Purpose of the Bill

The bill aims to amend Minnesota taxation laws to provide a financial benefit for financial institutions, specifically those structured as S corporations, by allowing them to reduce their taxable income under certain conditions. This is part of an effort to encourage lending to small businesses and agricultural enterprises.

Main Provisions

• Income Reduction: Financial institutions that are categorized as S corporations can subtract the income generated from certain commercial loans from their taxable income.
• Eligibility Criteria:
  • The loan's principal amount must not exceed $5,000,000.
  • The borrower must reside in or be located within Minnesota.
  • The loan must be used for business or agricultural purposes.

Significant Changes to Existing Law

• The bill amends the Minnesota Statutes by adding new subdivisions to the sections dealing with individual income and corporate franchise taxes, specifically sections 290.0132 and 290.0134.
• It introduces a mechanism for financial institutions to benefit from tax subtractions when they issue qualifying commercial loans to businesses or agricultural operations within Minnesota.

Relevant Terms

commercial loans, financial institutions, S corporation, taxable income, business loan, agricultural loan, Minnesota Statutes, tax subtraction.