ST. PAUL – The Minnesota Department of Revenue recently updated its state income tax policy on military retirement pensions to reflect measures the Legislature put in place this year.
Beginning in tax year 2016, taxpayers who receive certain types of military retirement pay (including pensions) may subtract that retirement pay from their taxable income in Minnesota. The tax exemption effective after December 31, 2015.
The Department of Revenue indicates you qualify for this subtraction if your military retirement pay is taxable on the federal return, and computed under U.S. Code, Title 10, sections 1401 to 1414, 1447 to 1455, and 12733.
“This was truly a bipartisan effort on a change that was long overdue, Minnesota is no longer one of a handful of states that is still hammering retired military pensions for state income taxes purposes,” said Rep. Dale Lueck, R-Aitkin, a member of the House Veterans Affairs Division.
Taxpayers who claim this subtraction may not claim the nonrefundable credit for past military service. This exemption applies to tax years 2016 and forward. For tax years 2015 and earlier, the military retirement pay (including pensions) is taxable in Minnesota.
For more information regarding this new law, contact Lueck at rep.dale.lueck@house.mn or visit the Department of Revenue’s Military Pension page. Members on active duty or serving in the National Guard can find information on military tax benefits on the Members of the Military page.
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