SF4622

Purpose

The bill aims to align Minnesota’s individual income tax rules with federal tax rules. It does this by redefining what is considered the Internal Revenue Code for Minnesota tax purposes and by including the federal exclusion from gross income for employer contributions to certain accounts (referred to in the bill text as “Trump accounts”). This helps Minnesota follow federal treatment when calculating how much of an employee’s income is taxed.

Main Provisions

• Amends Minnesota Statutes 2024, section 290.01, subdivision 31, to define Internal Revenue Code (IRC) as:
  • The Internal Revenue Code of 1986 as amended through May 1, 2023.
  • It also includes section 70204 of Public Law 119-21.
  • It includes any uncodified federal provisions related to IRC provisions that are incorporated into Minnesota law.
• Specifically, it adds the federal exclusion from gross income for employer contributions to “Trump accounts” as part of the Internal Revenue Code reference used in Minnesota law.

Significant Changes to Existing Law

• Conforms Minnesota’s tax code treatment to federal rules by updating the IRC definition used for Minnesota income tax purposes.
• Expands Minnesota’s law to recognize the federal exclusion from gross income for employer contributions to the specified accounts, potentially affecting how employer contributions are taxed for Minnesota residents.
• Includes uncodified federal provisions related to the IRC in the Minnesota definition, broadening the scope of what is treated as part of federal tax law for Minnesota.

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Relevant Terms Internal Revenue Code; Minnesota Statutes 2024; section 290.01; subdivision 31; Subd. 31; Internal Revenue Code means; May 1, 2023; uncodified provision; Public Law 11921; section 70204; exclusion from gross income; employer contributions; Trump accounts; employer contributions to Trump accounts; conformity with federal tax law.