HF828

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.