SF 303

as introduced - 90th Legislature (2017 - 2018) Posted on 01/24/2017 08:35am

A bill for an act
relating to taxation; individual income; establishing a subtraction and credit for
contributions to a Minnesota college savings plan; amending Minnesota Statutes
2016, section 290.0132, by adding a subdivision; proposing coding for new law
in Minnesota Statutes, chapter 290.

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

Section 1.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 23. new text end

new text begin Contributions to Minnesota college savings plans. new text end

new text begin An amount equal to the
contributions made during the tax year to a Minnesota college savings plan organized under
chapter 136G, not including amounts rolled over from other college savings plan accounts,
is a subtraction. The amount subtracted under this subdivision may not exceed $3,000 for
married couples filing joint returns and $1,500 for all other filers. The subtraction allowed
under this subdivision must not include any amount used to claim the credit allowed under
section 290.0682.
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, 2016.
new text end

Sec. 2.

new text begin [290.0682] MINNESOTA COLLEGE SAVINGS PLAN CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, the terms "Minnesota college
savings plan," "account," "nonqualified distribution," and "plan administrator" have the
meanings given them in chapter 136G.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) A credit of up to $500 is allowed against the tax imposed
by this chapter, subject to the limitations in paragraph (b).
new text end

new text begin (b) The credit allowed must be calculated by applying the following rates to the amount
contributed to a Minnesota college savings plan, as established in chapter 136G, in a taxable
year:
new text end

new text begin (1) 200 percent for individual filers and married couples filing a joint return who have
federal adjusted gross income of not more than 150 percent of the federal poverty guideline
for a household size of four;
new text end

new text begin (2) 100 percent for individual filers and married couples filing a joint return who have
federal adjusted gross income over 150 percent, but not more than 200 percent of the federal
poverty guideline for a household size of four;
new text end

new text begin (3) 50 percent for individual filers and married couples filing a joint return who have
federal adjusted gross income over 200 percent of the federal poverty guideline for a
household size of four, but not more than $80,000;
new text end

new text begin (4) 25 percent for married couples filing a joint return who have federal adjusted gross
income over $80,000, but not more than $100,000;
new text end

new text begin (5) ten percent for married couples filing a joint return who have federal adjusted gross
income over $100,000, but not more than $120,000; and
new text end

new text begin (6) five percent for married couples filing a joint return who have federal adjusted gross
income over $120,000, but not more than $160,000.
new text end

new text begin (c) The $80,000 amount in paragraph (b), clause (3), and the dollar amounts in paragraph
(b), clauses (4) to (6), used to calculate the credit 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 "2014" shall
be substituted for the word "1992." For 2016, the commissioner shall then determine the
percent change from the 12 months ending on August 31, 2014, to the 12 months ending
on August 31, 2015, and in each subsequent year, from the 12 months ending on August
31, 2014, 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, including section 14.386.
new text end

new text begin (d) The amount used to claim the credit under this section must be excluded from any
amount subtracted from federal taxable income under section 290.0132, subdivision 23.
new text end

new text begin Subd. 3. new text end

new text begin Credit transfer. new text end

new text begin (a) The credit allowed under this section must be calculated
after applying all other credits to the taxpayer's tax liability. If the amount of credit that the
taxpayer is eligible to receive under this section exceeds the taxpayer's tax liability after
applying all other credits, the commissioner shall transfer the excess amount according to
paragraph (b).
new text end

new text begin (b) The commissioner shall transfer the excess amount calculated under paragraph (a)
to the plan administrator to be deposited to the taxpayer's Minnesota college savings plan
account. If the taxpayer made contributions to more than one account, the credit amount
must be allocated based on the contributions to each account as a percentage of the total
contributions to all accounts.
new text end

new text begin Subd. 4. new text end

new text begin Verification of contribution amounts. new text end

new text begin The commissioner of the Office of
Higher Education must provide sufficient information to the commissioner of revenue to
verify the taxpayer's annual contribution amounts to an account.
new text end

new text begin Subd. 5. new text end

new text begin Recapture of credit. new text end

new text begin In the case of a nonqualified distribution, the taxpayer is
liable to the commissioner for the lesser of: ten percent of the amount of the nonqualified
distribution, or the sum of credits received under this section for all years.
new text end

new text begin Subd. 6. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the credit transfer amounts under
subdivision 3 is appropriated to the commissioner from the general fund.
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, 2016.
new text end