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HF 1768

as introduced - 89th Legislature (2015 - 2016) Posted on 03/24/2015 12:26am

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

Bill Text Versions

Engrossments
Introduction Posted on 03/12/2015

Current Version - as introduced

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A bill for an act
relating to taxation; increasing the income tax exclusion for the elderly and
disabled; allowing a second exemption for certain property tax refund claimants;
amending Minnesota Statutes 2014, sections 290.0802, subdivision 2; 290A.03,
subdivision 3.

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

Section 1.

Minnesota Statutes 2014, section 290.0802, subdivision 2, is amended to read:


Subd. 2.

Subtraction.

(a) A qualified individual is allowed a subtraction from federal
taxable 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 290.01, subdivision 19b, clause (4), 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) deleted text begin $12,000deleted text end new text begin $20,000new text end for a married taxpayer filing a joint return if a spouse is a
qualified individual,

(ii) deleted text begin $9,600deleted text end new text begin $16,000new text end for a single taxpayer, and

(iii) deleted text begin $6,000deleted text end new text begin $10,000new text end 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) deleted text begin $18,000deleted text end new text begin $30,000new text end for a married taxpayer filing a joint return if both spouses are
qualified individuals,

(ii) deleted text begin $14,500deleted text end new text begin $24,000new text end for a single taxpayer or for a married couple filing a joint return
if only one spouse is a qualified individual, and

(iii) deleted text begin $9,000deleted text end new text begin $15,000new text end 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, 2014.
new text end

Sec. 2.

Minnesota Statutes 2014, section 290A.03, subdivision 3, is amended to read:


Subd. 3.

Income.

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

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

(b) the sum of the following amounts to the extent not included in clause (a):

(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) the amount of deduction allowed under section 199 of the Internal Revenue
Code;

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

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

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

In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" shall mean federal adjusted gross income reflected
in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be
reduced by the amount of a net operating loss carryback or carryforward or a capital loss
carryback or carryforward allowed for the year.

(2) "Income" does not include:

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

(b) 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;

(c) 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;

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

(e) relief granted under this chapter;

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

(g) 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.

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

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

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

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

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

(e) for the claimant's fifth dependent, the exemption amount; deleted text begin and
deleted text end

(f) if the claimant deleted text begin or claimant's spousedeleted text end 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 amountdeleted text begin .deleted text end new text begin ; and
new text end

new text begin (g) if the 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.
new text end

For purposes of this subdivision, the "exemption amount" means the 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)(D) 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 begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning for refunds based on
taxes payable in 2016 and rent paid in 2015.
new text end