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House Research
Bill Summary

FILE NUMBER: H.F. 20, First Special Session		DATE: June 21, 2001
Version: As Introduced		STATUS: Rules and Legislative Administration
Authors: Olson
Subject: Income tax rate reduction and subtraction in personal and dependent exemption
Analyst: Nina Manzi, 651 296-5204

This document can be made available in alternative formats upon request. Please call (651) 296-6753 [voice]; or the Minnesota State Relay Service at 1-800-627-3529 [TTY] for assistance.

Overview

Decreases the individual income tax rates from 5.35, 7.05, and 7.85 percent to 5.25, 6.95, and 7.75 percent in tax year 2001, and to 4.85, 6.55, and 7.35 percent beginning in tax year 2004. Makes a corresponding reduction in the alternative minimum tax rate from 6.4 percent to 6.3 percent in tax year 2001, and to 5.9 percent beginning in tax year 2004.

Allows a subtraction of $1,000 from Minnesota taxable income for each personal and dependent exemption claimed at the federal level. Increases the subtraction amount to $2,200 beginning in tax year 2004.

Section

1 Subtraction for personal and dependent exemptions. Allows a subtraction from Minnesota taxable income for each personal and dependent exemption a taxpayer claimed at the federal level. The subtraction amount equals $1,000 for tax years 2001 to 2003, and increases to $2,200 in tax year 2004. Directs the commissioner to adjust the subtraction amount annually for inflation beginning in 2005. The tax benefit of each subtraction claimed would be:

for filers in the 5.25% bracket, $52.5 in tax years 2001 to 2003, increasing to $107 in tax year 2004, when the rate decreases to 4.85%;

for filers in the 6.95% bracket, $69.5 in tax years 2001 to 2003, increasing to $144 in tax year 2004, when the rate decreases to 6.55%;

for filers in the 7.75% bracket, $77.5 in tax years 2001 to 2003, increasing to $162 in tax year 2004, when the rate decreases to 7.35%

2 Income tax rates. Makes changes in the individual income tax rates:

the 5.35% rate is decreased to 5.25% in tax year 2001, and to 4.85% in tax year 2004;

the 7.05% rate is decreased to 6.95% in tax year 2001, and to 6.55% in tax year 2004;

the 7.85% rate is decreased to 7.75% in tax year 2001, and to 7.35% in tax year 2004.

3 AMT rate. Reduces the alternative minimum tax (AMT) rate from 6.4% to 6.3% in tax year 2001, and to 5.9% in tax year 2004.

4 Tentative minimum tax. Makes a conforming change in the definition of tentative minimum tax to reflect the change in the AMT rate.

5 AMT credit. Makes a conforming change in the AMT credit to reflect the change in the AMT rate.

Section
1	Subtraction for personal and dependent exemptions. Allows a subtraction from Minnesota taxable income for each personal and dependent exemption a taxpayer claimed at the federal level. The subtraction amount equals $1,000 for tax years 2001 to 2003, and increases to $2,200 in tax year 2004. Directs the commissioner to adjust the subtraction amount annually for inflation beginning in 2005. The tax benefit of each subtraction claimed would be:
	for filers in the 5.25% bracket, $52.5 in tax years 2001 to 2003, increasing to $107 in tax year 2004, when the rate decreases to 4.85%;
	for filers in the 6.95% bracket, $69.5 in tax years 2001 to 2003, increasing to $144 in tax year 2004, when the rate decreases to 6.55%;
	for filers in the 7.75% bracket, $77.5 in tax years 2001 to 2003, increasing to $162 in tax year 2004, when the rate decreases to 7.35%
2	Income tax rates. Makes changes in the individual income tax rates:
	the 5.35% rate is decreased to 5.25% in tax year 2001, and to 4.85% in tax year 2004;
	the 7.05% rate is decreased to 6.95% in tax year 2001, and to 6.55% in tax year 2004;
	the 7.85% rate is decreased to 7.75% in tax year 2001, and to 7.35% in tax year 2004.
3	AMT rate. Reduces the alternative minimum tax (AMT) rate from 6.4% to 6.3% in tax year 2001, and to 5.9% in tax year 2004.
4	Tentative minimum tax. Makes a conforming change in the definition of tentative minimum tax to reflect the change in the AMT rate.
5	AMT credit. Makes a conforming change in the AMT credit to reflect the change in the AMT rate.

House Research Bill Summary

House Research
Bill Summary