1.1 A bill for an act
1.2 relating to taxation; individual income; establishing a public pension benefit
1.3 subtraction; amending Minnesota Statutes 2022, sections 290.0132, subdivision
1.4 26, by adding a subdivision; 290.091, subdivision 2.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2022, section 290.0132, subdivision 26, is amended to read:
1.7 Subd. 26.Social Security benefits.(a) A portion The amount of taxable Social Security
1.8benefits received by a taxpayer in the taxable year is allowed as a subtraction. The subtraction
1.9equals the lesser of taxable Social Security benefits or a maximum subtraction subject to
1.10the limits under paragraphs (b), (c), and (d).
1.11 (b) For married taxpayers filing a joint return and surviving spouses, the maximum
1.12subtraction equals $5,150. The maximum subtraction is reduced by 20 percent of provisional
1.13income over $78,180. In no case is the subtraction less than zero.
1.14 (c) For single or head-of-household taxpayers, the maximum subtraction equals $4,020.
1.15The maximum subtraction is reduced by 20 percent of provisional income over $61,080.
1.16In no case is the subtraction less than zero.
1.17 (d) For married taxpayers filing separate returns, the maximum subtraction equals
1.18one-half the maximum subtraction for joint returns under paragraph (b). The maximum
1.19subtraction is reduced by 20 percent of provisional income over one-half the threshold
1.20amount specified in paragraph (b). In no case is the subtraction less than zero.
1.21 (e) For purposes of this subdivision, "provisional income" means modified adjusted
1.22gross income as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of
1Section 1.
REVISOR EAP/LN 23-0079812/19/22
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 300
NINETY-THIRD SESSION
Authored by Lislegard, Brand, Wolgamott, Stephenson, Norris and others01/11/2023
The bill was read for the first time and referred to the Committee on Taxes 2.1the taxable Social Security benefits received during the taxable year, and "Social Security
2.2benefits" has the meaning given in section 86(d)(1) of the Internal Revenue Code.
2.3 (f) The commissioner shall adjust the maximum subtraction and threshold amounts in
2.4paragraphs (b) to (d) as provided in section 270C.22. The statutory year is taxable year
2.52019. The maximum subtraction and threshold amounts as adjusted must be rounded to the
2.6nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest $10
2.7amount.
2.8 EFFECTIVE DATE.This section is effective for taxable years beginning after December
2.931, 2022.
2.10 Sec. 2. Minnesota Statutes 2022, section 290.0132, is amended by adding a subdivision
2.11to read:
2.12 Subd. 31.Public pension income subtraction.(a) The amount of a taxpayer's public
2.13pension exclusion is a subtraction.
2.14 (b) The amount of a taxpayer's federal exclusion is determined as follows:
2.15 (1) for a taxpayer whose provisional income is less than or equal to the base amount,
2.16the federal exclusion equals 100 percent of qualified benefits received during the taxable
2.17year;
2.18 (2) for a taxpayer whose provisional income exceeds the base amount, but is less than
2.19or equal to the adjusted base amount, the federal exclusion equals the greater of:
2.20 (i) 50 percent of qualified benefits received during the taxable year; or
2.21 (ii) the amount of qualified benefits minus 50 percent of the difference between
2.22provisional income and the base amount; and
2.23 (3) for a taxpayer whose provisional income exceeds the adjusted base amount, the
2.24federal exclusion equals the greater of:
2.25 (i) qualified benefits minus:
2.26 (A) 85 percent of provisional income in excess of the adjusted base amount; plus
2.27 (B) 50 percent of the difference between the base amount and the adjusted base amount;
2.28or
2.29 (ii) 15 percent of qualified benefits received during the taxable year.
2.30 (c) The amount of a taxpayer's state exclusion equals the lesser of:
2Sec. 2.
REVISOR EAP/LN 23-0079812/19/22 3.1 (1) the amount of qualified benefits in excess of the taxpayer's federal exclusion; or
3.2 (2) the maximum exclusion for a taxpayer determined under paragraph (d).
3.3 (d) The maximum state exclusion equals $5,450 for a joint return, half that amount for
3.4a married taxpayer filing a separate return, and $4,260 for all other taxpayers. The maximum
3.5subtraction is reduced by 20 percent of provisional income in excess of:
3.6 (1) $82,770 for a joint return;
3.7 (2) half the amount in clause (1) for a married taxpayer filing a separate return; and
3.8 (3) $64,670 for all other filers.
3.9 (e) For the purposes of this subdivision:
3.10 (1) "base amount" has the meaning given in section 86(c)(1) of the Internal Revenue
3.11Code and "adjusted base amount" has the meaning given in section 86(c)(2) of the Internal
3.12Revenue Code;
3.13 (2) "provisional income" has the meaning given in section 290.0132, subdivision 26,
3.14paragraph (e);
3.15 (3) "public pension exclusion" means the sum of the federal exclusion calculated under
3.16paragraph (b) and the state exclusion calculated under paragraphs (c) and (d); and
3.17 (4) "qualified benefits" means any amount received:
3.18 (i) by a basic member of any pension plan governed by chapter 3A, 352B, 353, 354, or
3.19354A, or the basic member's survivor, provided that the annuity or benefit is based on service
3.20for which the member or survivor is not also receiving Social Security benefits;
3.21 (ii) from any retirement system administered by the federal government that is based on
3.22service for which the recipient or the recipient's survivor is not also receiving Social Security
3.23benefits; or
3.24 (iii) from a public retirement system of or created by another state or any of its political
3.25subdivisions if the income tax laws of the other state permit a similar deduction or exemption
3.26or a reciprocal deduction or exemption of a retirement or pension benefit received from a
3.27public retirement system of or created by this state or any political subdivision of this state.
3.28 (f) The commissioner must adjust the maximum exclusion and phaseout threshold
3.29amounts in paragraph (d) as provided in section 270C.22. The statutory year is taxable year
3.302022. The maximum subtraction and threshold amounts as adjusted must be rounded to the
3Sec. 2.
REVISOR EAP/LN 23-0079812/19/22 4.1nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest $10
4.2amount.
4.3 EFFECTIVE DATE.This section is effective for taxable years beginning after December
4.431, 2022.
4.5 Sec. 3. Minnesota Statutes 2022, section 290.091, subdivision 2, is amended to read:
4.6 Subd. 2.Definitions.For purposes of the tax imposed by this section, the following
4.7terms have the meanings given.
4.8 (a) "Alternative minimum taxable income" means the sum of the following for the taxable
4.9year:
4.10 (1) the taxpayer's federal alternative minimum taxable income as defined in section
4.1155(b)(2) of the Internal Revenue Code;
4.12 (2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
4.13taxable income, but excluding:
4.14 (i) the charitable contribution deduction under section 170 of the Internal Revenue Code;
4.15 (ii) the medical expense deduction;
4.16 (iii) the casualty, theft, and disaster loss deduction; and
4.17 (iv) the impairment-related work expenses of a person with a disability;
4.18 (3) for depletion allowances computed under section 613A(c) of the Internal Revenue
4.19Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
4.20to the extent not included in federal alternative minimum taxable income, the excess of the
4.21deduction for depletion allowable under section 611 of the Internal Revenue Code for the
4.22taxable year over the adjusted basis of the property at the end of the taxable year (determined
4.23without regard to the depletion deduction for the taxable year);
4.24 (4) to the extent not included in federal alternative minimum taxable income, the amount
4.25of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
4.26Code determined without regard to subparagraph (E);
4.27 (5) to the extent not included in federal alternative minimum taxable income, the amount
4.28of interest income as provided by section 290.0131, subdivision 2;
4.29 (6) the amount of addition required by section 290.0131, subdivisions 9, 10, and 16;
4.30 (7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
4.31not included in the addition required under clause (6); and
4Sec. 3.
REVISOR EAP/LN 23-0079812/19/22 5.1 (8) to the extent not included in federal alternative minimum taxable income, the amount
5.2of foreign-derived intangible income deducted under section 250 of the Internal Revenue
5.3Code;
5.4 less the sum of the amounts determined under the following:
5.5 (i) interest income as defined in section 290.0132, subdivision 2;
5.6 (ii) an overpayment of state income tax as provided by section 290.0132, subdivision
5.73, to the extent included in federal alternative minimum taxable income;
5.8 (iii) the amount of investment interest paid or accrued within the taxable year on
5.9indebtedness to the extent that the amount does not exceed net investment income, as defined
5.10in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
5.11in computing federal adjusted gross income;
5.12 (iv) amounts subtracted from federal taxable or adjusted gross income as provided by
5.13section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, and 26 to 29, and 31;
5.14 (v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
5.15paragraph (c); and
5.16 (vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
5.17subdivision 7.
5.18 In the case of an estate or trust, alternative minimum taxable income must be computed
5.19as provided in section 59(c) of the Internal Revenue Code, except alternative minimum
5.20taxable income must be increased by the addition in section 290.0131, subdivision 16.
5.21 (b) "Investment interest" means investment interest as defined in section 163(d)(3) of
5.22the Internal Revenue Code.
5.23 (c) "Net minimum tax" means the minimum tax imposed by this section.
5.24 (d) "Regular tax" means the tax that would be imposed under this chapter (without regard
5.25to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
5.26under this chapter.
5.27 (e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
5.28after subtracting the exemption amount determined under subdivision 3.
5.29 EFFECTIVE DATE.This section is effective for taxable years beginning after December
5.3031, 2022.
5Sec. 3.
REVISOR EAP/LN 23-0079812/19/22