HF1958

Purpose of the Bill

The purpose of this bill is to modify the individual income tax rates and brackets in the state of Minnesota, impacting tax calculations for married couples, unmarried individuals, and heads of households.

Main Provisions

• Married Individuals Filing Joint Returns: The revised tax brackets and rates are adjusted with updated income thresholds for different tax rates, ranging from 5.35% on lower incomes to 12.45% on incomes over $500,000.
• Unmarried Individuals: Similar adjustments are made with different income thresholds, applying tax rates from 5.35% to 12.45%.
• Heads of Households: Adjusted tax brackets and rates from 5.35% to 12.45% are applied, with income thresholds specific for heads of household.
• Nonresident Individuals: Tax calculation modifications for individuals who are not Minnesota residents for the entire year, where taxes are determined based on Minnesota source income compared to federal adjusted gross income.
• Tax Tables: For taxpayers with incomes below a certain threshold, the tax will be computed using tax tables prepared by the commissioner of revenue, with consideration for fractional dollar amounts.
• Special Provisions for Qualifying Entities: Special computation rules apply for nonresident individuals who are owners of qualifying entities electing specific tax treatments.

Significant Changes to Existing Law

This bill updates the income thresholds and rates for each tax bracket, thus changing how taxes are computed for various types of taxpayers in Minnesota. It also includes specific provisions for nonresident taxpayers and those associated with certain entities, aiming for more precise tax liability determinations based on Minnesota source income.

Relevant Terms

• Income tax rates
• Tax brackets
• Married filing jointly
• Unmarried individuals
• Heads of households
• Minnesota source income
• Nonresident taxpayers
• Qualifying entities