Minnesota allows qualified individuals a nonrefundable income tax credit for past military service. To be eligible for the credit, an individual must have been separated from the military in the taxable year for which the credit is claimed, and either have served at least 20 years in the military, or have a service-connected disability rating of 100 percent for a total and permanent disability. The credit starts at $750 and is reduced by ten percent of federal adjusted gross income (FAGI) in excess of $30,000. Eligibility for the credit phases out at $37,500 in FAGI. This bill reduces the percentage of the phase-out from ten to five percent of FAGI in excess of $30,000. Therefore, eligibility would phase out at $45,000 in FAGI.
Effective beginning in tax year 2013.
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