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S.F. No. 417 - Modifying Research and Development Credit Increase; Partial Refundability (as proposed to be amended by the A-1 amendment)
 
Author: Senator Carla J. Nelson
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: February 7, 2017



 

As proposed to be amended, this bill increases the percentage allowed for the second tier of the research and development (R&D) credit and allows the first $250,000 of the credit to be refundable if the credit exceeds the taxpayer’s liability. Effective beginning in tax year 2017.

Section

Provision

1

Increases the percentage on the second tier of qualified research expenses from 2.5% to 4.5%. Under current law, the credit calculation is 10 percent of the first $2 million of Minnesota qualified research expenses and 2.5 percent of the amount over that.
 

2

Moves the definition of “liability for tax” from the provision of law limiting refundability of the credit to the definitions provisions in the R&D credit statute. This same language is stricken in section 3. 
 

3

Strikes the “liability for tax” definition that was moved to section 2. Adds a cross-reference in the carryforward provision in current law to the new refundability provision in section 4.
 

4

Provides that up to $250,000 of the credit is refundable if the credit exceeds the taxpayer’s liability. The 15-year carryforward allowance for the nonrefundable portion of the credit under current law is maintained.

 
 
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