1.1 A bill for an act
1.2 relating to taxation; individual income and property tax refunds; allowing a
1.3 subtraction for all federally taxable Social Security income; reducing the first tier
1.4 income tax rate; increasing homestead credit state refunds; amending Minnesota
1.5 Statutes 2022, sections 290.0132, subdivision 26; 290.06, subdivisions 2c, 2d;
1.6 290A.04, subdivisions 2, 4.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2022, section 290.0132, subdivision 26, is amended to read:
1.9 Subd. 26.Social Security benefits.(a) A portion The amount of taxable Social Security
1.10benefits received by a taxpayer in the taxable year is allowed as a subtraction. The subtraction
1.11equals the lesser of taxable Social Security benefits or a maximum subtraction subject to
1.12the limits under paragraphs (b), (c), and (d).
1.13 (b) For married taxpayers filing a joint return and surviving spouses, the maximum
1.14subtraction equals $5,150. The maximum subtraction is reduced by 20 percent of provisional
1.15income over $78,180. In no case is the subtraction less than zero.
1.16 (c) For single or head-of-household taxpayers, the maximum subtraction equals $4,020.
1.17The maximum subtraction is reduced by 20 percent of provisional income over $61,080.
1.18In no case is the subtraction less than zero.
1.19 (d) For married taxpayers filing separate returns, the maximum subtraction equals
1.20one-half the maximum subtraction for joint returns under paragraph (b). The maximum
1.21subtraction is reduced by 20 percent of provisional income over one-half the threshold
1.22amount specified in paragraph (b). In no case is the subtraction less than zero.
1Section 1.
23-01734 as introduced01/10/23 REVISOR EAP/HL
SENATE
STATE OF MINNESOTA
S.F. No. 1895NINETY-THIRD SESSION
(SENATE AUTHORS: NELSON)
OFFICIAL STATUSD-PGDATE
Introduction and first reading02/20/2023
Referred to Taxes 2.1 (e) For purposes of this subdivision, "provisional income" means modified adjusted
2.2gross income as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of
2.3the taxable Social Security benefits received during the taxable year, and "Social Security
2.4benefits" has the meaning given in section 86(d)(1) of the Internal Revenue Code.
2.5 (f) The commissioner shall adjust the maximum subtraction and threshold amounts in
2.6paragraphs (b) to (d) as provided in section 270C.22. The statutory year is taxable year
2.72019. The maximum subtraction and threshold amounts as adjusted must be rounded to the
2.8nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest $10
2.9amount.
2.10 EFFECTIVE DATE.This section is effective for taxable years beginning after December
2.1131, 2022.
2.12 Sec. 2. Minnesota Statutes 2022, section 290.06, subdivision 2c, is amended to read:
2.13 Subd. 2c.Schedules of rates for individuals, estates, and trusts.(a) The income taxes
2.14imposed by this chapter upon married individuals filing joint returns and surviving spouses
2.15as defined in section 2(a) of the Internal Revenue Code must be computed by applying to
2.16their taxable net income the following schedule of rates:
2.17 (1) On the first $38,770 $43,950, 5.35 2.8 percent;
2.18 (2) On all over $38,770 $43,950, but not over $154,020 $174,610, 6.8 percent;
2.19 (3) On all over $154,020 $174,610, but not over $269,010 $304,970, 7.85 percent;
2.20 (4) On all over $269,010 $304,970, 9.85 percent.
2.21 Married individuals filing separate returns, estates, and trusts must compute their income
2.22tax by applying the above rates to their taxable income, except that the income brackets
2.23will be one-half of the above amounts after the adjustment required in subdivision 2d.
2.24 (b) The income taxes imposed by this chapter upon unmarried individuals must be
2.25computed by applying to taxable net income the following schedule of rates:
2.26 (1) On the first $26,520 $30,070, 5.35 2.8 percent;
2.27 (2) On all over $26,520 $30,070, but not over $87,110 $98,760, 6.8 percent;
2.28 (3) On all over $87,110 $98,760, but not over $161,720 $183,340, 7.85 percent;
2.29 (4) On all over $161,720 $183,340, 9.85 percent.
2Sec. 2.
23-01734 as introduced01/10/23 REVISOR EAP/HL 3.1 (c) The income taxes imposed by this chapter upon unmarried individuals qualifying as
3.2a head of household as defined in section 2(b) of the Internal Revenue Code must be
3.3computed by applying to taxable net income the following schedule of rates:
3.4 (1) On the first $32,650 $37,010, 5.35 2.8 percent;
3.5 (2) On all over $32,650 $37,010, but not over $131,190 $148,730, 6.8 percent;
3.6 (3) On all over $131,190 $148,730, but not over $214,980 $243,720, 7.85 percent;
3.7 (4) On all over $214,980 $243,720, 9.85 percent.
3.8 (d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax
3.9of any individual taxpayer whose taxable net income for the taxable year is less than an
3.10amount determined by the commissioner must be computed in accordance with tables
3.11prepared and issued by the commissioner of revenue based on income brackets of not more
3.12than $100. The amount of tax for each bracket shall be computed at the rates set forth in
3.13this subdivision, provided that the commissioner may disregard a fractional part of a dollar
3.14unless it amounts to 50 cents or more, in which case it may be increased to $1.
3.15 (e) An individual who is not a Minnesota resident for the entire year must compute the
3.16individual's Minnesota income tax as provided in this subdivision. After the application of
3.17the nonrefundable credits provided in this chapter, the tax liability must then be multiplied
3.18by a fraction in which:
3.19 (1) the numerator is the individual's Minnesota source federal adjusted gross income as
3.20defined in section 62 of the Internal Revenue Code and increased by:
3.21 (i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, and
3.2217, and 290.0137, paragraph (a); and reduced by
3.23 (ii) the Minnesota assignable portion of the subtraction for United States government
3.24interest under section 290.0132, subdivision 2, the subtractions under sections 290.0132,
3.25subdivisions 9, 10, 14, 15, 17, 18, and 27, and 290.0137, paragraph (c), after applying the
3.26allocation and assignability provisions of section 290.081, clause (a), or 290.17; and
3.27 (2) the denominator is the individual's federal adjusted gross income as defined in section
3.2862 of the Internal Revenue Code, increased by:
3.29 (i) the additions required under sections 290.0131, subdivisions 2, 6, 8 to 10, 16, and
3.3017, and 290.0137, paragraph (a); and reduced by
3.31 (ii) the subtractions under sections 290.0132, subdivisions 2, 9, 10, 14, 15, 17, 18, and
3.3227, and 290.0137, paragraph (c).
3Sec. 2.
23-01734 as introduced01/10/23 REVISOR EAP/HL 4.1 (f) If an individual who is not a Minnesota resident for the entire year is a qualifying
4.2owner of a qualifying entity that elects to pay tax as provided in section 289A.08, subdivision
4.37a, paragraph (b), the individual must compute the individual's Minnesota income tax as
4.4provided in paragraph (e), and also must include, to the extent attributed to the electing
4.5qualifying entity:
4.6 (1) in paragraph (e), clause (1), item (i), and paragraph (e), clause (2), item (i), the
4.7addition under section 290.0131, subdivision 5; and
4.8 (2) in paragraph (e), clause (1), item (ii), and paragraph (e), clause (2), item (ii), the
4.9subtraction under section 290.0132, subdivision 3.
4.10 EFFECTIVE DATE.This section is effective for taxable years beginning after December
4.1131, 2022.
4.12 Sec. 3. Minnesota Statutes 2022, section 290.06, subdivision 2d, is amended to read:
4.13 Subd. 2d.Inflation adjustment of brackets.The commissioner shall annually adjust
4.14the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed
4.15in subdivision 2c as provided in section 270C.22. The statutory year is taxable year 2019
4.162023. The rate applicable to any rate bracket must not be changed. The dollar amounts
4.17setting forth the tax shall be adjusted to reflect the changes in the rate brackets. The rate
4.18brackets as adjusted must be rounded to the nearest $10 amount. If the rate bracket ends in
4.19$5, it must be rounded up to the nearest $10 amount. The commissioner shall determine the
4.20rate bracket for married filing separate returns after this adjustment is done. The rate bracket
4.21for married filing separate must be one-half of the rate bracket for married filing joint.
4.22 EFFECTIVE DATE.This section is effective for taxable years beginning after December
4.2331, 2023.
4.24 Sec. 4. Minnesota Statutes 2022, section 290A.04, subdivision 2, is amended to read:
4.25 Subd. 2.Homeowners; homestead credit refund.A claimant whose property taxes
4.26payable are in excess of the percentage of the household income stated below shall pay an
4.27amount equal to the percent of income shown for the appropriate household income level
4.28along with the percent to be paid by the claimant of the remaining amount of property taxes
4.29payable. The state refund equals the amount of property taxes payable that remain, up to
4.30the state refund amount shown below.
4Sec. 4.
23-01734 as introduced01/10/23 REVISOR EAP/HL 5.1 Maximum
State
Refund
5.2 Percent Paid by
ClaimantPercent of Income5.3 Household Income
2,770
3,830$
15
10 percent1.0 percent
5.4 $0 to 1,739
5.5 2,090
2,770
3,830$
15
10 percent1.1 percent
5.6 1,740 to 3,459
5.7 2,091 to 4,160
2,770
3,830$
15
10 percent1.2 percent
5.8 3,460 to 5,239
5.9 4,161 to 6,300
2,770
3,830$
20
15 percent1.3 percent
5.10 5,240 to 6,989
5.11 6,301 to 8,400
2,770
3,830$
20
15 percent1.4 percent
5.12 6,990 to 8,719
5.13 8,401 to 10,480
2,770
3,830$
20
15 percent1.5 percent
5.14 8,720 to 12,219
5.15 10,481 to 14,680
2,770
3,830$
20
15 percent1.6 percent
5.16 12,220 to 13,949
5.17 14,681 to 16,760
2,770
3,830$
20
15 percent1.7 percent
5.18 13,950 to 15,709
5.19 16,761 to 18,880
2,770
3,830$
20
15 percent1.8 percent
5.20 15,710 to 17,449
5.21 18,881 to 20,970
2,770
3,830$
25
20 percent1.9 percent
5.22 17,450 to 19,179
5.23 20,971 to 23,040
2,770
3,830$
25
20 percent2.0 percent
5.24 19,180 to 24,429
5.25 23,041 to 29,350
2,770
3,830$
30
25 percent2.0 percent
5.26 24,430 to 26,169
5.27 29,351 to 31,440
2,770
3,830$
30
25 percent2.0 percent
5.28 26,170 to 29,669
5.29 31,441 to 35,650
2,770
3,830$
35
30 percent2.0 percent
5.30 29,670 to 41,859
5.31 35,651 to 50,290
2,240
3,190$
35
30 percent2.0 percent
5.32 41,860 to 61,049
5.33 50,291 to 73,350
1,960
2,850$
40
35 percent2.0 percent
5.34 61,050 to 69,769
5.35 73,351 to 83,830
1,620
2,450$
40
35 percent2.1 percent
5.36 69,770 to 78,499
5.37 83,831 to 94,320
1,450
2,240$
40
35 percent2.2 percent
5.38 78,500 to 87,219
5.39 94,321 to 104,790
1,270
2,030$
40
35 percent2.3 percent
5.40 87,220 to 95,939
5.41 104,791 to 115,270
1,070
1,790$
45
40 percent2.4 percent
5.42 95,940 to 101,179
5.43 115,271 to 121,570
890
1,570$
45
40 percent2.5 percent
5.44 101,180 to 104,689
5.45 121,571 to 125,780
5Sec. 4.
23-01734 as introduced01/10/23 REVISOR EAP/HL 730
1,380$
50
45 percent2.5 percent
6.1 104,690 to 108,919
6.2 125,781 to 130,870
540
1,150$
50
45 percent2.5 percent
6.3 108,920 to 113,149
6.4 130,871 to 135,950
750$50 percent2.5 percent6.5 135,951 to 145,000
250$50 percent2.5 percent6.6 145,001 to 155,000
6.7 The payment made to a claimant shall be the amount of the state refund calculated under
6.8this subdivision. No payment is allowed if the claimant's household income is $113,150
6.9$155,001 or more.
6.10 EFFECTIVE DATE.This section is effective beginning with refunds based on property
6.11taxes payable in 2024.
6.12 Sec. 5. Minnesota Statutes 2022, section 290A.04, subdivision 4, is amended to read:
6.13 Subd. 4.Inflation adjustment.The commissioner shall annually adjust the dollar
6.14amounts of the income thresholds and the maximum refunds under subdivisions 2 and 2a
6.15as provided in section 270C.22. The statutory year for the renter's credit under subdivision
6.162a is 2018. The statutory year for the homestead credit refund is 2023.
6Sec. 5.
23-01734 as introduced01/10/23 REVISOR EAP/HL