Minnesota tax law changes (2019)

Page updated Aug. 12, 2019

On May 24, 2019, the Minnesota Legislature passed a tax bill that conforms many of Minnesota’s tax laws with several federal tax code changes enacted between Dec. 16, 2016, and Dec. 31, 2018:

  • The Disaster Tax Relief and Airport and Airway Extension Act
  • The Tax Cuts and Jobs Act
  • The Bipartisan Budget Act of 2018
  • The Consolidated Appropriations Act of 2018

Review the tax bill summary (Source: Minnesota House Research)
Review the session law (Chapter 6, HF 5)
 

Coming up

Minnesota Tax Year 2018 Income Tax Return Filing Update (Webinar)

Aug. 22, 10 - 11 a.m.
This webinar will provide an update on the Minnesota Department of Revenue's changes to income tax forms and guidance for those whose 2018 tax returns were extended.

Learn more and register
 

Resources and articles

Minnesota Conformity/Nonconformity Guide

Federal Tax Code Full Conformity in MN Partial Conformity in MN No Conformity in MN Effective Date
Standard deduction X     Tax year 2019

This table provides an overview of the federal tax changes Minnesota conformed to with its 2019 legislation. Click to see the full table.
(MNCPA member login required.)

NEW: Client letter template

Download and customize this letter so your clients are informed about the 2019 tax law changes and how it'll affect their returns. This Word document has highlighted fields where you enter your firm's information.
(MNCPA member login required.)

Archived Webinar: Minnesota's Federal Tax Reform Conformity Legislation

Learn about the known implications of the 2019 tax bill, including how it'll affect the 2017, 2018 and 2019 tax years.
(MNCPA member login required. This webinar doesn't qualify for CPE.)

Footnote: When is 'conformity' not conformity?

David Brauer, CPA
Conformity discussions took center stage during the 2019 legislative session. Check out this article to see what was ultimately passed and signed into law.

MNCPA Perspectives: Help provide clarity on Minnesota's 2019 tax law changes

Geno Fragnito, MNCPA government relations director
Your expertise can help clear up some of the complex issues associated with Minnesota conformity. Read this blog post to learn how you can effect change.


General Minnesota conformity highlights

For individuals
  • Changing the starting point for determining individual income taxes from federal taxable income (FTI) to federal adjusted gross income (FAGI).
  • Conforming to the standard deductions.
  • Making the dependent exemption equal to that allowed under pre-TCJA law, but eliminating the personal exemption.
  • Creating a state itemized deduction for unreimbursed employee expenses.
For businesses
  • Conforming to Section 179 to the $1 million federal allowance, but retaining the 80% add-back rule.
  • Temporarily expanding bonus depreciation, but retaining the add-back rule.
  • Capping business interest deductions at 30% of adjusted taxable income.
  • Expanding the eligibility for more businesses to have the option to use cash basis rather than accrual basis.
  • Disallowing net operating carrybacks and limiting carryovers to 80% of the loss.
Other
  • Changes were made to the June accelerated tax liability formula. The rate increased from 81.4% to 87.5% for tax owed in 2020 and 2021. The rate will reduce to 84.5% for tax owed in 2022.
  • Several new local option sales taxes were passed. The new rates, when effective, will be posted on the Department of Revenue sales tax map.


Frequently asked questions

Should I file an amendment as a result of the 2019 tax law changes?
The Minnesota Department of Revenue asks to not file any amendments at this time. They will adjust the 2017 and 2018 returns that require changes resulting from conformity.

Should I complete my 2018 tax return extension on the old forms?
Please wait to file your extension. Software updates will be worked on and implemented in time for the upcoming extension deadlines.

Will I be assessed an additional tax charge (ATC) for tax year 2018 due to the conformity changes made in the 2019 Minnesota tax bill?
For tax year 2018, the Minnesota Department of Revenue will waive the ATC for underpayment of estimated income tax due to the uncertainty in tax planning that resulted from the federal law changes made in the TCJA in 2016, which were addressed in Minnesota law in 2019. See Revenue's website for more details.

What's the best way to reach the Minnesota Department of Revenue with questions concerning the 2019 tax law?
Contact Revenue at TaxLawChanges@state.mn.us.


More resources

 

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