SF952

The legislative bill S.F. No. 952 involves changing how Social Security income is taxed for individuals in Minnesota. The main goal is to gradually reduce the amount of Social Security income that is subject to tax. This means that over time, people will get to keep more of their Social Security benefits without having to pay state taxes on them.

Here’s how the bill proposes to phase out these taxes:

1. Different methods are provided to calculate the subtraction (tax deduction) from taxable Social Security benefits. A taxpayer can choose whichever method gives them the highest deduction.
2. Scheduled increases in the percentage of Social Security benefits that can be deducted will occur annually from the year 2025 until 2035. For example, in 2025, a deduction of 10% of taxable benefits is allowed, which increases incrementally each year until it reaches a 100% deduction in 2035.
3. There are threshold amounts of adjusted gross income above which the amount of subtraction is gradually reduced. These thresholds vary depending on the taxpayer's filing status (e.g., single, married filing jointly).
4. The bill also outlines specific reductions in subtractions based on the level of income exceeding certain threshold amounts.
5. Definitions and adjustments are provided for what counts as provisional income and how these amounts affect the tax subtraction.

Ultimately, this bill aims to help retirees by reducing the tax burden on their Social Security income over a period of years. This phased approach allows individuals to plan for lesser tax liabilities as they continue into retirement.