The proposed bill aims to modify the tax code in Minnesota, specifically focusing on the research credit for income and corporate franchise taxes. It revises definitions related to the types of research expenses that qualify for this credit. Key changes include:

1. Qualified Research Expenses: These are defined as expenses related to qualified research and basic research payments as per specific sections of the Internal Revenue Code, but with the stipulation that the research must be conducted within Minnesota. Expenses for research conducted outside of Minnesota are excluded. Additionally, contributions to nonprofit corporations that support the growth of small, technologically innovative businesses in Minnesota can also be counted as qualified research expenses.

2. Qualified Research: The definition follows the Internal Revenue Code but is specifically limited to research conducted within Minnesota.

3. Base Amount: This term is redefined for tax calculation purposes:

   • For most taxpayers, it's based on average gross receipts calculated from Minnesota sales.
   • For those opting for an alternative simplified credit, it is 50% of their average qualified Minnesota research expenses over the previous three years.

4. Liability for Tax: This involves calculating the sum of the tax imposed under specific sections of Minnesota statutes after subtracting the sum of allowed nonrefundable credits for entities within a combined report of a unitary business.

The bill is primarily targeted at promoting research and development within Minnesota by offering tax incentives for local research activities and supporting small technology-oriented businesses in their early stages through nonprofit entities.