Purpose of the Bill

The purpose of this bill is to amend the existing student loan tax credit for individual income taxpayers in Minnesota. It aims to increase the amount of the student loan credit and make it refundable, thereby providing greater financial relief to individuals with education loans.

Main Provisions

• Increased Credit Amount: The bill proposes to raise the maximum student loan credit from $500 to $1,000.
• Refundability of Credit: By making the credit refundable, individuals who qualify for the credit can receive a refund if the credit exceeds their tax liability. This change allows individuals with lower incomes to benefit from the credit even if they owe less in taxes.
• Credit Calculation:
  • The credit is determined as the least of several values, which include:
  • Eligible loan payments minus ten percent of the adjusted gross income over $10,000.
  • The individual's earned income for the taxable year.
  • The sum of the interest paid on the loans during the year plus ten percent of the original loan amount.
  • The minimum credit would not be less than zero.

Significant Changes

• The bill changes the previously non-refundable student loan credit to a refundable one, enabling more individuals, especially those with lesser taxable income, to receive actual financial assistance even if their overall tax liability is reduced to zero.
• It increases the credit cap from $500 to $1,000, which potentially doubles the financial help available under the credit.

Relevant Terms

student loan credit, refundable credit, individual income taxpayer, tax liability, adjusted gross income, eligible loan payments, earned income, qualified education loans