Section 1 makes a conforming change to remove reference to the “highest” rate of individual income tax rates.
Section 2 modifies the definition of “net income” for individuals to mean the federal taxable income as defined in Internal Revenue Code, plus the amount of the standard deduction or itemized deduction used in determining federal taxable income.
Section 3 limits the add back of the disallowed itemized deductions to taxable year 2011 only. For taxable year 2011 only, also limits the add back for the difference between the standard deduction allowed under section 63(c) of the Internal Revenue Code and the standard deduction allowed for taxable year 2011. These two add backs are “nonconforming” provisions to federal tax law and are effective under current law through tax year 2012. Under this section, Minnesota would continue nonconformity for taxable year 2011 only and would conform beginning in taxable year 2012.
Section 4 makes the following subtractions from federal taxable income:
-
for individuals who itemize on their federal tax return, the amount equal to the charitable contributions deduction as was computed on the federal return;
-
for individuals who itemize on their federal tax return, the amount equal to the home mortgage interest deduction as was computed on the federal return; and
-
a personal income exemption in an amount equal to $30,000 for married individuals filing joint returns, $15,000 for married individuals filing separate returns, $20,530 for unmarried individuals, and $25,260 for unmarried individuals qualifying as head of household.
Section 5 modifies the income tax brackets to reflect a single bracket for individuals at a rate of seven percent. This section maintains the brackets for estates and trusts at current law.
Sections 1 to 5 are effective for taxable years beginning after December 31, 2011.
Section 6 updates the benchmark year for the inflation adjustment for the brackets in the above section. The inflation adjustment would apply only to the brackets for estates and trusts. This section is effective for taxable years beginning after December 31, 2012.
Section 7 requires the Revisor of Statutes to identify and correct internal cross-references affected by changes made to the preceding sections. The changes made under this section are effective for taxable years beginning after December 31, 2011.
SM/NPB:dv
|