Purpose

Establishes a new Minnesota income tax credit for farmers who donate food to food shelves, aiming to increase food donations from farmers and support hunger relief.

Key definitions

• Farmer: a taxpayer in the farming business who can own farmland under Minnesota rules.
• Food shelf: a nonprofit that qualifies as a food shelf under Minnesota law.
• Qualifying donation: an in-kind donation of food produced by the farmer that is eligible for a deduction under the Internal Revenue Code (IRC) section 170.
• Food shelf reference: linked to a specific state statute section defining what counts as a food shelf.

Credit amount and how it works

• The credit equals 85 percent of qualifying donations to a food shelf.
• The value of the donations is determined using the IRC 170 rules for calculating charitable contributions.
• The credit is applied against the taxpayer’s Minnesota income tax.

Limitations and rules on use

• The credit is capped at 50 percent of the taxpayer’s real property taxes paid in the taxable year.
• Denial of double benefit: the same qualifying donation cannot be used to claim any other Minnesota state income tax deduction or credit.
• Carryover: if the credit exceeds tax liability in a year, the unused amount can be carried forward for up to five subsequent taxable years, beginning with the earliest eligible year.

Pass-through entities

• For partnerships, LLCs taxed as partnerships, S corporations, or other multi-owner entities, the credit is passed through to owners (partners, members, or shareholders) pro rata based on their ownership interests as of the last day of the taxable year, or as otherwise allocated in the entity’s governing documents.

Nonresidents and part-year residents

• The credit for nonresidents and part-year residents is allocated based on a percentage calculated under Minnesota tax law (specific subsection referenced in the bill).

Summary of impact

• Creates a new state tax credit incentive for farmers to donate food to food shelves.
• Ties the credit to the value of donations under federal tax rules, with a significant 85 percent rate.
• imposes a limit using real property taxes and bans duplicative use with other state tax benefits.
• Includes provisions for carryover, pass-through treatment, and nonresident allocations.

Relevant Terms

• 85 percent
• qualifying donation
• in-kind charitable donation
• food shelf
• food shelf under section 124D.1191
• Internal Revenue Code section 170
• Minnesota income tax
• real property taxes
• credit carryover
• nonresidents
• part-year residents
• partnerships
• LLC taxed as partnership
• S corporation
• pass-through
• section 290.06 subdivision 2c paragraph e
• taxable year
• tax liability
• deductions and credits (double benefit prohibition)
• 500.24 (farmland ownership), 124D.1191 (food shelf reference)