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HF828 (Legislative Session 94 (2025-2026))

Unlimited Social Security individual income tax subtraction provided.

AI Generated Summary

House File No. 828, authored by Representative Dotseth, is a legislative bill concerning the taxation of Social Security benefits within the state of Minnesota. Specifically, this bill proposes changes to section 290.0132, subdivision 26 of the Minnesota Statutes 2024, to modify how Social Security income is subtracted from taxable income.

The bill outlines two methods for calculating the subtraction:

  1. Simplified Subtraction:

    • Based on a taxpayer’s taxable Social Security benefits, adjusted according to their adjusted gross income (AGI).
    • For married individuals filing jointly or surviving spouses, the phaseout threshold (the point at which benefits begin to be reduced) starts at $100,000 of AGI.
    • For single or head of household filers, the threshold starts at $78,000.
    • For married individuals filing separately, the threshold is half that of joint filers. The simplified subtraction reduces by 10% for each $2000 or $4000 (based on filing status) of income exceeding these thresholds.

  2. Alternate Subtraction:

    • The lesser of the taxpayer's taxable Social Security benefits or a maximum subtraction amount that decreases as provisional income increases.
    • Specific maximum subtraction amounts and thresholds vary based on filing status (e.g., $5,840 with a provisional income over $88,630 for joint filers).
    • Provisional income is defined as modified AGI plus half of the taxable Social Security benefits.

The bill also stipulates that these threshold amounts should be adjusted annually as per section 270C.22 of the Minnesota Statutes. The commissioner is tasked with rounding the maximum subtraction and threshold amounts to the nearest $10.

This legislation aims to provide a more favorable tax treatment of Social Security income, potentially lowering the tax burden for many Minnesota residents receiving Social Security benefits.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 16, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "A provision that exempts taxable Social Security benefits through an alternate calculation method."
      ],
      "removed": [
        "Original phaseout threshold calculation that was less beneficial to taxpayers."
      ],
      "summary": "This bill amends the Minnesota Statutes section 290.0132 subdivision 26 regarding the taxation of Social Security benefits.",
      "modified": [
        "Updated phaseout thresholds for Social Security benefit taxation based on taxpayer filing status."
      ]
    },
    "citation": "290.0132"
  },
  {
    "analysis": {
      "added": [
        "Instructions for adjusting phaseout threshold amounts for inflation or other factors."
      ],
      "removed": [],
      "summary": "Referenced for the adjustment of phaseout threshold amounts in the realm of taxation.",
      "modified": [
        "Clarification on how thresholds are to be adjusted and rounded."
      ]
    },
    "citation": "270C.22"
  },
  {
    "analysis": {
      "added": [
        "Use of provisional income in calculating the maximum subtraction of taxable benefits."
      ],
      "removed": [],
      "summary": "Defines provisional income for the purpose of limiting Social Security benefit subtractions.",
      "modified": []
    },
    "citation": "86(b)(2) of the Internal Revenue Code"
  },
  {
    "analysis": {
      "added": [
        "Social Security benefits definition applied to subtraction calculations."
      ],
      "removed": [],
      "summary": "Defines Social Security benefits for tax purposes.",
      "modified": []
    },
    "citation": "86(d)(1) of the Internal Revenue Code"
  }
]

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