SF 1159

Introduction - 94th Legislature (2025 - 2026)

Posted on 02/14/2025 09:25 a.m.

A bill for an act
relating to taxation; individual income; providing for a full subtraction of taxable
Social Security benefits for veterans and surviving spouses; amending Minnesota
Statutes 2024, section 290.0132, subdivision 26.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 290.0132, subdivision 26, is amended to read:

Subd. 26.

Social Security benefits.

(a) new text begin Except as provided in paragraph (k), new text end a taxpayer
is allowed a subtraction equal to the greater of the simplified subtraction allowed under
paragraph (b) or the alternate subtraction determined under paragraph (e).

(b) A taxpayer's simplified subtraction equals the amount of taxable social security
benefits, as reduced under paragraphs (c) and (d).

(c) For a taxpayer other than a married taxpayer filing a separate return with adjusted
gross income above the phaseout threshold, the simplified subtraction is reduced by ten
percent for each $4,000 of adjusted gross income, or fraction thereof, in excess of the
phaseout threshold. The phaseout threshold equals:

(1) $100,000 for a married taxpayer filing a joint return or surviving spouse;

(2) $78,000 for a single or head of household taxpayer; and

(3) for a married taxpayer filing a separate return, half the amount for a married taxpayer
filing a joint return.

(d) For a married taxpayer filing a separate return, the simplified subtraction is reduced
by ten percent for each $2,000 of adjusted gross income, or fraction thereof, in excess of
the phaseout threshold.

(e) A taxpayer's alternate subtraction equals the lesser of taxable Social Security benefits
or a maximum subtraction subject to the limits under paragraphs (f), (g), and (h).

(f) For married taxpayers filing a joint return and surviving spouses, the maximum
subtraction under paragraph deleted text begin (c) deleted text end new text begin (e) new text end equals $5,840. The maximum subtraction is reduced by
20 percent of provisional income over $88,630. In no case is the subtraction less than zero.

(g) For single or head-of-household taxpayers, the maximum subtraction under paragraph
deleted text begin (c) deleted text end new text begin (e) new text end equals $4,560. The maximum subtraction is reduced by 20 percent of provisional
income over $69,250. In no case is the subtraction less than zero.

(h) For married taxpayers filing separate returns, the maximum subtraction under
paragraph deleted text begin (c) deleted text end new text begin (e) new text end equals one-half the maximum subtraction for joint returns under paragraph
(f). The maximum subtraction is reduced by 20 percent of provisional income over one-half
the threshold amount specified in paragraph (d). In no case is the subtraction less than zero.

(i) For purposes of this subdivision, "provisional income" means modified adjusted gross
income as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of the
taxable Social Security benefits received during the taxable year, and "Social Security
benefits" has the meaning given in section 86(d)(1) of the Internal Revenue Code.

(j) The commissioner shall adjust the phaseout threshold amounts in deleted text begin paragraphs (c) and
(d) deleted text end new text begin paragraph (c), clauses (1) and (2), new text end as provided in section 270C.22. The statutory year is
taxable year 2023. The maximum subtraction and threshold amounts as adjusted must be
rounded to the nearest $10 amount. If the amount ends in $5, the amount is rounded up to
the nearest $10 amount.

new text begin (k) Notwithstanding paragraphs (a) to (j), the amount of Social Security benefits received
by a veteran or surviving spouse of a veteran is a subtraction. For purposes of this paragraph,
"veteran" has the meaning given in section 197.447.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2024.
new text end