1.1                          A bill for an act 
  1.2             relating to taxation; income; modifying rates; 
  1.3             providing a credit for nursing home residents; 
  1.4             appropriating money; amending Minnesota Statutes 2002, 
  1.5             section 290.06, subdivision 2d; Minnesota Statutes 
  1.6             2003 Supplement, section 290.06, subdivision 2c; 
  1.7             proposing coding for new law in Minnesota Statutes, 
  1.8             chapter 290. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2003 Supplement, section 
  1.11  290.06, subdivision 2c, is amended to read: 
  1.12     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  1.13  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  1.14  married individuals filing joint returns and surviving spouses 
  1.15  as defined in section 2(a) of the Internal Revenue Code must be 
  1.16  computed by applying to their taxable net income the following 
  1.17  schedule of rates: 
  1.18     (1) On the first $25,680 $28,420, 5.35 percent; 
  1.19     (2) On all over $25,680 $28,420, but not 
  1.20  over $102,030 $112,910, 7.05 percent; 
  1.21     (3) On all over $102,030 $112,910, but not over $1,000,000, 
  1.22  7.85 percent; 
  1.23     (4) On all over $1,000,000, 8.25 percent. 
  1.24     Married individuals filing separate returns, estates, and 
  1.25  trusts must compute their income tax by applying the above rates 
  1.26  to their taxable income, except that the income brackets will be 
  1.27  one-half of the above amounts.  
  2.1      (b) The income taxes imposed by this chapter upon unmarried 
  2.2   individuals must be computed by applying to taxable net income 
  2.3   the following schedule of rates: 
  2.4      (1) On the first $17,570 $19,440, 5.35 percent; 
  2.5      (2) On all over $17,570 $19,440, but not 
  2.6   over $57,710 $63,860, 7.05 percent; 
  2.7      (3) On all over $57,710 $63,860, but not over $500,000, 
  2.8   7.85 percent; 
  2.9      (4) On all over $500,000, 8.25 percent. 
  2.10     (c) The income taxes imposed by this chapter upon unmarried 
  2.11  individuals qualifying as a head of household as defined in 
  2.12  section 2(b) of the Internal Revenue Code must be computed by 
  2.13  applying to taxable net income the following schedule of rates: 
  2.14     (1) On the first $21,630 $23,940, 5.35 percent; 
  2.15     (2) On all over $21,630 $23,940, but not over 
  2.16  $86,910 $96,180, 7.05 percent; 
  2.17     (3) On all over $86,910 $96,180, but not over $500,000, 
  2.18  7.85 percent; 
  2.19     (4) On all over $500,000, 8.25 percent. 
  2.20     (d) In lieu of a tax computed according to the rates set 
  2.21  forth in this subdivision, the tax of any individual taxpayer 
  2.22  whose taxable net income for the taxable year is less than an 
  2.23  amount determined by the commissioner must be computed in 
  2.24  accordance with tables prepared and issued by the commissioner 
  2.25  of revenue based on income brackets of not more than $100.  The 
  2.26  amount of tax for each bracket shall be computed at the rates 
  2.27  set forth in this subdivision, provided that the commissioner 
  2.28  may disregard a fractional part of a dollar unless it amounts to 
  2.29  50 cents or more, in which case it may be increased to $1. 
  2.30     (e) An individual who is not a Minnesota resident for the 
  2.31  entire year must compute the individual's Minnesota income tax 
  2.32  as provided in this subdivision.  After the application of the 
  2.33  nonrefundable credits provided in this chapter, the tax 
  2.34  liability must then be multiplied by a fraction in which:  
  2.35     (1) the numerator is the individual's Minnesota source 
  2.36  federal adjusted gross income as defined in section 62 of the 
  3.1   Internal Revenue Code and increased by the additions required 
  3.2   under section 290.01, subdivision 19a, clauses (1), (5), and 
  3.3   (6), and reduced by the subtraction under section 290.01, 
  3.4   subdivision 19b, clause (11), and the Minnesota assignable 
  3.5   portion of the subtraction for United States government interest 
  3.6   under section 290.01, subdivision 19b, clause (1), after 
  3.7   applying the allocation and assignability provisions of section 
  3.8   290.081, clause (a), or 290.17; and 
  3.9      (2) the denominator is the individual's federal adjusted 
  3.10  gross income as defined in section 62 of the Internal Revenue 
  3.11  Code of 1986, increased by the amounts specified in section 
  3.12  290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 
  3.13  by the amounts specified in section 290.01, subdivision 19b, 
  3.14  clauses (1) and (11). 
  3.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
  3.16  years beginning after December 31, 2003. 
  3.17     Sec. 2.  Minnesota Statutes 2002, section 290.06, 
  3.18  subdivision 2d, is amended to read: 
  3.19     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
  3.20  taxable years beginning after December 31, 2000 2004, the 
  3.21  minimum and maximum dollar amounts for each rate bracket for 
  3.22  which a tax is imposed in subdivision 2c shall be adjusted for 
  3.23  inflation by the percentage determined under paragraph (b).  For 
  3.24  the purpose of making the adjustment as provided in this 
  3.25  subdivision all of the rate brackets provided in subdivision 2c 
  3.26  shall be the rate brackets as they existed for taxable years 
  3.27  beginning after December 31, 1999 2003, and before January 
  3.28  1, 2001 2005.  The rate applicable to any rate bracket must not 
  3.29  be changed.  The dollar amounts setting forth the tax shall be 
  3.30  adjusted to reflect the changes in the rate brackets.  The rate 
  3.31  brackets as adjusted must be rounded to the nearest $10 amount.  
  3.32  If the rate bracket ends in $5, it must be rounded up to the 
  3.33  nearest $10 amount.  
  3.34     (b) The commissioner shall adjust the rate brackets and by 
  3.35  the percentage determined pursuant to the provisions of section 
  3.36  1(f) of the Internal Revenue Code, except that in section 
  4.1   1(f)(3)(B) the word "1999" "2003" shall be substituted for the 
  4.2   word "1992."  For 2001 2005, the commissioner shall then 
  4.3   determine the percent change from the 12 months ending on August 
  4.4   31, 1999 2003, to the 12 months ending on August 31, 2000 2004, 
  4.5   and in each subsequent year, from the 12 months ending on August 
  4.6   31, 1999 2003, to the 12 months ending on August 31 of the year 
  4.7   preceding the taxable year.  The determination of the 
  4.8   commissioner pursuant to this subdivision shall not be 
  4.9   considered a "rule" and shall not be subject to the 
  4.10  Administrative Procedure Act contained in chapter 14.  
  4.11     No later than December 15 of each year, the commissioner 
  4.12  shall announce the specific percentage that will be used to 
  4.13  adjust the tax rate brackets. 
  4.14     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
  4.15  years beginning after December 31, 2004. 
  4.16     Sec. 3.  [290.0676] [NURSING HOME SURCHARGE CREDIT.] 
  4.17     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
  4.18  a credit against the tax imposed by this chapter equal to $5.55 
  4.19  for each day during the taxable year for which the individual 
  4.20  resided as a private-pay resident in a non-state-operated 
  4.21  nursing home licensed under chapter 144A.  The credit may be 
  4.22  claimed by either the private pay-resident or by an individual 
  4.23  who paid the surcharge on behalf of the resident, but only one 
  4.24  credit may be claimed for each private-pay resident. 
  4.25     Subd. 2.  [CREDIT REFUNDABLE.] If the amount of credit 
  4.26  which the claimant is eligible to receive under this section 
  4.27  exceeds the claimant's tax liability under this chapter, the 
  4.28  commissioner shall refund the excess to the claimant. 
  4.29     Subd. 3.  [APPROPRIATION.] An amount sufficient to pay the 
  4.30  refunds required by this section is appropriated to the 
  4.31  commissioner from the general fund. 
  4.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
  4.33  years beginning after December 31, 2003.