This bill amends Minnesota Statutes 2024, section 290.0132, subdivision 26, to phase out the taxation of Social Security income for individuals over a specified timeline. The bill introduces a new structure for taxpayers to calculate their allowable subtraction from taxable Social Security benefits. It replaces the previous single subtraction method with a tiered approach that allows for a percentage of taxable Social Security benefits to be excluded from income tax, gradually increasing from 10% in 2025 to 100% by 2035. The bill also clarifies the phaseout thresholds for different filing statuses and adjusts the reduction percentages based on adjusted gross income.

Additionally, the bill includes several insertions and deletions to refine the language and structure of the existing law. Notably, it adds new paragraphs that outline the specific percentages of Social Security benefits that will be exempt from taxation over the coming years, while deleting outdated references to previous subtraction methods. The effective date for these changes is set for taxable years beginning after December 31, 2024, ensuring that the new provisions will be implemented in a phased manner over the next decade.

Statutes affected:
Introduction: 290.0132