SF2011

This Minnesota Senate bill (S.F. No. 2011) proposes an amendment to the state's tax code to provide an unlimited subtraction for Social Security benefits from individual income taxation.

Key Points of the Bill:

1. Eliminates Current Limits: The bill removes the existing phaseouts and maximum subtraction caps that currently limit the amount of Social Security benefits that can be deducted from taxable income.
2. Full Subtraction: Under this proposal, all Social Security benefits received by a taxpayer would be subtracted from taxable income.
3. Definitions and References:
   • The term "Social Security benefits" follows the definition in Section 86(d)(1) of the Internal Revenue Code.
   • The concept of "provisional income" from the previous structure is eliminated since all Social Security benefits would now be fully subtracted.
4. Effective Date: While the bill does not specify an effective date explicitly, mentioned statutory adjustments are based on tax year 2023, suggesting it may apply to tax filings in or after 2024.

Impact:

• For Taxpayers: This would remove state taxes on Social Security income, benefiting retirees and those receiving Social Security benefits.
• For State Revenue: The change could reduce state tax revenue significantly, as many Minnesotans would see a decrease in their taxable income.

In summary, this bill seeks to make all Social Security benefits fully exempt from Minnesota state income tax, removing the income-based reduction thresholds that currently apply.