HF3999

Purpose

This bill creates a new tax subtraction for certain taxpayers. It aims to provide relief to families with three or more children by removing a portion of the taxpayer’s income from tax calculations.

Main Provisions

• Adds Subdivision 40 to Minnesota Statutes 2024 section 290.0132 to establish a subtraction for taxpayers with three or more children.
• A taxpayer who had three or more dependents who attained age 17 or younger in the taxable year has the amount of income they received treated as a subtraction from income for tax purposes.
• For the purposes of this subdivision, a dependent means a dependent who qualifies for an exemption under section 290.0121.
• The term “income” is defined to mean any income included in adjusted gross income (AGI) or any amount required to be added to AGI under section 290.0131.

Definitions (as used in this subdivision)

• Dependent: a person who qualifies for an exemption under section 290.0121.
• Income: any income included in AGI or any amount required to be added to AGI under section 290.0131.
• AGI (adjusted gross income): the starting point for calculating taxable income, as referenced in the definition of income.

Significance and Changes to Existing Law

• Creates a new subtraction under the Minnesota income tax system, expanding the tools available to reduce taxable income for families with three or more children.
• Re-defines how “dependent” is determined for this subtraction by tying it to the exemption under section 290.0121.
• The subtraction applies to all income categories that are included in AGI or added to AGI under the cited sections, potentially lowering overall tax liability for eligible taxpayers.
• No specific dollar amount or phase‑in rules are provided in the excerpt; the subtraction is described in qualitative terms as “the amount of income received by the taxpayer” being subtracted.

Practical Effect

• Eligible families (three or more dependents age 17 or younger in the tax year) would see their income used for tax calculations reduced by the subtraction, which could significantly lower taxable income and associated taxes.

Note on Effective Date

• The text provided does not specify when the subtraction would take effect (no effective date is stated in the excerpt).

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Relevant Terms - subtraction - taxpayers with three or more children - dependent - exemption - section 290.0121 - income - adjusted gross income (AGI) - section 290.0131 - Minnesota Statutes 2024 section 290.0132 - Subd. 40 - taxable year - three or more dependents - 17 or younger