Minnesota 2025-2026 Regular Session

Minnesota Senate Bill SF2263 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to taxation; individual income; providing subtractions for overtime pay,
3	3	1.3 tips income, bonuses, and winnings from nonprofit lawful gambling organizations;
4	4	1.4 making changes to withholding provisions; amending Minnesota Statutes 2024,
5	5	1.5 sections 290.0132, by adding subdivisions; 290.091, subdivision 2; 290.92,
6	6	1.6 subdivision 2a, by adding a subdivision.
7	7	1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
8	8	1.8 Section 1. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
9	9	1.9to read:
10	10	1.10 Subd. 36.Overtime pay.(a) The amount of overtime pay is a subtraction.
11	11	1.11 (b) For the purposes of this subdivision, "overtime pay" means wages, salaries, tips, and
12	12	1.12other employee compensation earned for hours worked in any workweek in excess of the
13	13	1.13maximum workweek applicable to the employee under chapter 177 or United States Code,
14	14	1.14title 29, section 207.
15	15	1.15 EFFECTIVE DATE.This section is effective for taxable years beginning after December
16	16	1.1631, 2024.
17	17	1.17 Sec. 2. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
18	18	1.18to read:
19	19	1.19 Subd. 37.Tip income.(a) The amount of tips is a subtraction.
20	20	1.20 (b) For the purposes of this subdivision, "tips" means amounts that an individual reports:
21	21	1.21 (1) to the individual's employer as required under section 6053(a) of the Internal Revenue
22	22	1.22Code; or
23	23	1Sec. 2.
24	24	25-02028 as introduced01/29/25 REVISOR EAP/AC
25	25	SENATE
26	26	STATE OF MINNESOTA
27	27	S.F. No. 2263NINETY-FOURTH SESSION
28	28	(SENATE AUTHORS: LUCERO)
29	29	OFFICIAL STATUSD-PGDATE
30	30	Introduction and first reading03/06/2025
31	31	Referred to Taxes 2.1 (2) to the Internal Revenue Service as wages which are subject to notice and demand
32	32	2.2for payment of employer taxes under section 3121(q) of the Internal Revenue Code.
33	33	2.3 EFFECTIVE DATE.This section is effective for taxable years beginning after December
34	34	2.431, 2024.
35	35	2.5 Sec. 3. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
36	36	2.6to read:
37	37	2.7 Subd. 38.Bonus pay.(a) The amount of bonus pay is a subtraction.
38	38	2.8 (b) For the purposes of this section, "bonus pay" means bonus remuneration amounts
39	39	2.9that are not regular wages and are supplemental wage payments under Code of Federal
40	40	2.10Regulations, title 26, section 31.3402(g)-1.
41	41	2.11 EFFECTIVE DATE.This section is effective for taxable years beginning after December
42	42	2.1231, 2024.
43	43	2.13 Sec. 4. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
44	44	2.14to read:
45	45	2.15 Subd. 39.Winnings from lawful gambling.The amount of winnings and prizes from
46	46	2.16lawful gambling received from an organization licensed under chapter 349 is a subtraction.
47	47	2.17 EFFECTIVE DATE.This section is effective for taxable years beginning after December
48	48	2.1831, 2024.
49	49	2.19 Sec. 5. Minnesota Statutes 2024, section 290.091, subdivision 2, is amended to read:
50	50	2.20 Subd. 2.Definitions.For purposes of the tax imposed by this section, the following
51	51	2.21terms have the meanings given.
52	52	2.22 (a) "Alternative minimum taxable income" means the sum of the following for the taxable
53	53	2.23year:
54	54	2.24 (1) the taxpayer's federal alternative minimum taxable income as defined in section
55	55	2.2555(b)(1)(D) of the Internal Revenue Code;
56	56	2.26 (2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
57	57	2.27taxable income, but excluding:
58	58	2.28 (i) the charitable contribution deduction under section 170 of the Internal Revenue Code;
59	59	2.29 (ii) the medical expense deduction;
60	60	2Sec. 5.
61	61	25-02028 as introduced01/29/25 REVISOR EAP/AC 3.1 (iii) the casualty, theft, and disaster loss deduction; and
62	62	3.2 (iv) the impairment-related work expenses of a person with a disability;
63	63	3.3 (3) for depletion allowances computed under section 613A(c) of the Internal Revenue
64	64	3.4Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
65	65	3.5to the extent not included in federal alternative minimum taxable income, the excess of the
66	66	3.6deduction for depletion allowable under section 611 of the Internal Revenue Code for the
67	67	3.7taxable year over the adjusted basis of the property at the end of the taxable year (determined
68	68	3.8without regard to the depletion deduction for the taxable year);
69	69	3.9 (4) to the extent not included in federal alternative minimum taxable income, the amount
70	70	3.10of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
71	71	3.11Code determined without regard to subparagraph (E);
72	72	3.12 (5) to the extent not included in federal alternative minimum taxable income, the amount
73	73	3.13of interest income as provided by section 290.0131, subdivision 2;
74	74	3.14 (6) the amount of addition required by section 290.0131, subdivisions 9, 10, and 16;
75	75	3.15 (7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
76	76	3.16not included in the addition required under clause (6); and
77	77	3.17 (8) to the extent not included in federal alternative minimum taxable income, the amount
78	78	3.18of foreign-derived intangible income deducted under section 250 of the Internal Revenue
79	79	3.19Code;
80	80	3.20 less the sum of the amounts determined under the following:
81	81	3.21 (i) interest income as defined in section 290.0132, subdivision 2;
82	82	3.22 (ii) an overpayment of state income tax as provided by section 290.0132, subdivision
83	83	3.233, to the extent included in federal alternative minimum taxable income;
84	84	3.24 (iii) the amount of investment interest paid or accrued within the taxable year on
85	85	3.25indebtedness to the extent that the amount does not exceed net investment income, as defined
86	86	3.26in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
87	87	3.27in computing federal adjusted gross income;
88	88	3.28 (iv) amounts subtracted from federal taxable or adjusted gross income as provided by
89	89	3.29section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, 26 to 29, 31, 34, and 35 and 34 to 39;
90	90	3.30 (v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
91	91	3.31paragraph (c); and
92	92	3Sec. 5.
93	93	25-02028 as introduced01/29/25 REVISOR EAP/AC 4.1 (vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
94	94	4.2subdivision 7.
95	95	4.3 In the case of an estate or trust, alternative minimum taxable income must be computed
96	96	4.4as provided in section 59(c) of the Internal Revenue Code, except alternative minimum
97	97	4.5taxable income must be increased by the addition in section 290.0131, subdivision 16.
98	98	4.6 (b) "Investment interest" means investment interest as defined in section 163(d)(3) of
99	99	4.7the Internal Revenue Code.
100	100	4.8 (c) "Net minimum tax" means the minimum tax imposed by this section.
101	101	4.9 (d) "Regular tax" means the tax that would be imposed under this chapter (without regard
102	102	4.10to this section, section 290.033, and section 290.032), reduced by the sum of the
103	103	4.11nonrefundable credits allowed under this chapter.
104	104	4.12 (e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
105	105	4.13after subtracting the exemption amount determined under subdivision 3.
106	106	4.14 EFFECTIVE DATE.This section is effective for taxable years beginning after December
107	107	4.1531, 2024.
108	108	4.16 Sec. 6. Minnesota Statutes 2024, section 290.92, subdivision 2a, is amended to read:
109	109	4.17 Subd. 2a.Collection at source.(1) Deductions. Every employer making payment of
110	110	4.18wages shall deduct and withhold upon such wages a tax as provided in this section.
111	111	4.19 (2) Withholding on payroll period. The employer shall withhold the tax on the basis
112	112	4.20of each payroll period or as otherwise provided in this section.
113	113	4.21 (3) Withholding tables. Unless the amount of tax to be withheld is determined as
114	114	4.22provided in subdivision 3, the amount of tax to be withheld for each individual shall be
115	115	4.23based upon tables to be prepared and distributed by the commissioner. The tables shall be
116	116	4.24computed for the several permissible withholding periods and shall take account of
117	117	4.25allowances allowed under this section; and the amounts computed for withholding shall be
118	118	4.26such that the amount withheld for any individual during the individual's taxable year shall
119	119	4.27approximate in the aggregate as closely as possible the tax which is levied and imposed
120	120	4.28under this chapter for that taxable year, upon the individual's salary, wages, or compensation
121	121	4.29for personal services of any kind for the employer.
122	122	4.30 (4) Miscellaneous payroll period. If wages are paid with respect to a period which is
123	123	4.31not a payroll period, the amount to be deducted and withheld shall be that applicable in the
124	124	4.32case of a miscellaneous payroll period containing a number of days, including Sundays and
125	125	4Sec. 6.
126	126	25-02028 as introduced01/29/25 REVISOR EAP/AC 5.1holidays, equal to the number of days in the period with respect to which such wages are
127	127	5.2paid.
128	128	5.3 (5) Miscellaneous payroll period. (a) In any case in which wages are paid by an
129	129	5.4employer without regard to any payroll period or other period, the amount to be deducted
130	130	5.5and withheld shall be that applicable in the case of a miscellaneous payroll period containing
131	131	5.6a number of days equal to the number of days, including Sundays and holidays, which have
132	132	5.7elapsed since the date of the last payment of such wages by such employer during the
133	133	5.8calendar year, or the date of commencement of employment with such employer during
134	134	5.9such year, or January 1 of such year, whichever is the later.
135	135	5.10 (b) In any case in which the period, or the time described in clause (a), in respect of any
136	136	5.11wages is less than one week, the commissioner, under rules prescribed by the commissioner,
137	137	5.12may authorize an employer to determine the amount to be deducted and withheld under the
138	138	5.13tables applicable in the case of a weekly payroll period, in which case the aggregate of the
139	139	5.14wages paid to the employee during the calendar week shall be considered the weekly wages.
140	140	5.15 (6) Wages computed to nearest dollar. If the wages exceed the highest bracket, in
141	141	5.16determining the amount to be deducted and withheld under this subdivision, the wages may,
142	142	5.17at the election of the employer, be computed to the nearest dollar.
143	143	5.18 (7) Rules on withholding. The commissioner may, by rule, authorize employers:
144	144	5.19 (a) to estimate the wages which will be paid to any employee in any quarter of the
145	145	5.20calendar year;
146	146	5.21 (b) to determine the amount to be deducted and withheld upon each payment of wages
147	147	5.22to such employee during such quarter as if the appropriate average of the wages so estimated
148	148	5.23constituted the actual wages paid; and
149	149	5.24 (c) to deduct and withhold upon any payment of wages to such employee during such
150	150	5.25quarter such amount as may be necessary to adjust the amount actually deducted and withheld
151	151	5.26upon wages of such employee during such quarter to the amount required to be deducted
152	152	5.27and withheld during such quarter without regard to this paragraph (7).
153	153	5.28 (8) Additional withholding. The commissioner is authorized to provide by rule for
154	154	5.29increases or decreases in the amount of withholding otherwise required under this section
155	155	5.30in cases where the employee requests the changes. Such additional withholding shall for
156	156	5.31all purposes be considered tax required to be deducted and withheld under this section.
157	157	5.32 (9) Tips. In the case of tips which constitute wages, this subdivision shall be applicable
158	158	5.33only to such tips as are included in a written statement furnished to the employer pursuant
159	159	5Sec. 6.
160	160	25-02028 as introduced01/29/25 REVISOR EAP/AC 6.1to section 6053 of the Internal Revenue Code and only to the extent that the tax can be
161	161	6.2deducted and withheld by the employer, at or after the time such statement is so furnished
162	162	6.3and before the close of the calendar year in which such statement is furnished, from such
163	163	6.4wages of the employee (excluding tips, but including funds turned over by the employee to
164	164	6.5the employer for the purpose of such deduction and withholding) as are under the control
165	165	6.6of the employer; and an employer who is furnished by an employee a written statement of
166	166	6.7tips (received in a calendar month) pursuant to section 6053 of the Internal Revenue Code
167	167	6.8to which subdivision 1 is applicable may deduct and withhold the tax with respect to such
168	168	6.9tips from any wages of the employee (excluding tips) under the employer's control, even
169	169	6.10though at the time such statement is furnished the total amount of the tips included in
170	170	6.11statements furnished to the employer as having been received by the employee in such
171	171	6.12calendar month in the course of employment by such employer is less than $20. Such tax
172	172	6.13shall not at any time be deducted and withheld in an amount which exceeds the aggregate
173	173	6.14of such wages and funds as are under the control of the employer minus any tax required
174	174	6.15by other provisions of state or federal law to be collected from such wages and funds.
175	175	6.16 (10) (9) Vehicle fringe benefits. An employer shall not deduct and withhold any tax
176	176	6.17under this section with respect to any vehicle fringe benefit provided to an employee if the
177	177	6.18employer has so elected for federal purposes and the requirement of and the definition
178	178	6.19contained in section 3402(s) of the Internal Revenue Code are complied with.
179	179	6.20 EFFECTIVE DATE.This section is effective for taxable years beginning after December
180	180	6.2131, 2024.
181	181	6.22 Sec. 7. Minnesota Statutes 2024, section 290.92, is amended by adding a subdivision to
182	182	6.23read:
183	183	6.24 Subd. 32.Tip income exempt from withholding requirements.Income that is tips,
184	184	6.25as defined in section 290.0132, subdivision 36, is exempt from the withholding requirements
185	185	6.26of this section.
186	186	6.27 EFFECTIVE DATE.This section is effective for taxable years beginning after December
187	187	6.2831, 2024.
188	188	6Sec. 7.
189	189	25-02028 as introduced01/29/25 REVISOR EAP/AC