Minnesota Recent Tax Law Changes - for tax year 2013

On 3/21/14, Governor Dayton signed a bill into law that brought conformity of Minnesota tax law with the federal law (American Taxpayer Relief Act - ATRA).  Many provisions of the federal law over the years were not adopted by Minnesota.  This new law brings many aspects of the federal law into agreement with Minnesota law of which include:

Itemized Deductions (Minnesota adopts these deductions):

• Mortgage Insurance Premiums - deducting the cost of premiums for insurance covering the mortgage on a principle residence (within certain income limits)
• Charitable contribution of Real Property made for conservation purposes
• Charitable deduction for Contributions of Food Inventory 

Adjustment Deductions (Minnesota adopts these deductions):

• Interest payments on a loan for which interest payments have been required for more than 60 months
• Interest payments made voluntarily
• Phase-out of Student Loan Interest (phase-out of student loan interest for single fliers is between $60,000 & $75,000; married filing jointly is between $125,000 & $155,000
• Qualified higher education expense deduction up to $4,000  (through 2013)

Income Differences (Minnesota adopts these provisions, making them exempt from state income taxes):

• Employer-provided education assistance (up to $5,250)
• Employer-provided adoption assistance (up to $12,970)
• Employer-provided transit assistance (up to $245/month)
• Taxpayers can exclude otherwise taxable discharge of mortgage debt from their income if the discharge was qualified principal residence indebtedness (through 2013)
• IRA Distribution for Charitable Purposes - for taxpayers 70 1/2 and older, they can exclude up to $100,000 per year in otherwise taxable IRA distributions, if the distribution goes to a qualified charitable organization
• Taxpayers can use non-taxable distributions from a Coverdell Education Savings Account for elementary and secondary education expenses.

Business provisions (Minnesota adopts):

• Accelerated depreciation for business property on an Indian reservation
• Modified depreciation for qualified film & television production
• Depreciation of qualified leasehold improvements, restaurant buildings and improvements, and retail improvements
• Modified depreciation for motor sports entertainment complexes
• Election to expense advanced mine safety equipment 
• S-Corporation basis adjustment for charitable contributions of appreciated property

Source:   Minnesota Department of Revenue