2006 Minnesota Statutes

290.0671 MINNESOTA WORKING FAMILY CREDIT.
    Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax imposed
by this chapter equal to a percentage of earned income. To receive a credit, a taxpayer must be
eligible for a credit under section 32 of the Internal Revenue Code.
(b) For individuals with no qualifying children, the credit equals 1.9125 percent of the first
$4,620 of earned income. The credit is reduced by 1.9125 percent of earned income or adjusted
gross income, whichever is greater, in excess of $5,770, but in no case is the credit less than zero.
(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first $6,920
of earned income and 8.5 percent of earned income over $12,080 but less than $13,450. The credit
is reduced by 5.73 percent of earned income or adjusted gross income, whichever is greater, in
excess of $15,080, but in no case is the credit less than zero.
(d) For individuals with two or more qualifying children, the credit equals ten percent of
the first $9,720 of earned income and 20 percent of earned income over $14,860 but less than
$16,800. The credit is reduced by 10.3 percent of earned income or adjusted gross income,
whichever is greater, in excess of $17,890, but in no case is the credit less than zero.
(e) 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).
(f) For a person who was a resident for the entire tax year and has earned income not subject
to tax under this chapter, including income excluded under section 290.01, subdivision 19b,
clause (10) or (16), the credit must be allocated based on the ratio of federal adjusted gross
income reduced by the earned income not subject to tax under this chapter over federal adjusted
gross income. For purposes of this paragraph, the subtractions for military pay under section
290.01, subdivision 19b, clauses (11) and (12), are not considered "earned income not subject
to tax under this chapter."
For the purposes of this paragraph, the exclusion of combat pay under section 112 of the
Internal Revenue Code is not considered "earned income not subject to tax under this chapter."
(g) For tax years beginning after December 31, 2001, and before December 31, 2004,
the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph (d),
after being adjusted for inflation under subdivision 7, are each increased by $1,000 for married
taxpayers filing joint returns.
(h) For tax years beginning after December 31, 2004, and before December 31, 2007,
the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph (d),
after being adjusted for inflation under subdivision 7, are each increased by $2,000 for married
taxpayers filing joint returns.
(i) For tax years beginning after December 31, 2007, and before December 31, 2010,
the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph (d),
after being adjusted for inflation under subdivision 7, are each increased by $3,000 for married
taxpayers filing joint returns. For tax years beginning after December 31, 2008, the $3,000 is
adjusted annually for inflation under subdivision 7.
(j) The commissioner shall construct tables showing the amount of the credit at various
income levels and make them available to taxpayers. The tables shall follow the schedule
contained in this subdivision, except that the commissioner may graduate the transition between
income brackets.
    Subd. 1a. Definitions. For purposes of this section, the terms "qualifying child," and "earned
income," have the meanings given in section 32(c) of the Internal Revenue Code, and the term
"adjusted gross income" has the meaning given in section 62 of the Internal Revenue Code.
"Earned income of the lesser-earning spouse" has the meaning given in section 290.0675,
subdivision 1 , paragraph (d).
    Subd. 2. Credit name. The credit allowed by this section shall be known as the "Minnesota
working family credit."
    Subd. 3.[Repealed, 2003 c 127 art 3 s 24]
    Subd. 4. Credit refundable. If the amount of credit which the claimant is eligible to receive
under this section exceeds the claimant's tax liability under this chapter, the commissioner shall
refund the excess to the claimant.
    Subd. 5. Calculation assistance. Upon request of the individual and submission of the
necessary information, in the form prescribed by the commissioner, the Department of Revenue
shall calculate the credit on behalf of the individual.
    Subd. 6. Appropriation. An amount sufficient to pay the refunds required by this section
is appropriated to the commissioner from the general fund. This amount includes any amounts
appropriated to the commissioner of human services from the federal Temporary Assistance for
Needy Families (TANF) block grant funds for transfer to the commissioner of revenue.
    Subd. 6a. TANF appropriation for working family credit expansion. (a) On an annual
basis the commissioner of revenue, with the assistance of the commissioner of human services,
shall calculate the value of the refundable portion of the Minnesota Working Family Credit
provided under this section that qualifies for payment with funds from the federal Temporary
Assistance for Needy Families (TANF) block grant. Of this total amount, the commissioner of
revenue shall estimate the portion entailed by the expansion of the credit rates for individuals with
qualifying children over the rates provided in Laws 1999, chapter 243, article 2, section 12.
(b) An amount sufficient to pay the refunds entailed by the expansion of the credit rates for
individuals with qualifying children over the rates provided in Laws 1999, chapter 243, article 2,
section 12, as estimated in paragraph (a), is appropriated to the commissioner of human services
from the federal Temporary Assistance for Needy Families (TANF) block grant funds, for transfer
to the commissioner of revenue for deposit in the general fund.
    Subd. 7. Inflation adjustment. The earned income amounts used to calculate the credit and
the income thresholds at which the maximum credit begins to be reduced in subdivision 1 must
be adjusted for inflation. The commissioner shall make the inflation adjustments in accordance
with section 1(f) of the Internal Revenue Code except that for the purposes of this subdivision the
percentage increase shall be determined from the year starting September 1, 1999, and ending
August 31, 2000, as the base year for adjusting for inflation for the tax year beginning after
December 31, 2000. The determination of the commissioner under this subdivision is not a
rule under the Administrative Procedure Act.
History: 1991 c 291 art 6 s 27; 1992 c 511 art 6 s 19; art 7 s 14; 1993 c 375 art 8 s 9,14;
1994 c 587 art 1 s 24; 1Sp1997 c 4 art 13 s 2; 1998 c 389 art 6 s 7-9; 1999 c 243 art 2 s 12; 2000
c 490 art 4 s 17-19; 1Sp2001 c 5 art 7 s 38,39; art 10 s 7,8; 2003 c 127 art 3 s 11; 1Sp2003 c 21
art 1 s 8; 2005 c 151 art 6 s 16; 1Sp2005 c 3 art 3 s 9; art 4 s 13; art 10 s 7

NOTE: The amendment to subdivision 1 by Laws 2005, First Special Session chapter 3,
article 10, section 7, is effective for tax years beginning after December 31, 2006. Laws 2005,
First Special Session chapter 3, article 10, section 7, the effective date.