1.1                          A bill for an act
  1.2             relating to income taxation; providing for a state 
  1.3             working family credit; amending Minnesota Statutes 
  1.4             1996, section 290.0671, by adding subdivisions; 
  1.5             Minnesota Statutes 1997 Supplement, section 290.0671, 
  1.6             subdivision 1. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1997 Supplement, section 
  1.9   290.0671, subdivision 1, is amended to read: 
  1.10     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
  1.11  a credit against the tax imposed by this chapter equal to a 
  1.12  percentage of ~~the credit for which the individual is~~ 
  1.13  ~~eligible~~ earned income.  To receive a credit, a taxpayer must be 
  1.14  eligible for a credit under section 32 of the Internal Revenue 
  1.15  Code.  ~~The percentage is 15 for individuals without a qualifying~~ 
  1.16  ~~child, and 25 for individuals with at least one qualifying~~ 
  1.17  ~~child.  For purposes of this section, "qualifying child" has the~~ 
  1.18  ~~meaning given in section 32(c)(3) of the Internal Revenue Code.~~ 
  1.19     (a) For individuals with no qualifying children, the credit 
  1.20  equals .. percent of the first $....... of earned income, and .. 
  1.21  percent of earned income from $....... to $........  The credit 
  1.22  is reduced by .. percent of earned income or modified adjusted 
  1.23  gross income, whichever is greater, in excess of $......., but 
  1.24  in no case is the credit less than zero. 
  1.25     (b) For individuals with one qualifying child, the credit 
  1.26  equals .. percent of the first $....... of earned income, and .. 
  2.1   percent of earned income from $....... to $........  The credit 
  2.2   is reduced by .. percent of earned income or modified adjusted 
  2.3   gross income, whichever is greater, in excess of $......., but 
  2.4   in no case is the credit less than zero. 
  2.5      (c) For individuals with two or more qualifying children, 
  2.6   the credit equals .. percent of the first $....... of earned 
  2.7   income, and .. percent of earned income from $....... to 
  2.8   $........  The credit is reduced by .. percent of earned income 
  2.9   or modified adjusted gross income, whichever is greater, in 
  2.10  excess of $......., but in no case is the credit less than zero. 
  2.11     For a nonresident or part-year resident, the credit 
  2.12  determined under section 32 of the Internal Revenue Code must be 
  2.13  allocated based on the percentage calculated under section 
  2.14  290.06, subdivision 2c, paragraph (e). 
  2.15     For a person who was a resident for the entire tax year and 
  2.16  has earned income not subject to tax under this chapter, the 
  2.17  credit must be allocated based on the ratio of federal adjusted 
  2.18  gross income reduced by the earned income not subject to tax 
  2.19  under this chapter over federal adjusted gross income. 
  2.20     Sec. 2.  Minnesota Statutes 1996, section 290.0671, is 
  2.21  amended by adding a subdivision to read: 
  2.22     Subd. 1a.  [DEFINITIONS.] For purposes of this section, the 
  2.23  terms "qualifying child," "earned income," and "modified 
  2.24  adjusted gross income" have the meanings given in section 32(c) 
  2.25  of the Internal Revenue Code. 
  2.26     Sec. 3.  Minnesota Statutes 1996, section 290.0671, is 
  2.27  amended by adding a subdivision to read: 
  2.28     Subd. 7.  [INFLATION ADJUSTMENT.] The earned income amounts 
  2.29  used to calculate the credit and the income thresholds at which 
  2.30  the maximum credit begins to be reduced in subdivision 1 must be 
  2.31  adjusted for inflation.  The commissioner shall adjust the 
  2.32  earned income and threshold amounts by the percentage determined 
  2.33  under section 290.06, subdivision 2d, for the taxable year. 
  2.34     Sec. 4.  [EFFECTIVE DATE.] 
  2.35     Sections 1 and 2 are effective for tax years beginning 
  2.36  after December 31, 1997.  Section 3 is effective for tax years 
  3.1   beginning after December 31, 1998.