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S.F. No. 151 - Subtraction for public pension income
Author: Senator Kari Dziedzic
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Date: March 13, 2019


Section 1. Public pension income. Provides a subtraction for pension benefits received from specified Minnesota plans (listed below), federal retirement plans, and other states’ pension plans if the other state offers similar treatment for Minnesota plan benefits. To qualify for the subtraction, the pension benefit recipient or recipient’s survivor must not have received Social Security benefits. Benefits from the following Minnesota plans are eligible for the subtraction:

  • Legislator’s Retirement Plan;
  • State Patrol Retirement Fund;
  • Public Employee Retirement Plan;
  • Teacher’s Retirement Plan; and
  • St. Paul Teacher’s Plan.

The subtraction is modeled after the federal tax treatment of Social Security benefits. The subtraction equals a percentage of the pension benefit amount depending on total income (pension benefits plus one-half of modified adjusted gross income). MAGI is similar to AGI, with some deductions added back.

Subtraction amount = percentage                   Married filers’ income              Single filer’s income
      of benefits subtracted   

100%                                                               $34,000 and under                     $25,000 and under

50%                                                                 $34,001 to $44,000                    $25,001 to $32,000

15%                                                                 Greater than $44,000                 Greater than $32,000

Section 2. Definitions; alternative minimum taxable income. Excludes the amount subtracted under section 1 from the AMT calculation.

The bill is effective beginning in tax year 2019.

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