Minnesota Tax Update: Federal Conformity

By Published On: February 9, 2023Categories: Services - Tax

On January 12th, 2023 Minnesota enacted a federal tax conformity bill (2023 H.F. 31). This bipartisan legislation was passed and signed into law to provide filing simplicity and tax relief to Minnesota individuals and businesses by updating several provisions in the state’s tax code to match the federal tax code for tax years 2017 through 2022. The legislation provides nearly $100 million in tax relief for Minnesota individuals and businesses. Read on for more information and how this could impact your filings.

Who is Impacted?

The rules used to determine Minnesota income tax are generally based on federal income tax laws, so when federal income tax laws are changed, conforming changes to Minnesota’s income tax law must also be made. These conforming changes are made by updating Minnesota statutes to adopt the most current version of the Internal Revenue Code.

In January 2023, Minnesota law was updated to recognize the Internal Revenue Code as amended through December 15, 2022. These updates may impact previous Minnesota income tax returns. This means that many of the federal income tax nonconformity modifications reported on your 2017 through 2021 Minnesota returns are no longer required.

This may impact you if you filed a Minnesota income tax return between 2017 and 2022 with a nonconformity schedule. For more information, see the tables on form and line changes to the nonconformity schedules here.

Do I Need to Take Action?

Because Minnesota has adopted federal income tax law changes that state law previously did not conform to, amended returns may be needed to correctly determine your Minnesota taxable income.

The team at SDK can review your specific returns using the new forms and instructions to determine if the tax law changes affect your returns. An amended return in one year may impact other years and require additional amended returns.

SDK is Ready to Help

Reach out to your CPA at SDK today to review the conformity changes and determine what your next steps are. Our tax team can be reached at 612-332-5500 or through email at info@sdkcpa.com.