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