HF2268

Purpose of the Bill

The purpose of the bill is to modify Minnesota tax laws to allow individuals to subtract income received from certain retirement plans from their taxable income. This aims to reduce the tax burden on retirees who receive income from qualified retirement sources.

Main Provisions

• The bill introduces a tax subtraction for income received from qualified retirement plans. This includes distributions from plans defined under sections 401 and individual retirement accounts (IRAs) under section 408 of the Internal Revenue Code.
• The tax subtraction applies only to Minnesota residents who are 65 years of age or older by the end of the taxable year.

Specific Provisions

1. Married Taxpayers Filing Jointly:

   • If both spouses are 65 or older, they can subtract the lesser of the total qualified distributions received or $150,000 from their taxable income.

2. Other Eligible Taxpayers:

   • Individuals 65 or older (not filing jointly as described above) can subtract the lesser of the total qualified distributions received or $75,000 from their taxable income.

Significant Changes to Existing Law

• This bill adds a new subsection to Minnesota Statutes, specifically allowing for a subtraction from taxable income for distributions from qualifying retirement plans, which was not previously available under existing law.

Relevant Terms

• Tax subtraction
• Qualified retirement plan
• Distributions
• Internal Revenue Code sections 401 and 408
• Individual retirement account (IRA)
• Taxable income