SF 3058

as introduced - 89th Legislature (2015 - 2016) Posted on 03/22/2016 09:41am

A bill for an act
relating to taxation; individual income; providing a credit for student loan
payments; appropriating money; proposing coding for new law in Minnesota
Statutes, chapter 290.

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

Section 1.

[290.0693] STUDENT LOAN CREDIT.

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms
have the meanings given.

(b) "Adjusted gross income" means federal adjusted gross income as defined in
section 62 of the Internal Revenue Code.

(c) "Eligible individual" means an individual:

(1) in a public service job, as defined under United States Code, title 20, section
1087e(m)(3)(B);

(2) with a partial financial hardship, as defined under United States Code, title 20,
section 1098e(a)(3); and

(3) with one or more qualified education loans related to an undergraduate or
graduate degree program at a postsecondary educational institution.

(d) "Eligible loan payments" means the amount the eligible individual paid during
the taxable year to pay principal and interest on qualified education loans.

(e) "Postsecondary educational institution" means a postsecondary institution
eligible for state student aid under section 136A.103 or, if the institution is not located in
this state, a postsecondary institution participating in the federal Pell Grant program under
Title IV of the Higher Education Act of 1965, Public Law 89-329, as amended.

(f) "Qualified education loan" has the meaning given in section 221 of the Internal
Revenue Code, but is limited to indebtedness incurred on behalf of the eligible individual
or the eligible individual's spouse.

Subd. 2.

Credit allowed.

(a) An eligible individual is allowed a credit against the
tax due under this chapter. The credit equals one-half of eligible loan payments in excess
of ten percent of adjusted gross income, up to $2,000.

(b) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).

(c) An eligible individual may receive the credit under this section without regard to
the individual's eligibility for the public service loan forgiveness program under United
States Code, title 20, section 1087e(m).

Subd. 3.

Credit refundable.

If the amount of credit that an eligible individual who
is a resident or part-year resident of Minnesota is eligible to receive under this section
exceeds the individual's tax liability under this chapter, the commissioner shall refund
the excess to the individual. For a nonresident taxpayer, the credit may not exceed the
taxpayer's liability for tax under this chapter.

Subd. 4.

Appropriation.

An amount sufficient to pay the refunds required by this
section is appropriated to the commissioner from the general fund.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2015.