HF5034

Purpose

• Create a new tax credit to encourage private donations to organizations that operate women’s pregnancy centers. The credit reduces state taxes for taxpayers who contribute to these centers, with the goal of supporting services that provide information, referrals, and support to pregnant women to carry pregnancies to term and care for their children after birth.

Main Provisions

• Credit amount and limit
  • Taxpayers can receive a credit equal to their contributions to a women’s pregnancy center, up to $50,000 per taxpayer.
• Carryforward and usage
  • If the credit exceeds the taxpayer’s tax liability for a year, the unused portion can be carried forward to the next year. The excess must be applied first to the next year, and the total unused credit cannot exceed the taxpayer’s remaining tax liability after applying the current year’s credit.
• Interaction with other credits
  • A taxpayer cannot claim this credit for the same contribution if they claim a separate credit under Minnesota Statutes section 297I.20 subdivision 8 for the same contribution.
• Definition of eligible center
  • A “women’s pregnancy center” is an organization that provides information, referrals, and support to encourage and assist pregnant women in carrying their pregnancies to term and in caring for their children after birth.
• What counts as a contribution
  • A contribution is a charitable donation that would be deductible under the federal Internal Revenue Code (IRC) section 170. The bill also references special treatment related to deductions under IRC section 408(d)(8), with a note that IRC section 170(b)(1)(G) applies regardless of the taxable year.
• Deduction-related limitations
  • The credit cannot be claimed for any amount that would be used to claim certain state itemized deductions or subtractions (specifically the itemized deduction under a state provision and a particular subtraction provision).
• Nonresidents and part-year residents
  • For nonresidents or part-year residents, the credit must be allocated using a percentage specified in state law.
• Pass-through entities
  • For partnerships, LLCs taxed as partnerships, S corporations, and multi-owner entities, the credit is passed through to the individual owners (partners, members, or shareholders) pro rata based on their share, or per any special allocation in governing documents or other agreements, as of the last day of the tax year.
• Administration and reporting
  • The state tax commissioner, in consultation with the state health commissioner, must maintain a list of qualifying women’s pregnancy centers eligible for the credit.

Significant Changes to Existing Law

• Establishes a new state tax credit program (inserted into the tax code) for contributions to women’s pregnancy centers, expanding the set of credits available to Minnesota taxpayers.
• Requires ongoing administrative oversight, including a formal list of eligible centers and cross-references with existing tax provisions and credits.
• Introduces specific rules for how the credit interacts with nonresident taxation, pass-through entities, and existing deductions, creating new compliance considerations for individuals and businesses.

Practical Effects

• Taxpayers who donate to qualifying women’s pregnancy centers could receive a direct reduction of their Minnesota tax bill, up to $50,000 per year.
• The measure may encourage more charitable giving to these centers, while also altering how some contributions affect federal deduction rules and Minnesota-specific deductions.

Relevant Terms - tax credit - contributions/charitable contributions - women’s pregnancy centers - up to $50,000 per taxpayer - carryforward - nonresident/part-year resident allocation - pass-through entities (partnerships, LLCs taxed as partnerships, S corporations) - list of qualifying centers - Minnesota tax credit interaction with other credits (297I.20) - itemized deduction (state) and subtraction provisions (290.0122(4), 290.0132(7)) - Internal Revenue Code references (IRC section 170, IRC 408(d)(8), and 170(b)(1)(G))