Minnesota SF 1237: Research income and corporate franchise tax credit modification

Bill Text

1.1 A bill for an act​
1.2 relating to taxation; income and corporate franchise tax; modifying the research​
1.3 credit; amending Minnesota Statutes 2024, section 290.068, subdivision 2, by​
1.4 adding a subdivision.​
1.5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:​
1.6 Section 1. Minnesota Statutes 2024, section 290.068, subdivision 2, is amended to read:​
1.7 Subd. 2.Definitions.For purposes of this section, the following terms have the meanings​
1.8 given.​
1.9 (a) "Qualified research expenses" means (i) qualified research expenses and basic research​
1.10 payments as defined in section 41(b) and (e) of the Internal Revenue Code, except it does​
1.11 not include expenses incurred for qualified research or basic research conducted outside​
1.12 the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue Code; and​
1.13 (ii) contributions to a nonprofit corporation established and operated pursuant to the​
1.14 provisions of chapter 317A for the purpose of promoting the establishment and expansion​
1.15 of business in this state, provided the contributions are invested by the nonprofit corporation​
1.16 for the purpose of providing funds for small, technologically innovative enterprises in​
1.17 Minnesota during the early stages of their development.​
1.18 (b) "Qualified research" means qualified research as defined in section 41(d) of the​
1.19 Internal Revenue Code, except that the term does not include qualified research conducted​
1.20 outside the state of Minnesota.​
1.21 (c) "Base amount" means:​
1​Section 1.​
25-01426 as introduced​01/15/25 REVISOR EAP/BM​
SENATE​
STATE OF MINNESOTA​
S.F. No. 1237​NINETY-FOURTH SESSION​
(SENATE AUTHORS: NELSON and Gustafson)​
OFFICIAL STATUS​D-PG​DATE​
Introduction and first reading​340​02/10/2025​
Referred to Taxes​

2.1 (1) for taxpayers not subject to clause (2), the base amount as defined in section 41(c)​
2.2 of the Internal Revenue Code, except that the average annual gross receipts and aggregate​
2.3 gross receipts must be calculated using Minnesota sales or receipts under section 290.191​
2.4 and the definitions contained in paragraphs (a) and (b) shall apply.; or​
2.5 (2) for a taxpayer with an alternative simplified credit election in place under subdivision​
2.6 2a for the taxable year, 50 percent of the average qualified Minnesota research expenses​
2.7 for the three taxable years preceding the taxable year for which the credit is being determined.​
2.8 (d) "Liability for tax" means the sum of the tax imposed under section 290.06,​
2.9 subdivisions 1 and 2c, for the taxable year reduced by the sum of the nonrefundable credits​
2.10 allowed under this chapter, on all of the entities required to be included on the combined​
2.11 report of the unitary business.​
2.12 EFFECTIVE DATE.This section is effective for taxable years beginning after December​
2.13 31, 2024.​
2.14 Sec. 2. Minnesota Statutes 2024, section 290.068, is amended by adding a subdivision to​
2.15 read:​
2.16 Subd. 2a.Alternative simplified credit election.(a) A corporation, partnership, or other​
2.17 taxpayer qualifying for a credit under this section may elect, not later than the time of filing​
2.18 the return for the taxable year, including all extensions, to calculate its base amount under​
2.19 subdivision 2, paragraph (c), clause (2), for the taxable year. An election made under this​
2.20 subdivision for a taxable year is irrevocable for that taxable year.​
2.21 (b) For a partnership, the election must be made by the partnership on the partnership​
2.22 return or other form, as required by the commissioner, and applies to all of its partners.​
2.23 EFFECTIVE DATE.This section is effective for taxable years beginning after December​
2.24 31, 2024.​
2​Sec. 2.​
25-01426 as introduced​01/15/25 REVISOR EAP/BM​