1.1 	A bill for an act
1.2 	relating to taxation; providing an income tax credit
1.3 	for contributions to health savings accounts;
1.4 	appropriating money; amending Minnesota Statutes 2004,
1.5 	section 290.06, by adding a subdivision.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 290.06, is
1.8 	amended by adding a subdivision to read:
1.9 		Subd. 32.Credit for contributions to health savings
1.10 	accounts. (a) An individual may take a credit against the tax
1.11 	imposed under this chapter equal to 25 percent of the
1.12 	individual's contributions to a health savings account that
1.13 	qualifies for a deduction under section 223 of the Internal
1.14 	Revenue Code for the benefit of that individual and that
1.15 	individual's family.
1.16 	(b) For claimants with income not greater than $33,500, the
1.17 	maximum credit allowed is $500.  No credit is allowed for
1.18 	contributions by individuals with income greater than $41,500.
1.19 	The maximum credit is reduced by $1 for each $4 of household
1.20 	income over $33,500, but in no case is the credit less than zero.
1.21 	For purposes of this section, "income" has the meaning
1.22 	given in section 290.067, subdivision 2a.  In the case of a
1.23 	married claimant, a credit is not allowed unless a joint income
1.24 	tax return is filed.
1.25 	(c) For a nonresident or part-year resident, the credit
2.1 	determined under paragraph (a) and the maximum credit amount in
2.2 	paragraph (b) must be allocated using the percentage calculated
2.3 	in section 290.06, subdivision 2c, paragraph (e).
2.4 	(d) The amount of the credit allowed must be reduced by the
2.5 	amount of the taxpayer's liability under section 290.091,
2.6 	determined before the credit allowed by this section is
2.7 	subtracted from regular tax liability.
2.8 	(e) If the amount of the credit that the claimant is
2.9 	eligible to receive under this subdivision exceeds the
2.10 	claimant's tax liability under this chapter, the commissioner
2.11 	shall refund the excess to the claimant.
2.12 	(f) An amount sufficient to pay the refunds required by
2.13 	this section is appropriated to the commissioner from the
2.14 	general fund.
2.15 	
EFFECTIVE DATE. This section is effective for taxable
2.16 	years beginning after December 31, 2004.