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HF 300

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/02/2023 06:40pm

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

Bill Text Versions

Engrossments
Introduction Posted on 01/11/2023

Current Version - as introduced

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A bill for an act
relating to taxation; individual income; establishing a public pension benefit
subtraction; amending Minnesota Statutes 2022, sections 290.0132, subdivision
26, by adding a subdivision; 290.091, subdivision 2.

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

Section 1.

Minnesota Statutes 2022, section 290.0132, subdivision 26, is amended to read:


Subd. 26.

Social Security benefits.

deleted text begin (a) A portiondeleted text end new text begin The amountnew text end of deleted text begin taxabledeleted text end Social Security
benefitsnew text begin received by a taxpayer in the taxable yearnew text end is allowed as a subtraction. deleted text begin The subtraction
equals the lesser of taxable Social Security benefits or a maximum subtraction subject to
the limits under paragraphs (b), (c), and (d).
deleted text end

deleted text begin (b) For married taxpayers filing a joint return and surviving spouses, the maximum
subtraction equals $5,150. The maximum subtraction is reduced by 20 percent of provisional
income over $78,180. In no case is the subtraction less than zero.
deleted text end

deleted text begin (c) For single or head-of-household taxpayers, the maximum subtraction equals $4,020.
The maximum subtraction is reduced by 20 percent of provisional income over $61,080.
In no case is the subtraction less than zero.
deleted text end

deleted text begin (d) For married taxpayers filing separate returns, the maximum subtraction equals
one-half the maximum subtraction for joint returns under paragraph (b). The maximum
subtraction is reduced by 20 percent of provisional income over one-half the threshold
amount specified in paragraph (b). In no case is the subtraction less than zero.
deleted text end

deleted text begin (e) For 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 taxable 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 end

deleted text begin (f) The commissioner shall adjust the maximum subtraction and threshold amounts in
paragraphs (b) to (d) as provided in section 270C.22. The statutory year is taxable year
2019. 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.
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, 2022.
new text end

Sec. 2.

Minnesota Statutes 2022, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 31. new text end

new text begin Public pension income subtraction. new text end

new text begin (a) The amount of a taxpayer's public
pension exclusion is a subtraction.
new text end

new text begin (b) The amount of a taxpayer's federal exclusion is determined as follows:
new text end

new text begin (1) for a taxpayer whose provisional income is less than or equal to the base amount,
the federal exclusion equals 100 percent of qualified benefits received during the taxable
year;
new text end

new text begin (2) for a taxpayer whose provisional income exceeds the base amount, but is less than
or equal to the adjusted base amount, the federal exclusion equals the greater of:
new text end

new text begin (i) 50 percent of qualified benefits received during the taxable year; or
new text end

new text begin (ii) the amount of qualified benefits minus 50 percent of the difference between
provisional income and the base amount; and
new text end

new text begin (3) for a taxpayer whose provisional income exceeds the adjusted base amount, the
federal exclusion equals the greater of:
new text end

new text begin (i) qualified benefits minus:
new text end

new text begin (A) 85 percent of provisional income in excess of the adjusted base amount; plus
new text end

new text begin (B) 50 percent of the difference between the base amount and the adjusted base amount;
or
new text end

new text begin (ii) 15 percent of qualified benefits received during the taxable year.
new text end

new text begin (c) The amount of a taxpayer's state exclusion equals the lesser of:
new text end

new text begin (1) the amount of qualified benefits in excess of the taxpayer's federal exclusion; or
new text end

new text begin (2) the maximum exclusion for a taxpayer determined under paragraph (d).
new text end

new text begin (d) The maximum state exclusion equals $5,450 for a joint return, half that amount for
a married taxpayer filing a separate return, and $4,260 for all other taxpayers. The maximum
subtraction is reduced by 20 percent of provisional income in excess of:
new text end

new text begin (1) $82,770 for a joint return;
new text end

new text begin (2) half the amount in clause (1) for a married taxpayer filing a separate return; and
new text end

new text begin (3) $64,670 for all other filers.
new text end

new text begin (e) For the purposes of this subdivision:
new text end

new text begin (1) "base amount" has the meaning given in section 86(c)(1) of the Internal Revenue
Code and "adjusted base amount" has the meaning given in section 86(c)(2) of the Internal
Revenue Code;
new text end

new text begin (2) "provisional income" has the meaning given in section 290.0132, subdivision 26,
paragraph (e);
new text end

new text begin (3) "public pension exclusion" means the sum of the federal exclusion calculated under
paragraph (b) and the state exclusion calculated under paragraphs (c) and (d); and
new text end

new text begin (4) "qualified benefits" means any amount received:
new text end

new text begin (i) by a basic member of any pension plan governed by chapter 3A, 352B, 353, 354, or
354A, or the basic member's survivor, provided that the annuity or benefit is based on service
for which the member or survivor is not also receiving Social Security benefits;
new text end

new text begin (ii) from any retirement system administered by the federal government that is based on
service for which the recipient or the recipient's survivor is not also receiving Social Security
benefits; or
new text end

new text begin (iii) from a public retirement system of or created by another state or any of its political
subdivisions if the income tax laws of the other state permit a similar deduction or exemption
or a reciprocal deduction or exemption of a retirement or pension benefit received from a
public retirement system of or created by this state or any political subdivision of this state.
new text end

new text begin (f) The commissioner must adjust the maximum exclusion and phaseout threshold
amounts in paragraph (d) as provided in section 270C.22. The statutory year is taxable year
2022. 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 end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 3.

Minnesota Statutes 2022, 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 person with a disability;

(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;

(6) the amount of addition required by section 290.0131, subdivisions 9, 10, and 16;

(7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
not included in the addition required under clause (6); and

(8) to the extent not included in federal alternative minimum taxable income, the amount
of foreign-derived intangible income deducted under section 250 of the Internal Revenue
Code;

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 taxable or adjusted gross income as provided by
section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, deleted text begin anddeleted text end 26 to 29new text begin , and 31new text end ;

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c); and

(vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
subdivision 7.

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 Code, except alternative minimum
taxable income must be increased by the addition in section 290.0131, subdivision 16.

(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, 2022.
new text end