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S.F. No. 1634 - Subtraction and credit for contributions to college savings plans
Author: Senator Roger C. Chamberlain
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Date: March 17, 2017






Authorizes a subtraction of up to $1,500 ($3,000 for married joint filers) for contributions to any state’s section 529 college savings plan for purposes of computing the Minnesota individual income tax. The subtraction excludes amounts that are rolled-over from other college savings plans, and is not allowed for amounts used to claim the credit in section 2.



Authorizes an income tax credit for contributions to any state’s section 529 college savings plan, not including amounts rolled over from other plans. The maximum credit is $500; the credit rate varies by federal adjusted gross income (AGI), with the income ranges adjusted annually for inflation. The credit is refundable; credit amounts in excess of income tax liability would be paid to the claimant as a refund. Imposes a penalty on individuals who claimed credits under this section if the beneficiary of an account uses a distribution for other than higher education expenses (e.g., tuition, fees, books, or the student’s living expenses). The penalty equals the lesser of ten percent of the nonqualified distribution, or the total amount of credits the individual claimed under this section.

The bill is effective beginning in tax year 2017.


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