This bill (S.F. No. 2469) proposes an amendment to Minnesota's individual income tax laws, specifically modifying how itemized deductions are calculated.

Key Provisions:

1. Current Deduction Reduction Rules:

   • Itemized deductions currently phase out for taxpayers with an adjusted gross income (AGI) over $220,650.
     
   • The reduction is the lesser of:
     
     • 3% of AGI exceeding $220,650 (up to $304,970) and 10% of AGI exceeding $304,970, or
       
     • 80% of the total itemized deduction amount.
       
   • Taxpayers with AGI over $1,000,000 face an automatic 80% reduction in itemized deductions.

2. Key Change in the Bill:

   • Charitable contributions will now be excluded from the itemized deduction reduction rules.
   • This means taxpayers will not see a reduction in their deduction amount related to charitable giving, even if their income is above the thresholds mentioned.

3. Other Exclusions from the Reduction Rule:

   • Previously excluded deductions (which remain unchanged) include:
     
     • Interest deduction for investment interest
       
     • Medical expenses
       
     • Losses under relevant tax provisions
       

4. Inflation Adjustment:

   • The bill maintains that AGI thresholds for itemized deduction reductions will adjust for inflation annually starting after December 31, 2023.

Impact:

• This change encourages charitable giving by allowing high-income taxpayers to fully deduct their charitable donations without being subject to phase-out rules.
  
• Beneficiaries include taxpayers who itemize deductions and donate to charities, especially those in higher income brackets.
  

If enacted, these amendments will be effective for tax years beginning after December 31, 2023.