SF4650

Purpose

This bill adds a new tax provision called the Senior subtraction. It creates a subtraction from taxable income for Minnesota individual income tax for people who are 65 years old or older, and it applies similarly if a spouse is 65+ in a joint filing.

Main provisions

• Establishment of a Senior subtraction (Subdivision 40) to Minnesota Statutes 2024 section 290.0132.
• a) If a taxpayer attains the age of 65 or older during the taxable year, the amount of income that person receives is treated as a subtraction from taxable income.
• b) For a married taxpayer filing a joint return, if either spouse attains age 65 or older during the taxable year, the income received by the taxpayer is treated as a subtraction from taxable income.
• c) “Income” for this subtraction means any income that is included in adjusted gross income (AGI) or any amount that must be added to AGI under section 290.0131.

Significant changes to existing law

• Adds a new subdivision (Subdivision 40) to the existing 290.0132 in Minnesota tax law, creating a senior-specific subtraction from taxable income.
• Expands the concept of subtraction to cover both single taxpayers aged 65+ and married taxpayers where either spouse is aged 65+ in a joint filing.
• Defines how “income” is determined for the purpose of the subtraction by tying it to AGI and to amounts added to AGI under 290.0131.

How this would affect taxpayers

• Eligible seniors (65 or older in the tax year) could reduce their taxable income by the amount of income they receive, lowering their state income tax liability.
• For married couples filing jointly, if either spouse is 65+, the subtraction would apply to the applicable income of the eligible spouse for tax year calculations.
• The specific scope of “income” for the subtraction follows the same definitions used for AGI and additions to AGI in the related sections of the Minnesota tax code.

Notes on implementation

• The subtraction is defined by new text added to the existing statute, and relies on the definitions of adjusted gross income and any required additions under section 290.0131.

Relevant Terms - Senior subtraction - Minnesota income tax - age 65 or older - adjusted gross income (AGI) - income included in AGI - section 290.0131 - Minnesota Statutes 2024 section 290.0132 - Subd. 40 - joint return / married filing jointly - taxable year - subtraction from taxable income