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S.F. No. 198 - Estate Tax Subtraction for Federal Exclusion Amount; Modification of Estate Tax Rates and Brackets
 
Author: Senator Lyle Koenen
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: March 16, 2015



 

This bill provides for a subtraction in the amount of the federal exclusion amount for purposes of Minnesota estate tax.  Effective for estates of decedents dying after December 31, 2014.

Section

Provision

1

Strikes the Minnesota-specific estate tax filing requirement and requires that a Minnesota return must be filed if a federal return is filed. 
 

2

Requires that the federal exclusion amount be subtracted for purposes of calculating the Minnesota taxable estate.  The federal exclusion amount is $5 million per decedent and is annually adjusted for inflation.  For decedents dying in 2015, the amount is $5.43 million. 
 

3

Strikes the estate tax rates and brackets applicable under current law.  Beginning with decedents dying in 2015, new rates and brackets are established.  Under current law, a zero tax rate is applied to the first $1.2 million of the taxable estate.  This amount is increased by $200,000 every year until the amount reaches $2 million.  Applying a zero tax rate has the effect of excluding the first certain amount of the estate.  Under this bill, a rate of 13 percent would apply to the first $7.1 million of the taxable estate after subtracting the amount required under section 2
 

4

Repeals sections of law pertaining to the filing and payment requirements, and the law providing for, the qualified small business and qualified farm property subtractions.  These sections are no longer necessary given the subtraction amount required under section 2

 
 
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