,180deleted text endnew text begin $6,640new text end of earned income. The credit is reduced by deleted text begin2.01deleted text endnew text begin threenew text end percent of
earned income or adjusted gross income, whichever is greater, in excess of deleted text begin$8,130deleted text endnew text begin $12,640new text end,
but in no case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 9.35 percent of the first
deleted text begin $11,120deleted text endnew text begin $11,950new text end of earned income. The credit is reduced by 6.02 percent of earned income
or adjusted gross income, whichever is greater, in excess of deleted text begin$21,190deleted text endnew text begin $22,770new text end, but in no case
is the credit less than zero.

(d) For individuals with two deleted text beginor moredeleted text end qualifying children, the credit equals 11 percent
of the first deleted text begin$18,240deleted text endnew text begin $19,600new text end of earned income. The credit is reduced by 10.82 percent of
earned income or adjusted gross income, whichever is greater, in excess of deleted text begin$25,130deleted text endnew text begin $27,000new text end,
but in no case is the credit less than zero.

new text begin (e) For individuals with three or more qualifying children, the credit equals 15.78 percent
of the first $14,870 of earned income. The credit is reduced by 9.07 percent of earned income
or adjusted gross income, whichever is greater, in excess of $27,000, but in no case is the
credit less than zero.
new text end

deleted text begin (e)deleted text endnew text begin (f)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 endnew text begin (g)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)deleted text endnew text begin (h)new text end For tax years beginning after December 31, deleted text begin2013deleted text endnew text begin 2019new text end, the deleted text begin$8,130deleted text endnew text begin $12,640new text end in
paragraph (b), the deleted text begin$21,190deleted text endnew text begin $22,770new text end in paragraph (c), deleted text beginanddeleted text end the deleted text begin$25,130deleted text endnew text begin $27,000new text end in paragraph
(d)new text begin, and the $27,000 in paragraph (e)new text end, after being adjusted for inflation under subdivision
7, are each increased by deleted text begin$5,000deleted text endnew text begin $5,700new text end for married taxpayers filing joint returns. deleted text beginFor 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 endnew text begin (i)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, 2018.
new text end

Sec. 2.

Minnesota Statutes 2018, section 290.0671, subdivision 7, is amended to read:


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
1new text begin, and the additional threshold amount for married taxpayers filing joint returns,new text end 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 Codenew text begin, as amended through December
31, 2016
new text end, except that in section 1(f)(3)(B) the word deleted text begin"2013"deleted text endnew text begin "2018"new text end shall be substituted for
the word "1992." For deleted text begin2015deleted text endnew text begin 2020new text end, the commissioner shall then determine the percent change
from the 12 months ending on August 31, deleted text begin2013deleted text endnew text begin 2018new text end, to the 12 months ending on August
31, deleted text begin2014deleted text endnew text begin 2019new text end, and in each subsequent year, from the 12 months ending on August 31, deleted text begin2013deleted text endnew text begin
2018
new text end, 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.

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