1.1 A bill for an act
1.2 relating to taxation; individual income and corporate franchise; providing for
1.3 certain conformity to federal tax provisions; amending Minnesota Statutes 2022,
1.4 sections 289A.02, subdivision 7; 290.01, by adding a subdivision; 290.0123,
1.5 subdivision 3; 290.0131, by adding a subdivision; 290.0132, subdivisions 18, 24,
1.6 by adding a subdivision; 290.0133, by adding a subdivision; 290.0134, by adding
1.7 a subdivision; 290.0671, subdivision 1a; 290.0675, subdivision 1; 290.091,
1.8 subdivision 2; 290.095, subdivision 11; 290A.03, subdivision 15; 291.005,
1.9 subdivision 1; Minnesota Statutes 2023 Supplement, sections 289A.08, subdivision
1.10 7; 290.01, subdivisions 19, 31; 290.06, subdivision 2c.
1.11BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.12 Section 1. Minnesota Statutes 2022, section 289A.02, subdivision 7, is amended to read:
1.13 Subd. 7.Internal Revenue Code.Unless specifically defined otherwise, "Internal
1.14Revenue Code" means the Internal Revenue Code of 1986, as amended through December
1.1531, 2018 December 15, 2022.
1.16 EFFECTIVE DATE.This section is effective the day following final enactment, except
1.17the changes incorporated by federal changes are effective retroactively at the same time the
1.18changes were effective for federal purposes.
1.19 Sec. 2. Minnesota Statutes 2022, section 289A.08, subdivision 7, is amended to read:
1.20 Subd. 7.Composite income tax returns for nonresident partners, shareholders, and
1.21beneficiaries.(a) The commissioner may allow a partnership with nonresident partners to
1.22file a composite return and to pay the tax on behalf of nonresident partners who have no
1.23other Minnesota source income. This composite return must include the names, addresses,
1Sec. 2.
REVISOR EAP/HL 23-0150912/28/22
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 31
NINETY-THIRD SESSION
Authored by Gomez, Lislegard, Youakim, Norris, Bahner and others01/04/2023
The bill was read for the first time and referred to the Committee on Taxes 2.1Social Security numbers, income allocation, and tax liability for the nonresident partners
2.2electing to be covered by the composite return.
2.3 (b) The computation of a partner's tax liability must be determined by multiplying the
2.4income allocated to that partner by the highest rate used to determine the tax liability for
2.5individuals under section 290.06, subdivision 2c. Nonbusiness deductions, standard
2.6deductions, or personal exemptions are not allowed.
2.7 (c) The partnership must submit a request to use this composite return filing method for
2.8nonresident partners. The requesting partnership must file a composite return in the form
2.9prescribed by the commissioner of revenue. The filing of a composite return is considered
2.10a request to use the composite return filing method.
2.11 (d) The electing partner must not have any Minnesota source income other than the
2.12income from the partnership, other electing partnerships, and other qualifying entities
2.13electing to file and pay the pass-through entity tax under subdivision 7a. If it is determined
2.14that the electing partner has other Minnesota source income, the inclusion of the income
2.15and tax liability for that partner under this provision will not constitute a return to satisfy
2.16the requirements of subdivision 1. The tax paid for the individual as part of the composite
2.17return is allowed as a payment of the tax by the individual on the date on which the composite
2.18return payment was made. If the electing nonresident partner has no other Minnesota source
2.19income, filing of the composite return is a return for purposes of subdivision 1.
2.20 (e) This subdivision does not negate the requirement that an individual pay estimated
2.21tax if the individual's liability would exceed the requirements set forth in section 289A.25.
2.22The individual's liability to pay estimated tax is, however, satisfied when the partnership
2.23pays composite estimated tax in the manner prescribed in section 289A.25.
2.24 (f) If an electing partner's share of the partnership's gross income from Minnesota sources
2.25is less than the filing requirements for a nonresident under this subdivision, the tax liability
2.26is zero. However, a statement showing the partner's share of gross income must be included
2.27as part of the composite return.
2.28 (g) The election provided in this subdivision is only available to a partner who has no
2.29other Minnesota source income and who is either (1) a full-year nonresident individual or
2.30(2) a trust or estate that does not claim a deduction under either section 651 or 661 of the
2.31Internal Revenue Code.
2.32 (h) A corporation defined in section 290.9725 and its nonresident shareholders may
2.33make an election under this paragraph. The provisions covering the partnership apply to
2.34the corporation and the provisions applying to the partner apply to the shareholder.
2Sec. 2.
REVISOR EAP/HL 23-0150912/28/22 3.1 (i) Estates and trusts distributing current income only and the nonresident individual
3.2beneficiaries of the estates or trusts may make an election under this paragraph. The
3.3provisions covering the partnership apply to the estate or trust. The provisions applying to
3.4the partner apply to the beneficiary.
3.5 (j) For the purposes of this subdivision, "income" means the partner's share of federal
3.6adjusted gross income from the partnership modified by the additions provided in section
3.7290.0131, subdivisions 8 to 10, 16, and 17, and 19, and the subtractions provided in: (1)
3.8section 290.0132, subdivisions 9, 27, and 28, to the extent the amount is assignable or
3.9allocable to Minnesota under section 290.17; and (2) section 290.0132, subdivision
3.10subdivisions 14 and 31. The subtraction allowed under section 290.0132, subdivision 9, is
3.11only allowed on the composite tax computation to the extent the electing partner would
3.12have been allowed the subtraction.
3.13 EFFECTIVE DATE.This section is effective for taxable years beginning after December
3.1431, 2021.
3.15 Sec. 3. Minnesota Statutes 2022, section 290.01, subdivision 19, is amended to read:
3.16 Subd. 19.Net income.(a) For a trust or estate taxable under section 290.03, and a
3.17corporation taxable under section 290.02, the term "net income" means the federal taxable
3.18income, as defined in section 63 of the Internal Revenue Code of 1986, as amended through
3.19the date named in this subdivision, incorporating the federal effective dates of changes to
3.20the Internal Revenue Code and any elections made by the taxpayer in accordance with the
3.21Internal Revenue Code in determining federal taxable income for federal income tax
3.22purposes, and with the modifications provided in sections 290.0131 to 290.0136.
3.23 (b) For an individual, the term "net income" means federal adjusted gross income with
3.24the modifications provided in sections 290.0131, 290.0132, and 290.0135 to 290.0137.
3.25 (c) In the case of a regulated investment company or a fund thereof, as defined in section
3.26851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
3.27company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
3.28except that:
3.29 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
3.30Revenue Code does not apply;
3.31 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue
3.32Code must be applied by allowing a deduction for capital gain dividends and exempt-interest
3Sec. 3.
REVISOR EAP/HL 23-0150912/28/22 4.1dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code;
4.2and
4.3 (3) the deduction for dividends paid must also be applied in the amount of any
4.4undistributed capital gains which that the regulated investment company elects to have
4.5treated as provided in section 852(b)(3)(D) of the Internal Revenue Code.
4.6 (d) The net income of a real estate investment trust as defined and limited by section
4.7856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
4.8taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
4.9 (e) The net income of a designated settlement fund as defined in section 468B(d) of the
4.10Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal
4.11Revenue Code.
4.12 (f) The Internal Revenue Code of 1986, as amended through December 31, 2018
4.13December 15, 2022, applies for taxable years beginning after December 31, 1996, except
4.14the sections of federal law in section 290.0111 shall also apply.
4.15 (g) Except as otherwise provided, references to the Internal Revenue Code in this
4.16subdivision and sections 290.0131 to 290.0136 mean the code in effect for purposes of
4.17determining net income for the applicable year.
4.18 EFFECTIVE DATE.This section is effective the day following final enactment, except
4.19the changes incorporated by federal changes are effective retroactively at the same time the
4.20changes were effective for federal purposes.
4.21 Sec. 4. Minnesota Statutes 2022, section 290.01, subdivision 31, is amended to read:
4.22 Subd. 31.Internal Revenue Code.Unless specifically defined otherwise, "Internal
4.23Revenue Code" means the Internal Revenue Code of 1986, as amended through December
4.2431, 2018, except the sections of federal law in section 290.0111 shall also apply December
4.2515, 2022. Internal Revenue Code also includes any uncodified provision in federal law that
4.26relates to provisions of the Internal Revenue Code that are incorporated into Minnesota law.
4.27 EFFECTIVE DATE.This section is effective the day following final enactment, except
4.28the changes incorporated by federal changes are effective retroactively at the same time the
4.29changes were effective for federal purposes.
4Sec. 4.
REVISOR EAP/HL 23-0150912/28/22 5.1 Sec. 5. Minnesota Statutes 2022, section 290.01, is amended by adding a subdivision to
5.2read:
5.3 Subd. 33.Earned income."Earned income" means earned income, as defined in section
5.432(c) of the Internal Revenue Code.
5.5 EFFECTIVE DATE.This section is effective retroactively for taxable years beginning
5.6after December 31, 2017.
5.7 Sec. 6. Minnesota Statutes 2022, section 290.0123, subdivision 3, is amended to read:
5.8 Subd. 3.Amount for dependents.For an individual who is a dependent, as defined in
5.9sections 151 and 152 of the Internal Revenue Code, of another taxpayer for a taxable year
5.10beginning in the calendar year in which the individual's taxable year begins, the standard
5.11deduction for that individual is limited to the greater of:
5.12 (1) $1,100; or
5.13 (2) the lesser of (i) the sum of $350 and that individual's earned income, as defined in
5.14section 32(c) of the Internal Revenue Code for the taxable year; or (ii) the standard deduction
5.15amount allowed under subdivision 1, clause (3).
5.16 EFFECTIVE DATE.This section is effective retroactively for taxable years beginning
5.17after December 31, 2017.
5.18 Sec. 7. Minnesota Statutes 2022, section 290.0131, is amended by adding a subdivision
5.19to read:
5.20 Subd. 19.Meal expenses.The amount of meal expenses in excess of the 50 percent
5.21limitation under section 274(n)(1) of the Internal Revenue Code allowed under subsection
5.22(n), paragraph (2), subparagraph (D), of that section is an addition.
5.23 EFFECTIVE DATE.This section is effective retroactively for amounts paid or incurred
5.24after December 31, 2020.
5.25 Sec. 8. Minnesota Statutes 2022, section 290.0132, subdivision 18, is amended to read:
5.26 Subd. 18.Net operating losses.(a) The amount of the net operating loss allowed under
5.27section 290.095, subdivision 11, paragraph (c), is a subtraction.
5.28 (b) The unused portion of a net operating loss carryover under section 290.095,
5.29subdivision 11, paragraph (d), is a subtraction. The subtraction is the lesser of:
5Sec. 8.
REVISOR EAP/HL 23-0150912/28/22 6.1 (1) the amount carried into the taxable year minus any subtraction made under this
6.2section for prior taxable years; or
6.3 (2) 80 percent of Minnesota taxable net income in a single taxable year and determined
6.4without regard to this subtraction.
6.5 EFFECTIVE DATE.This section is effective for taxable years beginning after December
6.631, 2021.
6.7 Sec. 9. Minnesota Statutes 2022, section 290.0132, subdivision 24, is amended to read:
6.8 Subd. 24.Discharge of indebtedness; education loans.(a) The amount equal to the
6.9discharge of indebtedness of a qualified student loan of the taxpayer is a subtraction if:.
6.10 (b) For the purposes of this subdivision, "qualified student loan" means:
6.11 (1) any loan provided expressly for postsecondary educational expenses, regardless of
6.12whether provided through the educational institution or directly to the borrower, if the loan
6.13was made, insured, or guaranteed by:
6.14 (i) the United States, or an instrumentality or agency thereof;
6.15 (ii) a state, territory, or possession of the United States, or the District of Columbia, or
6.16any political subdivision thereof; or
6.17 (iii) an eligible educational institution, as defined in section 25A(f)(2) of the Internal
6.18Revenue Code;
6.19 (2) any private education loan, as defined in section 140(a)(7) of the federal Truth in
6.20Lending Act;
6.21 (3) any loan made by any educational organization described in section 170(b)(1)(A)(ii)
6.22of the Internal Revenue Code, if the loan is made:
6.23 (i) pursuant to an agreement with any entity described in subitem (A) or any private
6.24education lender, as defined in section 140(a) of the Truth in Lending Act, under which the
6.25funds from which the loan was made were provided to the educational organization; or
6.26 (ii) pursuant to a program of the educational organization that is designed to encourage
6.27its students to serve in occupations with unmet needs or in areas with unmet needs and under
6.28which the services provided by the students or former students are for or under the direction
6.29of a governmental unit or an organization described in section 501(c)(3) of the Internal
6.30Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code; or
6Sec. 9.
REVISOR EAP/HL 23-0150912/28/22 7.1 (4) any loan made by an educational organization described in section 170(b)(1)(A)(ii)
7.2of the Internal Revenue Code or by an organization exempt from tax under section 501(a)
7.3of the Internal Revenue Code to refinance a loan to an individual to assist the individual in
7.4attending the educational organization but only if the refinancing loan is pursuant to a
7.5program of the refinancing organization that is designed as described in clause (3), item
7.6(ii).
7.7 (c) A discharge of indebtedness is ineligible for the subtraction under paragraph (a) if
7.8the discharge of a loan made by an organization described in paragraph (b), clause (3), or
7.9made by a private education lender as defined in section 140(a)(7) of the Truth in Lending
7.10Act if the discharge is on account of services performed for either the organization or for
7.11the private education lender.
7.12 (1) the indebtedness discharged is a qualified education loan; and
7.13 (2) the indebtedness was discharged under section 136A.1791, or following the taxpayer's
7.14completion of an income-driven repayment plan.
7.15 (b) For the purposes of this subdivision, "qualified education loan" has the meaning
7.16given in section 221 of the Internal Revenue Code.
7.17 (c) For purposes of this subdivision, "income-driven repayment plan" means a payment
7.18plan established by the United States Department of Education that sets monthly student
7.19loan payments based on income and family size under United States Code, title 20, section
7.201087e, or similar authority and specifically includes, but is not limited to:
7.21 (d) "Qualified student loan" includes but is not limited to a loan discharged under:
7.22 (1) the income-based repayment plan under United States Code, title 20, section 1098e;
7.23 (2) the income contingent repayment plan established under United States Code, title
7.2420, section 1087e, subsection (e); and
7.25 (3) the PAYE program or REPAYE program established by the Department of Education
7.26under administrative regulations.; and
7.27 (4) section 136A.1791.
7.28 EFFECTIVE DATE.This section is effective for taxable years beginning after December
7.2931, 2022.
7Sec. 9.
REVISOR EAP/HL 23-0150912/28/22 8.1 Sec. 10. Minnesota Statutes 2022, section 290.0132, subdivision 24, is amended to read:
8.2 Subd. 24.Discharge of indebtedness; education loans.(a) The amount equal to the
8.3discharge of indebtedness of a qualified student loan of the taxpayer is a subtraction if:.
8.4 (b) For the purposes of this subdivision, "qualified student loan" means a loan eligible
8.5for the exclusion from gross income under section 9675 of Public Law 117-2, the American
8.6Rescue Plan Act, except disregarding the portions of that section limiting the exclusion to
8.7discharges after December 31, 2020, and before January 1, 2026.
8.8 (1) the indebtedness discharged is a qualified education loan; and
8.9 (2) the indebtedness was discharged under section 136A.1791, or following the taxpayer's
8.10completion of an income-driven repayment plan.
8.11 (b) For the purposes of this subdivision, "qualified education loan" has the meaning
8.12given in section 221 of the Internal Revenue Code.
8.13 (c) For purposes of this subdivision, "income-driven repayment plan" means a payment
8.14plan established by the United States Department of Education that sets monthly student
8.15loan payments based on income and family size under United States Code, title 20, section
8.161087e, or similar authority and specifically includes, but is not limited to:
8.17 (c) "Qualified student loan" includes but is not limited to a loan discharged under:
8.18 (1) the income-based repayment plan under United States Code, title 20, section 1098e;
8.19 (2) the income contingent repayment plan established under United States Code, title
8.2020, section 1087e, subsection (e); and
8.21 (3) the PAYE program or REPAYE program established by the Department of Education
8.22under administrative regulations.; and
8.23 (4) section 136A.1791.
8.24 EFFECTIVE DATE.This section is effective for taxable years beginning after December
8.2531, 2022.
8.26 Sec. 11. Minnesota Statutes 2022, section 290.0132, is amended by adding a subdivision
8.27to read:
8.28 Subd. 31.Delayed business interest.For each of the five taxable years beginning after
8.29December 31, 2021, there is allowed a subtraction equal to one-fifth of the adjustment
8.30amount, to the extent not already deducted, for the exclusion under section 18, subdivision
8Sec. 11.
REVISOR EAP/HL 23-0150912/28/22 9.13, clause (10), due to the Coronavirus Aid, Relief and Economic Security Act, Public Law
9.2116-136, section 2306.
9.3 EFFECTIVE DATE.This section is effective for taxable years beginning after December
9.431, 2021.
9.5 Sec. 12. Minnesota Statutes 2022, section 290.0133, is amended by adding a subdivision
9.6to read:
9.7 Subd. 15.Meal expenses.The amount of meal expenses in excess of the 50 percent
9.8limitation under section 274(n)(1) of the Internal Revenue Code allowed under section
9.9274(n)(2)(D) of the Internal Revenue Code is an addition.
9.10 EFFECTIVE DATE.This section is effective retroactively for amounts paid or incurred
9.11after December 31, 2020.
9.12 Sec. 13. Minnesota Statutes 2022, section 290.0134, is amended by adding a subdivision
9.13to read:
9.14 Subd. 20.Delayed business interest.For each of the five taxable years beginning after
9.15December 31, 2021, there is allowed a subtraction equal to one-fifth of the adjustment
9.16amount, to the extent not already deducted, for the exclusion under section 18, subdivision
9.173, clause (10), due to the Coronavirus Aid, Relief and Economic Security Act, Public Law
9.18116-136, section 2306.
9.19 EFFECTIVE DATE.This section is effective for taxable years beginning after December
9.2031, 2021.
9.21 Sec. 14. Minnesota Statutes 2022, section 290.06, subdivision 2c, is amended to read:
9.22 Subd. 2c.Schedules of rates for individuals, estates, and trusts.(a) The income taxes
9.23imposed by this chapter upon married individuals filing joint returns and surviving spouses
9.24as defined in section 2(a) of the Internal Revenue Code must be computed by applying to
9.25their taxable net income the following schedule of rates:
9.26 (1) On the first $38,770, 5.35 percent;
9.27 (2) On all over $38,770, but not over $154,020, 6.8 percent;
9.28 (3) On all over $154,020, but not over $269,010, 7.85 percent;
9.29 (4) On all over $269,010, 9.85 percent.
9Sec. 14.
REVISOR EAP/HL 23-0150912/28/22 10.1 Married individuals filing separate returns, estates, and trusts must compute their income
10.2tax by applying the above rates to their taxable income, except that the income brackets
10.3will be one-half of the above amounts after the adjustment required in subdivision 2d.
10.4 (b) The income taxes imposed by this chapter upon unmarried individuals must be
10.5computed by applying to taxable net income the following schedule of rates:
10.6 (1) On the first $26,520, 5.35 percent;
10.7 (2) On all over $26,520, but not over $87,110, 6.8 percent;
10.8 (3) On all over $87,110, but not over $161,720, 7.85 percent;
10.9 (4) On all over $161,720, 9.85 percent.
10.10 (c) The income taxes imposed by this chapter upon unmarried individuals qualifying as
10.11a head of household as defined in section 2(b) of the Internal Revenue Code must be
10.12computed by applying to taxable net income the following schedule of rates:
10.13 (1) On the first $32,650, 5.35 percent;
10.14 (2) On all over $32,650, but not over $131,190, 6.8 percent;
10.15 (3) On all over $131,190, but not over $214,980, 7.85 percent;
10.16 (4) On all over $214,980, 9.85 percent.
10.17 (d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax
10.18of any individual taxpayer whose taxable net income for the taxable year is less than an
10.19amount determined by the commissioner must be computed in accordance with tables
10.20prepared and issued by the commissioner of revenue based on income brackets of not more
10.21than $100. The amount of tax for each bracket shall be computed at the rates set forth in
10.22this subdivision, provided that the commissioner may disregard a fractional part of a dollar
10.23unless it amounts to 50 cents or more, in which case it may be increased to $1.
10.24 (e) An individual who is not a Minnesota resident for the entire year must compute the
10.25individual's Minnesota income tax as provided in this subdivision. After the application of
10.26the nonrefundable credits provided in this chapter, the tax liability must then be multiplied
10.27by a fraction in which:
10.28 (1) the numerator is the individual's Minnesota source federal adjusted gross income as
10.29defined in section 62 of the Internal Revenue Code and increased by:
10.30 (i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, and
10.3117, and 19, and 290.0137, paragraph (a); and reduced by
10Sec. 14.
REVISOR EAP/HL 23-0150912/28/22 11.1 (ii) the Minnesota assignable portion of the subtraction for United States government
11.2interest under section 290.0132, subdivision 2, the subtractions under sections 290.0132,
11.3subdivisions 9, 10, 14, 15, 17, 18, and 27, and 31, and 290.0137, paragraph (c), after applying
11.4the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and
11.5 (2) the denominator is the individual's federal adjusted gross income as defined in section
11.662 of the Internal Revenue Code, increased by:
11.7 (i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, and
11.817, and 19, and 290.0137, paragraph (a); and reduced by
11.9 (ii) the subtractions under sections 290.0132, subdivisions 2, 9, 10, 14, 15, 17, 18, and
11.1027, and 31, and 290.0137, paragraph (c).
11.11 (f) If an individual who is not a Minnesota resident for the entire year is a qualifying
11.12owner of a qualifying entity that elects to pay tax as provided in section 289A.08, subdivision
11.137a, paragraph (b), the individual must compute the individual's Minnesota income tax as
11.14provided in paragraph (e), and also must include, to the extent attributed to the electing
11.15qualifying entity:
11.16 (1) in paragraph (e), clause (1), item (i), and paragraph (e), clause (2), item (i), the
11.17addition under section 290.0131, subdivision 5; and
11.18 (2) in paragraph (e), clause (1), item (ii), and paragraph (e), clause (2), item (ii), the
11.19subtraction under section 290.0132, subdivision 3.
11.20 EFFECTIVE DATE.This section is effective for taxable years beginning after December
11.2131, 2021.
11.22Sec. 15. Minnesota Statutes 2022, section 290.0671, subdivision 1a, is amended to read:
11.23 Subd. 1a.Definitions.For purposes of this section, the following terms "qualifying
11.24child," and "earned income," have the meanings given in section 32(c) of the Internal
11.25Revenue Code, and the term "adjusted gross income" has the meaning given in section 62
11.26of the Internal Revenue Code.:
11.27 "Earned income of the lesser-earning spouse" has the meaning given in section 290.0675,
11.28subdivision 1, paragraph (d).
11.29 (1) "qualifying child" has the meaning given in section 32(c)(3) of the Internal Revenue
11.30Code; and
11.31 (2) "earned income of the lesser earning spouse" has the meaning given in section
11.32290.0675, subdivision 1, paragraph (d).
11Sec. 15.
REVISOR EAP/HL 23-0150912/28/22 12.1 EFFECTIVE DATE.This section is effective retroactively for taxable years beginning
12.2after December 31, 2017.
12.3 Sec. 16. Minnesota Statutes 2022, section 290.0675, subdivision 1, is amended to read:
12.4 Subdivision 1.Definitions.(a) For purposes of this section the following terms have
12.5the meanings given.
12.6 (b) "Earned income" means the sum of the following, to the extent included in Minnesota
12.7taxable income:
12.8 (1) the taxpayer's earned income as defined in section 32(c)(2) of the Internal Revenue
12.9Code for the taxable year;
12.10 (2) income received from a retirement pension, profit-sharing, stock bonus, or annuity
12.11plan; and
12.12 (3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue Code.
12.13 (c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
12.14 (d) "Earned income of lesser-earning spouse" means the earned income of the spouse
12.15with the lesser amount of earned income as defined in paragraph (b) for the taxable year
12.16minus one-half the amount of the standard deduction under section 290.0123, subdivision
12.171, clause (1).
12.18 EFFECTIVE DATE.This section is effective retroactively for taxable years beginning
12.19after December 31, 2017.
12.20Sec. 17. Minnesota Statutes 2022, section 290.091, subdivision 2, is amended to read:
12.21 Subd. 2.Definitions.For purposes of the tax imposed by this section, the following
12.22terms have the meanings given.
12.23 (a) "Alternative minimum taxable income" means the sum of the following for the taxable
12.24year:
12.25 (1) the taxpayer's federal alternative minimum taxable income as defined in section
12.2655(b)(2) of the Internal Revenue Code;
12.27 (2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
12.28taxable income, but excluding:
12.29 (i) the charitable contribution deduction under section 170 of the Internal Revenue Code;
12.30 (ii) the medical expense deduction;
12Sec. 17.
REVISOR EAP/HL 23-0150912/28/22 13.1 (iii) the casualty, theft, and disaster loss deduction; and
13.2 (iv) the impairment-related work expenses of a person with a disability;
13.3 (3) for depletion allowances computed under section 613A(c) of the Internal Revenue
13.4Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
13.5to the extent not included in federal alternative minimum taxable income, the excess of the
13.6deduction for depletion allowable under section 611 of the Internal Revenue Code for the
13.7taxable year over the adjusted basis of the property at the end of the taxable year (determined
13.8without regard to the depletion deduction for the taxable year);
13.9 (4) to the extent not included in federal alternative minimum taxable income, the amount
13.10of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
13.11Code determined without regard to subparagraph (E);
13.12 (5) to the extent not included in federal alternative minimum taxable income, the amount
13.13of interest income as provided by section 290.0131, subdivision 2;
13.14 (6) the amount of addition required by section 290.0131, subdivisions 9, 10, and 16, and
13.1519;
13.16 (7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
13.17not included in the addition required under clause (6); and
13.18 (8) to the extent not included in federal alternative minimum taxable income, the amount
13.19of foreign-derived intangible income deducted under section 250 of the Internal Revenue
13.20Code;
13.21 less the sum of the amounts determined under the following:
13.22 (i) interest income as defined in section 290.0132, subdivision 2;
13.23 (ii) an overpayment of state income tax as provided by section 290.0132, subdivision
13.243, to the extent included in federal alternative minimum taxable income;
13.25 (iii) the amount of investment interest paid or accrued within the taxable year on
13.26indebtedness to the extent that the amount does not exceed net investment income, as defined
13.27in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
13.28in computing federal adjusted gross income;
13.29 (iv) amounts subtracted from federal taxable or adjusted gross income as provided by
13.30section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, and 26 to 29 33;
13.31 (v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
13.32paragraph paragraphs (c) and (d); and
13Sec. 17.
REVISOR EAP/HL 23-0150912/28/22 14.1 (vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
14.2subdivision 7.
14.3 In the case of an estate or trust, alternative minimum taxable income must be computed
14.4as provided in section 59(c) of the Internal Revenue Code, except alternative minimum
14.5taxable income must be increased by the addition in section 290.0131, subdivision 16.
14.6 (b) "Investment interest" means investment interest as defined in section 163(d)(3) of
14.7the Internal Revenue Code.
14.8 (c) "Net minimum tax" means the minimum tax imposed by this section.
14.9 (d) "Regular tax" means the tax that would be imposed under this chapter (without regard
14.10to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
14.11under this chapter.
14.12 (e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
14.13after subtracting the exemption amount determined under subdivision 3.
14.14 EFFECTIVE DATE.This section is effective for taxable years beginning after December
14.1531, 2021.
14.16Sec. 18. Minnesota Statutes 2022, section 290.095, subdivision 11, is amended to read:
14.17 Subd. 11.Carryback or carryover adjustments.(a) Except as provided in paragraph
14.18(c), for individuals, estates, and trusts the amount of a net operating loss that may be carried
14.19back or carried over shall be the same dollar amount allowable in the determination of
14.20federal taxable income, provided that, notwithstanding any other provision, estates and
14.21trusts must apply the following adjustments to the amount of the net operating loss that may
14.22be carried back or carried over:
14.23 (1) Nonassignable income or losses as required by section 290.17.
14.24 (2) Deductions not allocable to Minnesota under section 290.17.
14.25 (b) The net operating loss carryback or carryover applied as a deduction in the taxable
14.26year to which the net operating loss is carried back or carried over shall be equal to the net
14.27operating loss carryback or carryover applied in the taxable year in arriving at federal taxable
14.28income provided that trusts and estates must apply the following modifications:
14.29 (1) Increase the amount of carryback or carryover applied in the taxable year by the
14.30amount of losses and interest, taxes and other expenses not assignable or allowable to
14.31Minnesota incurred in the taxable year.
14Sec. 18.
REVISOR EAP/HL 23-0150912/28/22 15.1 (2) Decrease the amount of carryback or carryover applied in the taxable year by the
15.2amount of income not assignable to Minnesota earned in the taxable year. For estates and
15.3trusts, the net operating loss carryback or carryover to the next consecutive taxable year
15.4shall be the net operating loss carryback or carryover as calculated in clause (b) less the
15.5amount applied in the earlier taxable year(s). No additional net operating loss carryback or
15.6carryover shall be allowed to estates and trusts if the entire amount has been used to offset
15.7Minnesota income in a year earlier than was possible on the federal return. However, if a
15.8net operating loss carryback or carryover was allowed to offset federal income in a year
15.9earlier than was possible on the Minnesota return, an estate or trust shall still be allowed to
15.10offset Minnesota income but only if the loss was assignable to Minnesota in the year the
15.11loss occurred.
15.12 (c) This paragraph does not apply to eligible small businesses that make a valid election
15.13to carry back their losses for federal purposes under section 172(b)(1)(H) of the Internal
15.14Revenue Code as amended through March 31, 2009.
15.15 (1) A net operating loss of an individual, estate, or trust that is allowed under this
15.16subdivision and for which the taxpayer elects to carry back for more than two years under
15.17section 172(b)(1)(H) of the Internal Revenue Code is a net operating loss carryback to each
15.18of the two taxable years preceding the loss, and unused portions may be carried forward for
15.1920 taxable years after the loss.
15.20 (2) The entire amount of the net operating loss for any taxable year must be carried to
15.21the earliest of the taxable years to which the loss may be carried. The portion of the loss
15.22which that may be carried to each of the other taxable years is the excess, if any, of the
15.23amount of the loss over the greater of the taxable net income or alternative minimum taxable
15.24income for each of the taxable years to which the loss may be carried.
15.25 (d) For net operating loss carryovers or carrybacks arising in taxable years beginning
15.26after December 31, 2017, and before January 1, 2021, a net operating loss carryover or
15.27carryback is allowed as provided in the Internal Revenue Code as amended through December
15.2831, 2018, as follows:
15.29 (1) the entire amount of the net operating loss, to the extent not already deducted, must
15.30be carried to the earliest taxable year and any unused portion may be carried forward for
15.3120 taxable years after the loss; and
15.32 (2) the portion of the loss that may be carried to each of the other taxable years is the
15.33excess, if any, of the amount of the loss over the greater of the taxable net income or
15Sec. 18.
REVISOR EAP/HL 23-0150912/28/22 16.1alternative minimum taxable income for each of the taxable years to which the loss may be
16.2carried.
16.3 EFFECTIVE DATE.This section is effective retroactively for losses arising in taxable
16.4years beginning after December 31, 2017, and before January 1, 2021.
16.5 Sec. 19. Minnesota Statutes 2022, section 290A.03, subdivision 15, is amended to read:
16.6 Subd. 15.Internal Revenue Code."Internal Revenue Code" means the Internal Revenue
16.7Code of 1986, as amended through December 31, 2018 December 15, 2022.
16.8 EFFECTIVE DATE.This section is effective for property tax refunds based on property
16.9taxes payable in 2023 and rent paid in 2022 and thereafter.
16.10Sec. 20. Minnesota Statutes 2022, section 291.005, subdivision 1, is amended to read:
16.11 Subdivision 1.Scope.Unless the context otherwise clearly requires, the following terms
16.12used in this chapter shall have the following meanings:
16.13 (1) "Commissioner" means the commissioner of revenue or any person to whom the
16.14commissioner has delegated functions under this chapter.
16.15 (2) "Federal gross estate" means the gross estate of a decedent as required to be valued
16.16and otherwise determined for federal estate tax purposes under the Internal Revenue Code,
16.17increased by the value of any property in which the decedent had a qualifying income interest
16.18for life and for which an election was made under section 291.03, subdivision 1d, for
16.19Minnesota estate tax purposes, but was not made for federal estate tax purposes.
16.20 (3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986,
16.21as amended through December 31, 2018 March 15, 2022.
16.22 (4) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
16.23excluding therefrom any property included in the estate which that has its situs outside
16.24Minnesota, and (b) including any property omitted from the federal gross estate which that
16.25is includable in the estate, has its situs in Minnesota, and was not disclosed to federal taxing
16.26authorities.
16.27 (5) "Nonresident decedent" means an individual whose domicile at the time of death
16.28was not in Minnesota.
16.29 (6) "Personal representative" means the executor, administrator or other person appointed
16.30by the court to administer and dispose of the property of the decedent. If there is no executor,
16.31administrator or other person appointed, qualified, and acting within this state, then any
16Sec. 20.
REVISOR EAP/HL 23-0150912/28/22 17.1person in actual or constructive possession of any property having a situs in this state which
17.2that is included in the federal gross estate of the decedent shall be deemed to be a personal
17.3representative to the extent of the property and the Minnesota estate tax due with respect
17.4to the property.
17.5 (7) "Resident decedent" means an individual whose domicile at the time of death was
17.6in Minnesota. The provisions of section 290.01, subdivision 7, paragraphs (c) and (d), apply
17.7to determinations of domicile under this chapter.
17.8 (8) "Situs of property" means, with respect to:
17.9 (i) real property, the state or country in which it is located;
17.10 (ii) tangible personal property, the state or country in which it was normally kept or
17.11located at the time of the decedent's death or for a gift of tangible personal property within
17.12three years of death, the state or country in which it was normally kept or located when the
17.13gift was executed;
17.14 (iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
17.15Code, owned by a nonresident decedent and that is normally kept or located in this state
17.16because it is on loan to an organization, qualifying as exempt from taxation under section
17.17501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
17.18deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and
17.19 (iv) intangible personal property, the state or country in which the decedent was domiciled
17.20at death or for a gift of intangible personal property within three years of death, the state or
17.21country in which the decedent was domiciled when the gift was executed.
17.22 For a nonresident decedent with an ownership interest in a pass-through entity with
17.23assets that include real or tangible personal property, situs of the real or tangible personal
17.24property, including qualified works of art, is determined as if the pass-through entity does
17.25not exist and the real or tangible personal property is personally owned by the decedent. If
17.26the pass-through entity is owned by a person or persons in addition to the decedent, ownership
17.27of the property is attributed to the decedent in proportion to the decedent's capital ownership
17.28share of the pass-through entity.
17.29 (9) "Pass-through entity" includes the following:
17.30 (i) an entity electing S corporation status under section 1362 of the Internal Revenue
17.31Code;
17.32 (ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
17Sec. 20.
REVISOR EAP/HL 23-0150912/28/22 18.1 (iii) a single-member limited liability company or similar entity, regardless of whether
18.2it is taxed as an association or is disregarded for federal income tax purposes under Code
18.3of Federal Regulations, title 26, section 301.7701-3; or
18.4 (iv) a trust to the extent the property is includable in the decedent's federal gross estate;
18.5but excludes
18.6 (v) an entity whose ownership interest securities are traded on an exchange regulated
18.7by the Securities and Exchange Commission as a national securities exchange under section
18.86 of the Securities Exchange Act, United States Code, title 15, section 78f.
18.9 EFFECTIVE DATE.This section is effective the day following final enactment, except
18.10the changes incorporated by federal changes are effective retroactively at the same time the
18.11changes were effective for federal purposes.
18.12Sec. 21. LIMITATION ON RETROACTIVITY.
18.13 (a) The definitions in Minnesota Statutes, section 290.01, apply to this section.
18.14 (b) Notwithstanding any law to the contrary, for a taxable year beginning before January
18.151, 2022, a taxpayer's liability for tax under Minnesota Statutes, chapters 289A and 290,
18.16must not change as a result of this act's adoption of the following sections of federal law,
18.17which are incorporated as part of the Internal Revenue Code, as amended through December
18.1815, 2022:
18.19 (1) Taxpayer Certainty and Disaster Tax Relief Act of 2019, Public Law 116-94, section
18.20104, deduction of qualified tuition and related expenses;
18.21 (2) Taxpayer Certainty and Disaster Tax Relief Act of 2019, Public Law 116-94, section
18.22203, employee retention credit for employers affected by qualified disasters;
18.23 (3) Families First Coronavirus Response Act, Public Law 116-127, section 7001, payroll
18.24credit for required paid sick leave;
18.25 (4) Families First Coronavirus Response Act, Public Law 116-127, section 7003, payroll
18.26credit for required paid family leave;
18.27 (5) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
18.282204, allowance of partial above the line deduction for charitable contributions;
18.29 (6) for individuals, Coronavirus Aid, Relief and Economic Security Act, Public Law
18.30116-136, section 2205(a), modification of limitations on charitable contributions during
18.312020;
18Sec. 21.
REVISOR EAP/HL 23-0150912/28/22 19.1 (7) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
19.22301, employee retention credit for employers subject to closure due to COVID-19;
19.3 (8) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
19.42303, modifications for net operating losses;
19.5 (9) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
19.62304, modification of limitation on losses for taxpayers other than corporations;
19.7 (10) Coronavirus Aid, Relief and Economic Security Act, Public Law 116-136, section
19.82306, limitation on business interest;
19.9 (11) Taxpayer Certainty and Disaster Tax Relief Act of 2020, Public Law 116-260,
19.10section 207, extension and modification of employee retention and rehiring credit;
19.11 (12) Taxpayer Certainty and Disaster Tax Relief Act of 2020, Public Law 116-260,
19.12section 210, temporary allowance of full deduction for business meals;
19.13 (13) Taxpayer Certainty and Disaster Tax Relief Act of 2020, Public Law 116-260,
19.14section 303, employee retention credit for employers affected by qualified disasters;
19.15 (14) American Rescue Plan Act, Public Law 117-2, section 9501(b), preserving health
19.16benefits for workers;
19.17 (15) American Rescue Plan Act, Public Law 117-2, section 9631, refundability and
19.18enhancement of child and dependent care tax credit;
19.19 (16) American Rescue Plan Act, Public Law 117-2, section 9641, payroll sick and family
19.20leave credits; and
19.21 (17) American Rescue Plan Act, Public Law 117-2, section 9651, extension of employee
19.22retention credit.
19.23 EFFECTIVE DATE.This section is effective the day following final enactment, except
19.24the limitation on retroactivity for federal changes is effective retroactively at the same time
19.25the changes were effective for federal purposes.
19Sec. 21.
REVISOR EAP/HL 23-0150912/28/22