Purpose of the Bill

The purpose of this bill is to provide tax benefits to certain financial institutions by allowing them to subtract income derived from specific commercial loans when calculating taxable income. This aims to incentivize lending for business and agricultural purposes within the state of Minnesota.

Main Provisions

• Income Subtraction for Loans: The bill allows financial institutions structured as S corporations to subtract income earned from certain commercial loans when calculating their income for tax purposes.
• Loan Eligibility Criteria: To qualify for this subtraction:
  • The value of the loan must be $5,000,000 or less.
  • The loan must be provided to an individual or entity residing or located in Minnesota.
  • The loan should be used primarily for business or agricultural purposes.

Significant Changes to Existing Law

• This bill adds new subdivisions to the Minnesota Statutes 2024 sections 290.0132 and 290.0134. The additions specify the conditions under which financial institutions can subtract loan income from their taxable income, thus potentially reducing their tax burden.

Relevant Terms

• S corporation
• Commercial loan
• Tax subtraction
• Income subtraction
• Business purpose
• Agricultural purpose