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SF 104

Unlimited Social Security taxation subtraction allowance

2025-2026 Regular Session Introduced by Steve Drazkowski

Bill would allow Minnesota taxpayers to subtract unlimited Social Security benefits from state income tax, potentially eliminating state taxation on all Social Security income.

Referred to Taxes
#revenuedepartment #taxation-income
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WeVote Research Nonpartisan
Bill Summary · SF 104

Legislative bill overview

SF 104 would allow Minnesota taxpayers to subtract unlimited amounts of Social Security benefits from their state taxable income. Currently, Minnesota taxes Social Security benefits as ordinary income with limited or no exclusions depending on total income levels. This bill would essentially exempt all Social Security income from Minnesota state income tax.

Why is this important

Social Security is a primary income source for many retirees, and state taxation of these benefits directly reduces retirement security for seniors on fixed incomes. Minnesota is one of 13 states that taxes Social Security benefits, making this a concrete policy difference affecting approximately 500,000+ Social Security recipients in the state. The fiscal impact would be significant—preliminary estimates suggest this could reduce state revenue by hundreds of millions of dollars annually, affecting funding for schools, healthcare, and other services.

Potential points of contention

  • Revenue impact and state budget: Eliminating Social Security taxation would substantially reduce state income, requiring either spending cuts or tax increases elsewhere
  • Equity concerns: This primarily benefits retirees over working-age Minnesotans; questions arise about whether this is the most effective use of tax policy for economic equity
  • Interaction with federal policy: Social Security taxation varies by income level federally; unlimited subtraction could create complex interactions with federal tax planning
  • Fiscal sustainability: Whether the state budget can absorb this revenue loss without impacting education, healthcare, or infrastructure funding

Compiled from official sources — confirm details with the bill’s official record.

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