Limited individual income tax subtraction permitted for income received from a retirement savings plan.

2025-2026 Regular Session Introduced by Keith Allen and 2 co-sponsors

Minnesota would allow a limited subtraction from taxable income for income distributed from certain retirement savings plans.

Introduction and first reading, referred to Taxes

#retirement #taxation-income

Overview

HF 316 proposes a limited individual income tax subtraction for income received from a retirement savings plan. The bill is introduced in the Minnesota Legislature during the 2025-2026 session and is referred to the House Taxes Committee. Primary sponsors include co-sponsors Danny Nadeau, Keith Allen, and Andrew Myers. The action history shows introduction and first reading on February 13, 2025.

Purpose and Intent

To provide taxpayers with a tax benefit by allowing a limited subtraction from Minnesota individual income tax for income that is received from certain retirement savings plans.

The policy aims to recognize and support retirement savings by reducing current tax liability for qualified retirement income.

Key Provisions (What the bill would do)

Establish a subtraction (exemption) from Minnesota taxable income for a portion of income that is distributed or received from a retirement savings plan.

The term “retirement savings plan” is used in the bill to define the source of the income eligible for the subtraction. (Note: The exact definitions and eligible plan types would be specified in the bill text; this summary reflects the general intent.)

The subtraction is described as limited, indicating a cap or restricted application rather than a full exclusion of all retirement plan distributions.

There may be conditions or thresholds attached (e.g., limits by amount, by number of years receiving distributions, or by taxpayer filing status). Specific numerical limits are not provided in the summary available.

Affected Parties

Individual Minnesota taxpayers who receive income from a retirement savings plan that qualifies under the bill.

Retirees and beneficiaries who rely on distributions from retirement accounts would likely benefit to the extent that their distribution amounts fall within the allowed subtraction amount.

Taxpayers with multiple sources of retirement income may need to apportion the subtraction if the bill imposes per-plan or per-taxpayer caps.

Procedural and Timeline Aspects

Introduced and assigned to the House Taxes Committee on February 13, 2025.

As a first-reading measure, HF 316 will proceed through committee hearings, potential amendments, and subsequent readings before any floor votes.

Any final enactment would require passage by both House and Senate and the signature of the Governor, following Minnesota’s legislative process.

Potential Implications

Tax relief for retirees or those with retirement income, modestly reducing state tax liability.

Administrative considerations for the Department of Revenue to implement the subtraction, including taxpayer guidance, form changes, and verification of eligible retirement income.

Fiscal impact to the state depends on the subtraction’s size and the number of qualifying taxpayers, which would be estimated in a fiscal note.

Notes

The bill text would provide precise definitions (e.g., what counts as a “retirement savings plan”), the exact subtraction amount or formula, eligibility criteria, phase-out rules (if any), interaction with other credits/deductions, and any sunset provisions.

The summary reflects the stated purpose and general approach based on available information; consult the bill text for definitive language and figures.

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