MN SF16

Expands Social Security benefits subtraction by allowing taxpayers to subtract the full amount of taxable Social Security benefits received, up to maximum thresholds of $5,150 for joint filers and $4,020 for single filers, with phase-out beginning at $78,180 and $61,080 respectively.

Establishes new public pension income subtraction for qualified benefits from Minnesota public pension plans and federal retirement systems, allowing federal exclusion of up to 100 percent of qualified benefits for lower-income taxpayers with graduated phase-out at higher income levels.

Sets maximum state pension exclusion at $5,450 for joint returns and $4,260 for other taxpayers, reduced by 20 percent of provisional income exceeding $82,770 for joint filers and $64,670 for other filers.

Limits public pension exclusion to benefits based on service for which the recipient is not receiving Social Security benefits, and extends eligibility to benefits from other states' public retirement systems if those states offer reciprocal deductions.

Applies all provisions retroactively to taxable years beginning after December 31, 2022, with amounts adjusted annually based on inflation using 2019 and 2022 as baseline years.