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SF940 (Legislative Session 94 (2025-2026))

Unlimited Social Security subtraction permission

AI Generated Summary

The bill S.F. No. 940 proposes changes in the taxation of Social Security income in Minnesota. It allows taxpayers to subtract their Social Security benefits from their taxable income when calculating state income taxes. The bill outlines two methods for this subtraction:

  1. Simplified Subtraction: This method bases the subtraction amount on taxable Social Security benefits, with adjustments for higher income levels. For individuals or couples earning above certain thresholds, the subtraction decreases by 10% for every $4,000 (or $2,000 for married filing separately) of income above the threshold. The thresholds vary depending on filing status (e.g., married filing jointly, single, or head of household).

  2. Alternate Subtraction: This method sets a maximum subtraction amount that also gets reduced based on "provisional income" above certain levels. The maximum and the reduction vary by filing status. If the provisional income exceeds particular levels, the subtraction is reduced by 20 percent of the excess amount.

The bill includes provisions to adjust these thresholds annually based on changes in other economic factors. It aims to reduce the tax burden on individuals receiving Social Security, providing them potentially with more usable income annually. The overall intention is to simplify and potentially reduce the taxes for those receiving Social Security benefits depending on their total income levels.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 02, 2025SenateFloorActionIntroduction and first reading
February 02, 2025SenateFloorActionReferred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "A provision for unlimited Social Security subtraction."
      ],
      "removed": [
        "Previous limits on Social Security subtraction based on adjusted gross income thresholds."
      ],
      "summary": "The bill modifies the subtraction allowed for Social Security benefits under Minnesota Statutes section 290.0132.",
      "modified": [
        "Adjustment of phaseout threshold amounts for simplification."
      ]
    },
    "citation": "290.0132"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill refers to the adjustment process for phaseout threshold amounts provided in section 270C.22.",
      "modified": [
        "Adjustment mechanism for phaseout threshold amounts based on taxable year 2023."
      ]
    },
    "citation": "270C.22"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references the definition of modified adjusted gross income in section 86b2 of the Internal Revenue Code for determining provisional income.",
      "modified": []
    },
    "citation": "86b2"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references the definition of Social Security benefits in section 86d1 of the Internal Revenue Code.",
      "modified": []
    },
    "citation": "86d1"
  }
]

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