Minneslate Logo

HF2081 (Legislative Session 94 (2025-2026))

Unlimited Social Security income tax subtraction provided.

Related bill: SF2011

AI Generated Summary

Purpose of the Bill

The bill aims to amend Minnesota's tax law concerning individual income to provide an unlimited subtraction for Social Security benefits, thus reducing the taxable income for recipients of these benefits and potentially reducing their tax burden.

Main Provisions

  • Unlimited Subtraction for Social Security Benefits: The bill proposes that taxpayers can subtract the full amount of their taxable Social Security benefits from their income. This change applies uniformly, regardless of the taxpayer’s adjusted gross income.

  • Simplified and Alternate Subtractions: The bill outlines two methods to calculate the subtraction amount:

    • Simplified Subtraction: Applies a 10% reduction for each $4,000 (or $2,000 for married individuals filing separately) of adjusted gross income over a specified threshold, which varies for different filing statuses.
    • Alternate Subtraction: Allows taxpayers to subtract the lesser of their taxable Social Security benefits or a maximum allowable subtraction. This maximum amount decreases by 20% for income over certain limits, which again depends on the filing status.

  • Adjustments to Thresholds: Starting in the 2023 tax year, the Commissioner is required to adjust the phase-out thresholds based on inflation, ensuring that the thresholds remain relevant with economic changes.

Significant Changes to Existing Law

  • The main change is the elimination of caps on the Social Security benefit subtraction, allowing for an unlimited subtraction. Previously, subtraction amounts were subject to phase-out thresholds and maximum limits, which limited the extent to which benefits could be subtracted.

Relevant Terms

Social Security benefits, taxable income, subtraction, phase-out threshold, adjusted gross income, provisional income, filing status, tax deduction, income phase-out, inflation adjustments.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 09, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Introduces a new simplified and alternate subtraction method for Social Security benefits."
      ],
      "removed": [],
      "summary": "This bill modifies the existing subdivision 26 related to Social Security benefits taxation for Minnesota Statutes 2024.",
      "modified": [
        "Adjusts phaseout thresholds and maximum subtraction amounts for various filing statuses."
      ]
    },
    "citation": "290.0132"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references the federal definition of Social Security benefits.",
      "modified": []
    },
    "citation": "86(d)(1) of the Internal Revenue Code"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The commissioner must adjust the phaseout threshold amounts as provided in section 270C.22.",
      "modified": []
    },
    "citation": "270C.22"
  }
]

Sponsors