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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.




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.


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. 


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.


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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