Purpose of the Bill

This bill aims to provide a financial incentive for public postsecondary educational institutions in Minnesota that receive federal funding from the National Institutes of Health (NIH). It introduces a new refundable tax credit to support these institutions' continued contribution to higher education and research fields.

Main Provisions

• Eligibility for Credit: The bill specifies that eligible institutions are defined as public postsecondary educational institutions, aligning with criteria detailed in an existing Minnesota statute.

• Credit Calculation: Institutions are allowed a tax credit that equals 25% of the total NIH grant funding they receive within a taxable year. This is particularly intended to enhance the institution's financial position by effectively reducing their tax liability through the credits associated with NIH-funded research activities.

• Refundable Credit: If an institution's tax credit surpasses their total tax liability, they will receive a refund for the excess amount. This means that institutions can benefit from the credit even if they do not owe taxes, enhancing the support they receive for research initiatives through direct financial reimbursements.

• Appropriation and Claiming Process: The bill mandates that the state’s general fund will automatically allocate sufficient funds to cover these tax refunds. Additionally, the method for claiming this credit is to be determined by the tax commissioner, potentially necessitating separate claims processing to streamline refunds.

Significant Changes to Existing Law

The bill introduces a novel credit scheme that specifically targets public postsecondary educational institutions receiving federal NIH grants. Before this bill, no specific tax credit existed under Minnesota law for these types of institutions based on NIH funding. This change demonstrates a legislative effort to bolster research at state universities by providing financial reprieves linked to federal grant awards.

Relevant Terms

• National Institutes of Health (NIH)
• Tax Credit
• Refundable Credit
• Public Postsecondary Educational Institutions
• General Fund
• Tax Liability