This bill amends Minnesota Statutes 2024, section 290.0132, subdivision 26, to phase out the taxation of Social Security income for individual taxpayers. The amendment introduces a new structure for determining the subtraction amount for taxable Social Security benefits, allowing taxpayers to choose between a simplified subtraction and a new two-tiered alternate subtraction system. The first alternate subtraction will gradually increase the percentage of taxable Social Security benefits that can be excluded from income tax over a ten-year period, starting at 10% for taxable years beginning after December 31, 2024, and reaching 100% by taxable years beginning after December 31, 2034.

Additionally, the bill makes several deletions and insertions to clarify the calculation of the subtraction amounts based on adjusted gross income thresholds. The phaseout thresholds for different filing statuses are maintained, but the new language specifies the gradual increase in the percentage of Social Security benefits that can be excluded from taxation. The effective date for these changes is set for taxable years beginning after December 31, 2024.

Statutes affected:
Introduction: 290.0132