1.1 	A bill for an act
1.2 	relating to the military; providing for special
1.3 	"Support Our Troops" plates; establishing an account;
1.4 	providing funding for certain National Guard incentive
1.5 	programs; providing funding for a World War II
1.6 	veterans memorial and the maintenance and improvement
1.7 	of veterans homes; providing certain income tax
1.8 	benefits; appropriating money; amending Minnesota
1.9 	Statutes 2004, sections 290.01, subdivisions 7, 19,
1.10 	19b; 290.06, subdivision 2c; proposing coding for new
1.11 	law in Minnesota Statutes, chapters 168; 190.
1.12 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.13 	ARTICLE 1
1.14 	LICENSE PLATES

1.15 	Section 1. [168.1298] SPECIAL "SUPPORT OUR TROOPS"
1.16 	LICENSE PLATES.
1.17 		Subdivision 1.General requirements and procedures. (a)
1.18 	The commissioner shall issue special "Support Our Troops"
1.19 	license plates to an applicant who:
1.20 	(1) is an owner of a passenger automobile, one-ton pickup
1.21 	truck, recreational vehicle, or motorcycle;
1.22 	(2) pays a fee of $10 to cover the costs of handling and
1.23 	manufacturing the plates;
1.24 	(3) pays the registration tax required under section
1.25 	168.013;
1.26 	(4) pays the fees required under this chapter;
1.27 	(5) contributes a minimum of $30 annually to the Minnesota
1.28 	"Support Our Troops" private sector matching account established
2.1 	in section 190.19; and 
2.2 	(6) complies with laws and rules governing registration and
2.3 	licensing of vehicles and drivers.
2.4 	(b) The license application under this section must
2.5 	indicate that the annual contribution specified under paragraph
2.6 	(a), clause (5), is a minimum contribution to receive the plate
2.7 	and that the applicant may make an additional contribution to
2.8 	the account.
2.9 		Subd. 2.Design. After consultation with interested
2.10 	groups, the adjutant general and the commissioner of veterans
2.11 	affairs shall design the special plate, subject to the approval
2.12 	of the commissioner.
2.13 		Subd. 3.No refund. Contributions under this section
2.14 	must not be refunded.
2.15 		Subd. 4.Plate transfers. Notwithstanding section
2.16 	168.12, subdivision 1, on payment of a transfer fee of $5,
2.17 	plates issued under this section may be transferred to another
2.18 	passenger automobile, one-ton pickup truck, recreational
2.19 	vehicle, or motorcycle owned by the individual to whom the
2.20 	special plates were issued.
2.21 		Subd. 5.Contribution and fees credited. Contributions
2.22 	under subdivision 1, paragraph (a), clause (5), must be paid to
2.23 	the commissioner and credited to the Minnesota "Support Our
2.24 	Troops" private sector matching account established in section
2.25 	190.19.  The fees collected under this section must be deposited
2.26 	in the vehicle services operating account in the special revenue
2.27 	fund.
2.28 		Subd. 6.Record. The commissioner shall maintain a
2.29 	record of the number of plates issued under this section.

2.30 	Sec. 2. [190.19] MINNESOTA "SUPPORT OUR TROOPS" PRIVATE
2.31 	SECTOR MATCHING ACCOUNT.
2.32 		Subdivision 1.Establishment. The Minnesota "Support Our
2.33 	Troops" private sector matching account is established in the
2.34 	state treasury.  The account shall consist of contributions from
2.35 	private sources and appropriations.
2.36 		Subd. 2.Appropriations must be matched by private
3.1 	funds. Appropriations transferred to the "Support Our Troops"
3.2 	private sector matching account and money credited to the
3.3 	account under section 168.1298, subdivision 5, may be expended
3.4 	only to the extent that they are matched equally with
3.5 	contributions to the account from private sources.
3.6 	Appropriations transferred to the account that are not matched
3.7 	within three years from the date of the appropriation must
3.8 	cancel to the source of the appropriation.
3.9 		Subd. 3.Management. The "Support Our Troops" private
3.10 	sector matching account must be managed to earn the highest
3.11 	interest compatible with prudent investment, preservation of
3.12 	principal, and reasonable liquidity.  Unless an appropriation to
3.13 	the account reverts to its original source under subdivision 2,
3.14 	the principal and interest in the account remain in the account
3.15 	until expended as provided in this section.
3.16 		Subd. 4.Pledges and contributions. The adjutant general
3.17 	may accept contributions and pledges to the "Support Our Troops"
3.18 	private sector matching account.  A pledge that is made
3.19 	contingent on an appropriation is acceptable and shall be
3.20 	reported with other pledges as required in this section.  In the
3.21 	budget request for each biennium, the adjutant general shall
3.22 	report the balance of contributions in the account and the
3.23 	amount that has been pledged for payment in the succeeding two
3.24 	calendar years.
3.25 	Money in the account is appropriated to the adjutant
3.26 	general only for the purposes of alleviating financial hardships
3.27 	faced by:
3.28 	(1) a member of the Minnesota National Guard or a reserve
3.29 	unit based in Minnesota who has been called to active duty or
3.30 	active state service;
3.31 	(2) a Minnesota resident who is a member of a military
3.32 	reserve unit not based in Minnesota, if the member is called to
3.33 	active duty;
3.34 	(3) any other Minnesota resident performing active duty
3.35 	service for any branch of the military of the United States; and 
3.36 	(4) members of the immediate family of an individual
4.1 	identified in clause (1), (2), or (3).  For purposes of this
4.2 	clause, "immediate family" means the individual's spouse and
4.3 	minor children and, if they are dependents of the member of the
4.4 	military, the member's parents, grandparents, siblings,
4.5 	stepchildren, and adult children.

4.6 	ARTICLE 2
4.7 	NATIONAL GUARD FUNDING

4.8 	Section 1. APPROPRIATION.
 4.9 	(a) $3,850,000 is appropriated in fiscal year 2006 and
4.10 	$3,850,000 is appropriated in fiscal year 2007 from the general
4.11 	fund to the adjutant general to provide the additional amount
4.12 	necessary for full funding of the tuition reimbursement program
4.13 	in Minnesota Statutes, section 192.501, subdivision 2.
4.14 	(b) $1,500,000 is appropriated in fiscal year 2006 and
4.15 	$1,500,000 is appropriated in fiscal year 2007 from the general
4.16 	fund to the adjutant general to provide for reenlistment bonuses
4.17 	under Minnesota Statutes, section 192.501, subdivision 1b.

4.18 	ARTICLE 3
4.19 	BONDING

4.20 	Section 1. APPROPRIATION.
 4.21 	(a) $670,000 is appropriated from the bond proceeds fund to
4.22 	the commissioner of administration for the construction of a
4.23 	World War II veterans memorial on the Capitol Mall.  The design
4.24 	is subject to approval by the Capitol Area Architectural and
4.25 	Planning Board.
4.26 	(b) $6,282,000 is appropriated from the bond proceeds fund
4.27 	to the Veterans Homes Board for the maintenance and improvement
4.28 	of Minnesota's veterans homes, including $6,000,000 for asset
4.29 	preservation and $282,000 for the Luverne Veterans Home dementia
4.30 	unit common area.

4.31 	Sec. 2. BOND SALE.
 4.32 	To provide the money appropriated in this act from the bond
4.33 	proceeds fund, the commissioner of finance shall sell and issue
4.34 	bonds of the state in an amount up to $6,952,000 in the manner,
4.35 	upon the terms, and with the effect prescribed by Minnesota
4.36 	Statutes, sections 16A.631 to 16A.675, and by the Minnesota
5.1 	Constitution, article XI, sections 4 to 7.

5.2 	Sec. 3. EFFECTIVE DATE.
 5.3 	Sections 1 and 2 are effective the day following final
5.4 	enactment.

5.5 	ARTICLE 4
5.6 	INCOME TAX

5.7 	Section 1. Minnesota Statutes 2004, section 290.01,
5.8 	subdivision 7, is amended to read:
5.9 		Subd. 7.Resident.  (a) The term "resident" means any
5.10 	individual domiciled in Minnesota, except that an individual is
5.11 	not a "resident" for the period of time that the individual is
5.12 	either:
5.13 	(1) ~~on~~ in active ~~duty stationed outside of Minnesota while~~
5.14 	~~in~~ service as defined in section 190.05, subdivision 5, as a
5.15 	member of the armed forces of the United States ~~or~~ ,the United
5.16 	Nations, or the Minnesota National Guard; or
5.17 	(2) a "qualified individual" as defined in section
5.18 	911(d)(1) of the Internal Revenue Code, if the qualified
5.19 	individual notifies the county within three months of moving out
5.20 	of the country that homestead status be revoked for the
5.21 	Minnesota residence of the qualified individual, and the
5.22 	property is not classified as a homestead while the individual
5.23 	remains a qualified individual.
5.24 	(b) "Resident" also means any individual domiciled outside
5.25 	the state who maintains a place of abode in the state and spends
5.26 	in the aggregate more than one-half of the tax year in
5.27 	Minnesota, unless:
5.28 	(1) the individual or the spouse of the individual is in
5.29 	the armed forces of the United States; or
5.30 	(2) the individual is covered under the reciprocity
5.31 	provisions in section 290.081.
5.32 	For purposes of this subdivision, presence within the state
5.33 	for any part of a calendar day constitutes a day spent in the
5.34 	state.  Individuals shall keep adequate records to substantiate
5.35 	the days spent outside the state.
5.36 	The term "abode" means a dwelling maintained by an
6.1 	individual, whether or not owned by the individual and whether
6.2 	or not occupied by the individual, and includes a dwelling place
6.3 	owned or leased by the individual's spouse.
6.4 	(c) Neither the commissioner nor any court shall consider
6.5 	charitable contributions made by an individual within or without
6.6 	the state in determining if the individual is domiciled in
6.7 	Minnesota.
6.8 	
EFFECTIVE DATE. This section is effective for taxable
6.9 	years beginning after December 31, 2004.

6.10 	Sec. 2. Minnesota Statutes 2004, section 290.01,
6.11 	subdivision 19, is amended to read:
6.12 		Subd. 19.Net income.  The term "net income" means the
6.13 	federal taxable income, as defined in section 63 of the Internal
6.14 	Revenue Code of 1986, as amended through the date named in this
6.15 	subdivision, incorporating any elections made by the taxpayer in
6.16 	accordance with the Internal Revenue Code in determining federal
6.17 	taxable income for federal income tax purposes, and with the
6.18 	modifications provided in subdivisions 19a to 19f.
6.19 	In the case of a regulated investment company or a fund
6.20 	thereof, as defined in section 851(a) or 851(g) of the Internal
6.21 	Revenue Code, federal taxable income means investment company
6.22 	taxable income as defined in section 852(b)(2) of the Internal
6.23 	Revenue Code, except that:
6.24 	(1) the exclusion of net capital gain provided in section
6.25 	852(b)(2)(A) of the Internal Revenue Code does not apply;
6.26 	(2) the deduction for dividends paid under section
6.27 	852(b)(2)(D) of the Internal Revenue Code must be applied by
6.28 	allowing a deduction for capital gain dividends and
6.29 	exempt-interest dividends as defined in sections 852(b)(3)(C)
6.30 	and 852(b)(5) of the Internal Revenue Code; and
6.31 	(3) the deduction for dividends paid must also be applied
6.32 	in the amount of any undistributed capital gains which the
6.33 	regulated investment company elects to have treated as provided
6.34 	in section 852(b)(3)(D) of the Internal Revenue Code.
6.35 	The net income of a real estate investment trust as defined
6.36 	and limited by section 856(a), (b), and (c) of the Internal
7.1 	Revenue Code means the real estate investment trust taxable
7.2 	income as defined in section 857(b)(2) of the Internal Revenue
7.3 	Code.
7.4 	The net income of a designated settlement fund as defined
7.5 	in section 468B(d) of the Internal Revenue Code means the gross
7.6 	income as defined in section 468B(b) of the Internal Revenue
7.7 	Code.
7.8 	The provisions of sections 1113(a), 1117, 1206(a), 1313(a),
7.9 	1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612,
7.10 	1616, 1617, 1704(l), and 1704(m) of the Small Business Job
7.11 	Protection Act, Public Law 104-188, the provisions of Public Law
7.12 	104-117, the provisions of sections 313(a) and (b)(1), 602(a),
7.13 	913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013,
7.14 	1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b)
7.15 	and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and
7.16 	1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law
7.17 	105-34, the provisions of section 6010 of the Internal Revenue
7.18 	Service Restructuring and Reform Act of 1998, Public Law
7.19 	105-206, the provisions of section 4003 of the Omnibus
7.20 	Consolidated and Emergency Supplemental Appropriations Act,
7.21 	1999, Public Law 105-277, and the provisions of section 318 of
7.22 	the Consolidated Appropriation Act of 2001, Public Law 106-554,
7.23 	shall become effective at the time they become effective for
7.24 	federal purposes.
7.25 	The Internal Revenue Code of 1986, as amended through
7.26 	December 31, 1996, shall be in effect for taxable years
7.27 	beginning after December 31, 1996.
7.28 	The provisions of sections 202(a) and (b), 221(a), 225,
7.29 	312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and
7.30 	(c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306,
7.31 	1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528,
7.32 	1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e)
7.33 	of the Taxpayer Relief Act of 1997, Public Law 105-34, the
7.34 	provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002,
7.35 	and 7003 of the Internal Revenue Service Restructuring and
7.36 	Reform Act of 1998, Public Law 105-206, the provisions of
8.1 	section 3001 of the Omnibus Consolidated and Emergency
8.2 	Supplemental Appropriations Act, 1999, Public Law 105-277, the
8.3 	provisions of section 3001 of the Miscellaneous Trade and
8.4 	Technical Corrections Act of 1999, Public Law 106-36, ~~and~~ the
8.5 	provisions of section 316 of the Consolidated Appropriation Act
8.6 	of 2001, Public Law 106-554, and the provision of section 101 of
8.7 	the Military Family Tax Relief Act of 2003, Public Law 108-121,
8.8 	shall become effective at the time they become effective for
8.9 	federal purposes.
8.10 	The Internal Revenue Code of 1986, as amended through
8.11 	December 31, 1997, shall be in effect for taxable years
8.12 	beginning after December 31, 1997.
8.13 	The provisions of sections 5002, 6009, 6011, and 7001 of
8.14 	the Internal Revenue Service Restructuring and Reform Act of
8.15 	1998, Public Law 105-206, the provisions of section 9010 of the
8.16 	Transportation Equity Act for the 21st Century, Public Law
8.17 	105-178, the provisions of sections 1004, 4002, and 5301 of the
8.18 	Omnibus Consolidation and Emergency Supplemental Appropriations
8.19 	Act, 1999, Public Law 105-277, the provision of section 303 of
8.20 	the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law
8.21 	105-369, the provisions of sections 532, 534, 536, 537, and 538
8.22 	of the Ticket to Work and Work Incentives Improvement Act of
8.23 	1999, Public Law 106-170, the provisions of the Installment Tax
8.24 	Correction Act of 2000, Public Law 106-573, and the provisions
8.25 	of section 309 of the Consolidated Appropriation Act of 2001,
8.26 	Public Law 106-554, shall become effective at the time they
8.27 	become effective for federal purposes.
8.28 	The Internal Revenue Code of 1986, as amended through
8.29 	December 31, 1998, shall be in effect for taxable years
8.30 	beginning after December 31, 1998.
8.31 	The provisions of the FSC Repeal and Extraterritorial
8.32 	Income Exclusion Act of 2000, Public Law 106-519, and the
8.33 	provision of section 412 of the Job Creation and Worker
8.34 	Assistance Act of 2002, Public Law 107-147, shall become
8.35 	effective at the time it became effective for federal purposes.
8.36 	The Internal Revenue Code of 1986, as amended through
9.1 	December 31, 1999, shall be in effect for taxable years
9.2 	beginning after December 31, 1999.  The provisions of sections
9.3 	306 and 401 of the Consolidated Appropriation Act of 2001,
9.4 	Public Law 106-554, and the provision of section 632(b)(2)(A) of
9.5 	the Economic Growth and Tax Relief Reconciliation Act of 2001,
9.6 	Public Law 107-16, and provisions of sections 101 and 402 of the
9.7 	Job Creation and Worker Assistance Act of 2002, Public Law
9.8 	107-147, shall become effective at the same time it became
9.9 	effective for federal purposes.
9.10 	The Internal Revenue Code of 1986, as amended through
9.11 	December 31, 2000, shall be in effect for taxable years
9.12 	beginning after December 31, 2000.  The provisions of sections
9.13 	659a and 671 of the Economic Growth and Tax Relief
9.14 	Reconciliation Act of 2001, Public Law 107-16, the provisions of
9.15 	sections 104, 105, and 111 of the Victims of Terrorism Tax
9.16 	Relief Act of 2001, Public Law 107-134, ~~and~~ the provisions of
9.17 	sections 201, 403, 413, and 606 of the Job Creation and Worker
9.18 	Assistance Act of 2002, Public Law 107-147, and the provision of
9.19 	section 102 of the Military Family Tax Relief Act of 2003,
9.20 	Public Law 108-121,shall become effective at the same time it
9.21 	became effective for federal purposes.
9.22 	The Internal Revenue Code of 1986, as amended through March
9.23 	15, 2002, shall be in effect for taxable years beginning after
9.24 	December 31, 2001.
9.25 	The provisions of sections 101 and 102 of the Victims of
9.26 	Terrorism Tax Relief Act of 2001, Public Law 107-134, shall
9.27 	become effective at the same time it becomes effective for
9.28 	federal purposes.
9.29 	The Internal Revenue Code of 1986, as amended through June
9.30 	15, 2003, shall be in effect for taxable years beginning after
9.31 	December 31, 2002.  The provisions of section 201 of the Jobs
9.32 	and Growth Tax Relief and Reconciliation Act of 2003, ~~H.R. 2, if~~
9.33 	~~it is enacted into law~~ Public Law 108-27, and the provisions of
9.34 	sections 103, 106, 108, 109, and 110 of the Military Family Tax
9.35 	Relief Act of 2003, Public Law 108-121, are effective at the
9.36 	same time it became effective for federal purposes.
10.1 	The Internal Revenue Code of 1986, as amended through April
10.2 	10, 2004, shall be in effect for taxable years beginning after
10.3 	December 31, 2003.
10.4 	Except as otherwise provided, references to the Internal
10.5 	Revenue Code in subdivisions 19a to 19g mean the code in effect
10.6 	for purposes of determining net income for the applicable year.
10.7 	
EFFECTIVE DATE. This section is effective the day
10.8 	following final enactment.

10.9 	Sec. 3. Minnesota Statutes 2004, section 290.01,
10.10 	subdivision 19b, is amended to read:
10.11 		Subd. 19b.Subtractions from federal taxable income.  For
10.12 	individuals, estates, and trusts, there shall be subtracted from
10.13 	federal taxable income:
10.14 	(1) interest income on obligations of any authority,
10.15 	commission, or instrumentality of the United States to the
10.16 	extent includable in taxable income for federal income tax
10.17 	purposes but exempt from state income tax under the laws of the
10.18 	United States;
10.19 	(2) if included in federal taxable income, the amount of
10.20 	any overpayment of income tax to Minnesota or to any other
10.21 	state, for any previous taxable year, whether the amount is
10.22 	received as a refund or as a credit to another taxable year's
10.23 	income tax liability;
10.24 	(3) the amount paid to others, less the amount used to
10.25 	claim the credit allowed under section 290.0674, not to exceed
10.26 	$1,625 for each qualifying child in grades kindergarten to 6 and
10.27 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
10.28 	textbooks, and transportation of each qualifying child in
10.29 	attending an elementary or secondary school situated in
10.30 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
10.31 	wherein a resident of this state may legally fulfill the state's
10.32 	compulsory attendance laws, which is not operated for profit,
10.33 	and which adheres to the provisions of the Civil Rights Act of
10.34 	1964 and chapter 363A.  For the purposes of this clause,
10.35 	"tuition" includes fees or tuition as defined in section
10.36 	290.0674, subdivision 1, clause (1).  As used in this clause,
11.1 	"textbooks" includes books and other instructional materials and
11.2 	equipment purchased or leased for use in elementary and
11.3 	secondary schools in teaching only those subjects legally and
11.4 	commonly taught in public elementary and secondary schools in
11.5 	this state.  Equipment expenses qualifying for deduction
11.6 	includes expenses as defined and limited in section 290.0674,
11.7 	subdivision 1, clause (3).  "Textbooks" does not include
11.8 	instructional books and materials used in the teaching of
11.9 	religious tenets, doctrines, or worship, the purpose of which is
11.10 	to instill such tenets, doctrines, or worship, nor does it
11.11 	include books or materials for, or transportation to,
11.12 	extracurricular activities including sporting events, musical or
11.13 	dramatic events, speech activities, driver's education, or
11.14 	similar programs.  For purposes of the subtraction provided by
11.15 	this clause, "qualifying child" has the meaning given in section
11.16 	32(c)(3) of the Internal Revenue Code;
11.17 	(4) income as provided under section 290.0802;
11.18 	(5) to the extent included in federal adjusted gross
11.19 	income, income realized on disposition of property exempt from
11.20 	tax under section 290.491;
11.21 	(6) to the extent included in federal taxable income,
11.22 	postservice benefits for youth community service under section
11.23 	124D.42 for volunteer service under United States Code, title
11.24 	42, sections 12601 to 12604;
11.25 	(7) to the extent not deducted in determining federal
11.26 	taxable income by an individual who does not itemize deductions
11.27 	for federal income tax purposes for the taxable year, an amount
11.28 	equal to 50 percent of the excess of charitable contributions
11.29 	allowable as a deduction for the taxable year under section
11.30 	170(a) of the Internal Revenue Code over $500;
11.31 	(8) for taxable years beginning before January 1, 2008, the
11.32 	amount of the federal small ethanol producer credit allowed
11.33 	under section 40(a)(3) of the Internal Revenue Code which is
11.34 	included in gross income under section 87 of the Internal
11.35 	Revenue Code;
11.36 	(9) for individuals who are allowed a federal foreign tax
12.1 	credit for taxes that do not qualify for a credit under section
12.2 	290.06, subdivision 22, an amount equal to the carryover of
12.3 	subnational foreign taxes for the taxable year, but not to
12.4 	exceed the total subnational foreign taxes reported in claiming
12.5 	the foreign tax credit.  For purposes of this clause, "federal
12.6 	foreign tax credit" means the credit allowed under section 27 of
12.7 	the Internal Revenue Code, and "carryover of subnational foreign
12.8 	taxes" equals the carryover allowed under section 904(c) of the
12.9 	Internal Revenue Code minus national level foreign taxes to the
12.10 	extent they exceed the federal foreign tax credit;
12.11 	(10) in each of the five tax years immediately following
12.12 	the tax year in which an addition is required under subdivision
12.13 	19a, clause (7), an amount equal to one-fifth of the delayed
12.14 	depreciation.  For purposes of this clause, "delayed
12.15 	depreciation" means the amount of the addition made by the
12.16 	taxpayer under subdivision 19a, clause (7), minus the positive
12.17 	value of any net operating loss under section 172 of the
12.18 	Internal Revenue Code generated for the tax year of the
12.19 	addition.  The resulting delayed depreciation cannot be less
12.20 	than zero; ~~and~~ 
12.21 	(11) job opportunity building zone income as provided under
12.22 	section 469.316~~.~~; and 
12.23 	(12) to the extent included in federal taxable income,
12.24 	compensation paid to a service member as defined in United
12.25 	States Code, title 10, section 101(a)(5), for military service
12.26 	as defined in the Service Members Civil Relief Act, Public Law
12.27 	108-189, section 101(2), performed by a nonresident.  This
12.28 	subtraction does not apply to "retirement income" as defined in
12.29 	section 290.17, subdivision 2, paragraph (a), clause (3).
12.30 	
EFFECTIVE DATE. This section is effective for tax years
12.31 	beginning after December 31, 2004.

12.32 	Sec. 4. Minnesota Statutes 2004, section 290.06,
12.33 	subdivision 2c, is amended to read:
12.34 		Subd. 2c.Schedules of rates for individuals, estates,
12.35 	and trusts.  (a) The income taxes imposed by this chapter upon
12.36 	married individuals filing joint returns and surviving spouses
13.1 	as defined in section 2(a) of the Internal Revenue Code must be
13.2 	computed by applying to their taxable net income the following
13.3 	schedule of rates:
13.4 	(1) On the first $25,680, 5.35 percent;
13.5 	(2) On all over $25,680, but not over $102,030, 7.05
13.6 	percent;
13.7 	(3) On all over $102,030, 7.85 percent.
13.8 	Married individuals filing separate returns, estates, and
13.9 	trusts must compute their income tax by applying the above rates
13.10 	to their taxable income, except that the income brackets will be
13.11 	one-half of the above amounts.
13.12 	(b) The income taxes imposed by this chapter upon unmarried
13.13 	individuals must be computed by applying to taxable net income
13.14 	the following schedule of rates:
13.15 	(1) On the first $17,570, 5.35 percent;
13.16 	(2) On all over $17,570, but not over $57,710, 7.05
13.17 	percent;
13.18 	(3) On all over $57,710, 7.85 percent.
13.19 	(c) The income taxes imposed by this chapter upon unmarried
13.20 	individuals qualifying as a head of household as defined in
13.21 	section 2(b) of the Internal Revenue Code must be computed by
13.22 	applying to taxable net income the following schedule of rates:
13.23 	(1) On the first $21,630, 5.35 percent;
13.24 	(2) On all over $21,630, but not over $86,910, 7.05
13.25 	percent;
13.26 	(3) On all over $86,910, 7.85 percent.
13.27 	(d) In lieu of a tax computed according to the rates set
13.28 	forth in this subdivision, the tax of any individual taxpayer
13.29 	whose taxable net income for the taxable year is less than an
13.30 	amount determined by the commissioner must be computed in
13.31 	accordance with tables prepared and issued by the commissioner
13.32 	of revenue based on income brackets of not more than $100.  The
13.33 	amount of tax for each bracket shall be computed at the rates
13.34 	set forth in this subdivision, provided that the commissioner
13.35 	may disregard a fractional part of a dollar unless it amounts to
13.36 	50 cents or more, in which case it may be increased to $1.
14.1 	(e) An individual who is not a Minnesota resident for the
14.2 	entire year must compute the individual's Minnesota income tax
14.3 	as provided in this subdivision.  After the application of the
14.4 	nonrefundable credits provided in this chapter, the tax
14.5 	liability must then be multiplied by a fraction in which:
14.6 	(1) the numerator is the individual's Minnesota source
14.7 	federal adjusted gross income as defined in section 62 of the
14.8 	Internal Revenue Code and increased by the additions required
14.9 	under section 290.01, subdivision 19a, clauses (1), (5), and
14.10 	(6), and reduced by the ~~subtraction~~ subtractions under section
14.11 	290.01, subdivision 19b, ~~clause~~ clauses (11) and (12), and the
14.12 	Minnesota assignable portion of the subtraction for United
14.13 	States government interest under section 290.01, subdivision
14.14 	19b, clause (1), after applying the allocation and assignability
14.15 	provisions of section 290.081, clause (a), or 290.17; and
14.16 	(2) the denominator is the individual's federal adjusted
14.17 	gross income as defined in section 62 of the Internal Revenue
14.18 	Code of 1986, increased by the amounts specified in section
14.19 	290.01, subdivision 19a, clauses (1), (5), and (6), and reduced
14.20 	by the amounts specified in section 290.01, subdivision 19b,
14.21 	clauses (1) ~~and~~ ,(11), and (12).
14.22 	
EFFECTIVE DATE. This section is effective for taxable
14.23 	years beginning after December 31, 2004.