Minnesota 2025-2026 Regular Session

Minnesota Senate Bill SF860 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 a subtraction for certain
3	3	1.3 discharges of indebtedness; excluding certain discharges of indebtedness from
4	4	1.4 income for purposes of the property tax refund and the renter's income tax credit;
5	5	1.5 amending Minnesota Statutes 2024, sections 290.0132, by adding a subdivision;
6	6	1.6 290.0693, subdivision 1; 290A.03, subdivision 3.
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.Discharges of indebtedness; coerced debt.The amount of discharge of
11	11	1.11indebtedness awarded to a claimant under section 332.74, subdivision 3, is a subtraction.
12	12	1.12 EFFECTIVE DATE.This section is effective for taxable years beginning after December
13	13	1.1331, 2024.
14	14	1.14 Sec. 2. Minnesota Statutes 2024, section 290.0693, subdivision 1, is amended to read:
15	15	1.15 Subdivision 1.Definitions.(a) For the purposes of this section, the following terms have
16	16	1.16the meanings given.
17	17	1.17 (b) "Combined exemption amount" means the sum of:
18	18	1.18 (1) for the taxpayer's first dependent, the exemption amount multiplied by 1.4;
19	19	1.19 (2) for the taxpayer's second dependent, the exemption amount multiplied by 1.3;
20	20	1.20 (3) for the taxpayer's third dependent, the exemption amount multiplied by 1.2;
21	21	1.21 (4) for the taxpayer's fourth dependent, the exemption amount multiplied by 1.1;
22	22	1Sec. 2.
23	23	25-01097 as introduced12/18/24 REVISOR EAP/RC
24	24	SENATE
25	25	STATE OF MINNESOTA
26	26	S.F. No. 860NINETY-FOURTH SESSION
27	27	(SENATE AUTHORS: GUSTAFSON and Duckworth)
28	28	OFFICIAL STATUSD-PGDATE
29	29	Introduction and first reading02/03/2025
30	30	Referred to Taxes 2.1 (5) for the taxpayer's fifth dependent, the exemption amount; and
31	31	2.2 (6) if the taxpayer or taxpayer's spouse had a disability or attained the age of 65 on or
32	32	2.3before the close of the taxable year, the exemption amount.
33	33	2.4 (b) (c) "Dependent" means any individual who is considered a dependent under sections
34	34	2.5151 and 152 of the Internal Revenue Code.
35	35	2.6 (c) (d) "Disability" has the meaning given in section 290A.03, subdivision 10.
36	36	2.7 (d) (e) "Exemption amount" means the exemption amount under section 290.0121,
37	37	2.8subdivision 1, paragraph (b).
38	38	2.9 (e) (f) "Gross rent" means rent paid for the right of occupancy, at arm's length, of a
39	39	2.10homestead, exclusive of charges for any medical services furnished by the landlord as a
40	40	2.11part of the rental agreement, whether expressly set out in the rental agreement or not. The
41	41	2.12gross rent of a resident of a nursing home or intermediate care facility is $600 per month.
42	42	2.13The gross rent of a resident of an adult foster care home is $930 per month. The commissioner
43	43	2.14shall annually adjust the amounts in this paragraph as provided in section 270C.22. The
44	44	2.15statutory year is 2023. If the landlord and tenant have not dealt with each other at arm's
45	45	2.16length and the commissioner determines that the gross rent charged was excessive, the
46	46	2.17commissioner may adjust the gross rent to a reasonable amount for purposes of this section.
47	47	2.18 (f) (g) "Homestead" has the meaning given in section 290A.03, subdivision 6.
48	48	2.19 (g) (h) "Household" has the meaning given in section 290A.03, subdivision 4.
49	49	2.20 (h) (i) "Household income" means all income received by all persons of a household in
50	50	2.21a taxable year while members of the household, other than income of a dependent.
51	51	2.22 (i) (j) "Income" means adjusted gross income, minus:
52	52	2.23 (1) for the taxpayer's first dependent, the exemption amount multiplied by 1.4 the
53	53	2.24taxpayer's combined exemption amount; and
54	54	2.25 (2) for the taxpayer's second dependent, the exemption amount multiplied by 1.3; the
55	55	2.26amount of discharge of indebtedness subtracted under section 290.0132, subdivision 36.
56	56	2.27 (3) for the taxpayer's third dependent, the exemption amount multiplied by 1.2;
57	57	2.28 (4) for the taxpayer's fourth dependent, the exemption amount multiplied by 1.1;
58	58	2.29 (5) for the taxpayer's fifth dependent, the exemption amount; and
59	59	2.30 (6) if the taxpayer or taxpayer's spouse had a disability or attained the age of 65 on or
60	60	2.31before the close of the taxable year, the exemption amount.
61	61	2Sec. 2.
62	62	25-01097 as introduced12/18/24 REVISOR EAP/RC 3.1 (j) (k) "Rent constituting property taxes" means 17 percent of the gross rent actually
63	63	3.2paid in cash, or its equivalent, or the portion of rent paid in lieu of property taxes, in any
64	64	3.3taxable year by a claimant for the right of occupancy of the claimant's Minnesota homestead
65	65	3.4in the taxable year, and which rent constitutes the basis, in the succeeding taxable year of
66	66	3.5a claim for a credit under this section by the claimant. If an individual occupies a homestead
67	67	3.6with another person or persons not related to the individual as the individual's spouse or as
68	68	3.7dependents, and the other person or persons are residing at the homestead under a rental or
69	69	3.8lease agreement with the individual, the amount of rent constituting property tax for the
70	70	3.9individual equals that portion not covered by the rental agreement.
71	71	3.10 EFFECTIVE DATE.This section is effective for taxable years beginning after December
72	72	3.1131, 2024.
73	73	3.12 Sec. 3. Minnesota Statutes 2024, section 290A.03, subdivision 3, is amended to read:
74	74	3.13 Subd. 3.Income.(a) "Income" means the sum of the following:
75	75	3.14 (1) federal adjusted gross income as defined in the Internal Revenue Code; and
76	76	3.15 (2) the sum of the following amounts to the extent not included in clause (1):
77	77	3.16 (i) all nontaxable income;
78	78	3.17 (ii) the amount of a passive activity loss that is not disallowed as a result of section 469,
79	79	3.18paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss
80	80	3.19carryover allowed under section 469(b) of the Internal Revenue Code;
81	81	3.20 (iii) an amount equal to the total of any discharge of qualified farm indebtedness of a
82	82	3.21solvent individual excluded from gross income under section 108(g) of the Internal Revenue
83	83	3.22Code;
84	84	3.23 (iv) cash public assistance and relief;
85	85	3.24 (v) any pension or annuity (including railroad retirement benefits, all payments received
86	86	3.25under the federal Social Security Act, Supplemental Security Income, and veterans benefits),
87	87	3.26which was not exclusively funded by the claimant or spouse, or which was funded exclusively
88	88	3.27by the claimant or spouse and which funding payments were excluded from federal adjusted
89	89	3.28gross income in the years when the payments were made;
90	90	3.29 (vi) interest received from the federal or a state government or any instrumentality or
91	91	3.30political subdivision thereof;
92	92	3.31 (vii) workers' compensation;
93	93	3Sec. 3.
94	94	25-01097 as introduced12/18/24 REVISOR EAP/RC 4.1 (viii) nontaxable strike benefits;
95	95	4.2 (ix) the gross amounts of payments received in the nature of disability income or sick
96	96	4.3pay as a result of accident, sickness, or other disability, whether funded through insurance
97	97	4.4or otherwise;
98	98	4.5 (x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
99	99	4.61986, as amended through December 31, 1995;
100	100	4.7 (xi) contributions made by the claimant to an individual retirement account, including
101	101	4.8a qualified voluntary employee contribution; simplified employee pension plan;
102	102	4.9self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of
103	103	4.10the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal
104	104	4.11Revenue Code, to the extent the sum of amounts exceeds the retirement base amount for
105	105	4.12the claimant and spouse;
106	106	4.13 (xii) to the extent not included in federal adjusted gross income, distributions received
107	107	4.14by the claimant or spouse from a traditional or Roth style retirement account or plan;
108	108	4.15 (xiii) nontaxable scholarship or fellowship grants;
109	109	4.16 (xiv) alimony received to the extent not included in the recipient's income;
110	110	4.17 (xv) the amount of deduction allowed under section 220 or 223 of the Internal Revenue
111	111	4.18Code;
112	112	4.19 (xvi) the amount deducted for tuition expenses under section 222 of the Internal Revenue
113	113	4.20Code; and
114	114	4.21 (xvii) the amount deducted for certain expenses of elementary and secondary school
115	115	4.22teachers under section 62(a)(2)(D) of the Internal Revenue Code.
116	116	4.23 In the case of an individual who files an income tax return on a fiscal year basis, the
117	117	4.24term "federal adjusted gross income" shall mean federal adjusted gross income reflected in
118	118	4.25the fiscal year ending in the calendar year. Federal adjusted gross income shall not be reduced
119	119	4.26by the amount of a net operating loss carryback or carryforward or a capital loss carryback
120	120	4.27or carryforward allowed for the year.
121	121	4.28 (b) "Income" does not include:
122	122	4.29 (1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
123	123	4.30 (2) amounts of any pension or annuity which was exclusively funded by the claimant
124	124	4.31or spouse and which funding payments were not excluded from federal adjusted gross
125	125	4.32income in the years when the payments were made;
126	126	4Sec. 3.
127	127	25-01097 as introduced12/18/24 REVISOR EAP/RC 5.1 (3) to the extent included in federal adjusted gross income, amounts contributed by the
128	128	5.2claimant or spouse to a traditional or Roth style retirement account or plan, but not to exceed
129	129	5.3the retirement base amount reduced by the amount of contributions excluded from federal
130	130	5.4adjusted gross income, but not less than zero;
131	131	5.5 (4) surplus food or other relief in kind supplied by a governmental agency;
132	132	5.6 (5) relief granted under this chapter;
133	133	5.7 (6) child support payments received under a temporary or final decree of dissolution or
134	134	5.8legal separation;
135	135	5.9 (7) restitution payments received by eligible individuals and excludable interest as
136	136	5.10defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 2001,
137	137	5.11Public Law 107-16;
138	138	5.12 (8) alimony paid; or
139	139	5.13 (9) veterans disability compensation paid under title 38 of the United States Code; or
140	140	5.14 (10) to the extent included in federal adjusted gross income, the amount of discharge of
141	141	5.15indebtedness awarded to the claimant under section 332.74, subdivision 3.
142	142	5.16 (c) The sum of the following amounts may be subtracted from income:
143	143	5.17 (1) for the claimant's first dependent, the exemption amount multiplied by 1.4;
144	144	5.18 (2) for the claimant's second dependent, the exemption amount multiplied by 1.3;
145	145	5.19 (3) for the claimant's third dependent, the exemption amount multiplied by 1.2;
146	146	5.20 (4) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;
147	147	5.21 (5) for the claimant's fifth dependent, the exemption amount; and
148	148	5.22 (6) if the claimant or claimant's spouse had a disability or attained the age of 65 on or
149	149	5.23before December 31 of the year for which the taxes were levied, the exemption amount.
150	150	5.24 (d) For purposes of this subdivision, the following terms have the meanings given:
151	151	5.25 (1) "exemption amount" means the exemption amount under section 290.0121,
152	152	5.26subdivision 1, paragraph (b), for the taxable year for which the income is reported;
153	153	5.27 (2) "retirement base amount" means the deductible amount for the taxable year for the
154	154	5.28claimant and spouse under section 219(b)(5)(A) of the Internal Revenue Code, adjusted for
155	155	5.29inflation as provided in section 219(b)(5)(C) of the Internal Revenue Code, without regard
156	156	5.30to whether the claimant or spouse claimed a deduction; and
157	157	5Sec. 3.
158	158	25-01097 as introduced12/18/24 REVISOR EAP/RC 6.1 (3) "traditional or Roth style retirement account or plan" means retirement plans under
159	159	6.2sections 401, 403, 408, 408A, and 457 of the Internal Revenue Code.
160	160	6.3 EFFECTIVE DATE.This section is effective beginning with property taxes payable
161	161	6.4in 2026.
162	162	6Sec. 3.
163	163	25-01097 as introduced12/18/24 REVISOR EAP/RC