Minneslate Logo

SF1237 (Legislative Session 94 (2025-2026))

Research income and corporate franchise tax credit modification

Related bill: HF173

AI Generated Summary

Senate File No. 1237 is a legislative proposal in Minnesota aimed at modifying the existing research credit under the income and corporate franchise tax laws. The key changes proposed in this bill are:

  1. Qualified Research Expenses (QRE): The definition of QRE is clarified to include only those research expenses and basic research payments as defined by certain sections of the Internal Revenue Code, specifically excluding any research conducted outside Minnesota. Additionally, contributions made to nonprofit corporations that work towards the expansion of business within Minnesota through technological enterprises could qualify as QRE.

  2. Qualified Research: This term is adjusted to exclude any qualified research activities that happen outside the state of Minnesota.

  3. Base Amount Calculation:

    • For taxpayers who are not opting for an alternative simplified credit, the base amount is calculated based on the average annual and total gross receipts, which will only consider sales or receipts from Minnesota.
    • For taxpayers using an alternative simplified credit method, the base amount is set at 50% of the average qualified Minnesota research expenses over the last three tax years.

  4. Tax Liability: Definitions have been provided on how tax liability should be computed, emphasizing dependencies on the unitary business report and accounting for nonrefundable credits.

Overall, the amendments aim to refine the stipulations regarding what constitutes eligible research activities and expenditures, emphasizing support for research and development conducted within the state of Minnesota.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 09, 2025SenateFloorActionIntroduction and first reading
February 09, 2025SenateFloorActionReferred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "A new subdivision addressing taxpayers with alternative simplified credit elections."
      ],
      "removed": [],
      "summary": "This bill modifies the research credit related to income and corporate franchise tax under section 290.068.",
      "modified": [
        "Clarifies definitions and calculations for qualified research expenses, base amount, and liability for tax."
      ]
    },
    "citation": "290.068"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Refers to the calculation of Minnesota sales or receipts for corporate taxation purposes.",
      "modified": [
        "Ensures definitions align with the amendments in section 290.068."
      ]
    },
    "citation": "290.191"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Describes how liability for tax is calculated under subdivisions 1 and 2c.",
      "modified": [
        "Defines liability for tax in relation to nonrefundable credits and combined reporting for unitary business."
      ]
    },
    "citation": "290.06"
  }
]

Sponsors