HF3754

Purpose

• Align Minnesota’s individual income tax rules with the federal Internal Revenue Code (IRC) as amended through May 1, 2023, while specifically including a federal provision that creates an exclusion from gross income for employer contributions to “Trump accounts.”
• Update Minnesota Statutes to reflect this conformance and ensure related uncodified federal provisions that tie into the IRC are treated as part of Minnesota law.

Main Provisions

• Amends Minnesota Statutes 2024 section 290.01, subdivision 31 to redefine “Internal Revenue Code” to mean the IRC of 1986 as amended through May 1, 2023.
• Adds a specific inclusion: section 70204 of Public Law 11921, which provides the exclusion from gross income for employer contributions to Trump accounts, as part of the defined Internal Revenue Code used for Minnesota tax purposes.
• Includes uncodified federal provisions that relate to provisions of the Internal Revenue Code that are incorporated into Minnesota law.

Significant Changes to Existing Law

• The Minnesota tax code now explicitly adopts the federal IRC up to May 1, 2023, rather than a different or older version, for purposes of Minnesota income tax calculations.
• The exclusion from gross income for employer contributions to Trump accounts is now explicitly recognized within Minnesota’s conformed IRC framework.
• Any uncodified federal provisions that relate to IRC provisions that Minnesota law incorporates are also included, ensuring broader alignment with federal rules.

Potential Impacts

• Tax calculations under Minnesota income tax may mirror federal rules more closely due to the updated IRC reference.
• Employers and individuals may see changes related to how employer contributions (specifically the excluded amount) are treated for state tax purposes.
• Clarity regarding which federal provisions Minnesota uses when interpreting state tax law could affect filing and compliance.

Relevant Terms Internal Revenue Code exclusion from gross income employer contributions Trump accounts Minnesota Statutes 2024 section 290.01 subdivision 31 Subd.31 Public Law 11921 section 70204 May 1, 2023 uncodified provisions conformance to federal law