MN HF3461

Establishes a new public pension income subtraction for Minnesota state income tax purposes, allowing eligible retirees to exclude certain pension benefits from taxable income effective for tax years beginning after December 31, 2021.

Provides a three-tier federal exclusion formula based on "provisional income," ranging from 100% exclusion for lower-income retirees to 85% of benefits or 85% of income over the adjusted base amount for higher-income taxpayers.

Sets maximum state exclusion amounts of $5,450 for joint returns, $2,725 for married filing separately, and $4,260 for all other filers, phased out by 20% of provisional income exceeding $82,770 (joint) or $64,670 (other filers).

Qualifies eligible pension benefits from Minnesota public pension plans (chapters 3A, 352B, 353, 354, 354A), federal retirement systems, or other states' public retirement systems where the recipient is not also receiving Social Security benefits on the same service.

Amends the Minnesota alternative minimum tax definition to include the new public pension subtraction as a deductible amount when calculating alternative minimum taxable income.