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SF1631 (Legislative Session 94 (2025-2026))

Unlimited Social Security subtraction provision

AI Generated Summary

This bill, S.F. No. 1631, seeks to amend Minnesota’s tax code to provide an unlimited subtraction of Social Security benefits from taxable income for individual taxpayers. The bill modifies Minnesota Statutes 2024, Section 290.0132, Subdivision 26 to eliminate existing phaseout thresholds and limits on the subtraction of taxable Social Security benefits.

Under the proposed legislation:
1. All Social Security benefits would be fully subtracted from taxable income, removing the need for the current simplified and alternate subtraction calculations.
2. The definition of Social Security benefits remains unchanged, aligning with federal definitions under the Internal Revenue Code (IRC) Section 86(d)(1).
3. Taxpayers of all income levels would benefit, as the bill eliminates phaseouts that previously reduced or eliminated the tax subtraction based on income levels.

Impact:

  • This change would effectively eliminate Minnesota state income taxes on Social Security benefits, reducing the tax burden on retirees.
  • Minnesota would align with many other states that do not tax Social Security income.
  • Potential revenue loss for the state due to reduced taxable income from retirees.

This bill is currently in the Senate Tax Committee for review.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 19, 2025SenateFloorActionIntroduction and first reading
February 19, 2025SenateFloorActionReferred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Provision for an unlimited Social Security subtraction."
      ],
      "removed": [],
      "summary": "This bill modifies the subtraction formula for Social Security benefits under section 290.0132.",
      "modified": [
        "Adjusted phaseout thresholds and maximum subtraction amounts for various filing statuses."
      ]
    },
    "citation": "290.0132"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill modifies adjustments to phaseout threshold amounts under section 270C.22.",
      "modified": [
        "Adjusts the statutory year for taxable year 2023 phaseout threshold calculations."
      ]
    },
    "citation": "270C.22"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "References the definition of modified adjusted gross income for calculating provisional income.",
      "modified": []
    },
    "citation": "86(b)(2) of the Internal Revenue Code"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Defines Social Security benefits in reference to the Internal Revenue Code.",
      "modified": []
    },
    "citation": "86(d)(1) of the Internal Revenue Code"
  }
]

Sponsors