Minnesota House introduces bill for unlimited Social Security tax subtraction

Minnesota taxpayers may soon see a significant change in how their Social Security benefits are taxed, thanks to House Bill 100, introduced on February 10, 2025. This proposed legislation aims to allow an unlimited subtraction of Social Security income from individual income taxes, potentially easing the financial burden on retirees and low-income residents.

The bill amends Minnesota Statutes to eliminate the current phaseout thresholds that reduce the amount of Social Security benefits eligible for subtraction based on a taxpayer's adjusted gross income. Under the existing law, taxpayers face a gradual reduction of their Social Security subtraction as their income exceeds certain limits—$100,000 for married couples filing jointly and $78,000 for single filers. House Bill 100 seeks to remove these restrictions, allowing all taxpayers to fully subtract their Social Security benefits from their taxable income.

Supporters of the bill argue that it addresses the growing financial challenges faced by retirees, particularly in a state where the cost of living can be high. By allowing an unlimited subtraction, the bill could provide much-needed relief to seniors and low-income individuals who rely heavily on Social Security for their livelihoods.

However, the bill has sparked debates among lawmakers regarding its potential impact on state revenue. Critics express concerns that removing the phaseout could lead to significant revenue losses for the state, which may affect funding for essential services. As the bill moves to the Committee on Taxes, discussions are expected to focus on balancing the needs of taxpayers with the fiscal responsibilities of the state.

If passed, House Bill 100 could have far-reaching implications for Minnesota's tax structure and its residents' financial well-being. The bill's progress will be closely monitored as it navigates the legislative process, with advocates hopeful for a positive outcome that could enhance the economic stability of many Minnesota families.