ST PAUL, Minn. — More than half of Minnesota’s Social Security recipients pay no state taxes on those benefits, due to a system that includes federal exclusions and state subtractions.
But the idea of making all Social Security income exempt from taxation is gaining momentum, especially as the state sits on a projected $17 billion surplus for the next two-year budget cycle.
Aurora Democrat Dave Lislegard told the House Tax Committee Thursday that it was the number one issue people raised as he went door knocking on the campaign trail last year.
The Social Security Tax is a matter of fairness for middle class retirees and an investment in financial security of Minnesotans for years to come,” Rep. Lislegard told his colleagues.
According to the House Research staff there are currently 829,000 households in Minnesota receiving Social Security checks. After federal exclusions and state subtractions are applied, only 42 percent of those households — or 349,000 — face some level of state income tax liability on their Social Security checks.
Lislegard’s bill, House File 300, would allow retirees to subtract all of their Social Security income from their taxable income total. It would also allow retired government employees to claim that subtraction, which is currently not allowed for certain categories of retirees.
“With the unprecedented budget surplus in Minnesota we have an historic opportunity to eliminate this tax and start protecting older Minnesotans.”
Approved – Sully
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