SF4249 would expand Minnesota’s individual income tax subtraction for Social Security benefits by making the subtraction unlimited. Under current law, taxpayers may subtract Social Security benefits from taxable income only up to a simplified or alternate subtraction amount, both of which are subject to income-based phaseouts. This bill replaces that structure with a subtraction equal to the amount of taxable Social Security benefits received, effectively allowing taxpayers to exclude all taxable Social Security benefits from Minnesota income tax.
The bill also retains and updates the existing framework for how the subtraction is calculated and phased out, including references to federal definitions of Social Security benefits and provisional income, and it preserves the commissioner’s authority to adjust threshold amounts for inflation. The change would apply to taxable years beginning after December 31, 2025, and would amend Minnesota Statutes 2025 Supplement, section 290.0132, subdivision 26.
Impact
This bill would materially reduce Minnesota taxable income for taxpayers who receive Social Security benefits, especially retirees and other older residents with benefit income. It would amend the state’s individual income tax subtraction statute to remove the current cap on the Social Security subtraction, thereby lowering or eliminating state income tax on Social Security benefits for affected taxpayers. The principal affected statute is Minnesota Statutes 2025 Supplement, section 290.0132, subdivision 26, and the change would take effect for tax years beginning after December 31, 2025.
Sentiment
Based on the bill text and the available context, the bill appears to be presented as a tax relief measure for Social Security recipients, with sponsors from the Senate majority/minority mix suggesting bipartisan interest. Because there are no committee transcripts or recorded votes provided, there is no direct evidence of debate or opposition in the available record. The overall tone of the bill is straightforward and supportive of reducing tax burden on Social Security income.
Contention
The main policy issue is fiscal and distributional: whether Minnesota should fully exempt Social Security benefits from state income tax, which would benefit retirees and other recipients but reduce state revenue. Potential points of contention include the cost to the state budget, whether the benefit should be targeted to lower- and middle-income taxpayers rather than made unlimited, and whether the existing income-based phaseout structure should remain in place. No specific objections or supporters are documented in the provided committee or vote history.