Bill > HF1632

This bill modifies Minnesota's tax code to provide a new tax subtraction for federal foreign service pension income. Specifically, the bill allows taxpayers who receive retirement pay from the federal government for foreign service (as established under United States Code, title 22, section 4071) to subtract a portion of that income from their state taxes. The subtraction is calculated by multiplying the total compensation received by a fraction that represents the number of years of foreign service divided by the total number of years of civil service for which the taxpayer receives pension income. Additionally, the bill makes a technical amendment to the state's alternative minimum tax calculation by adding the new foreign service pension subtraction to the list of allowable deductions. Both provisions will take effect for taxable years beginning after December 31, 2024, meaning taxpayers can first use this subtraction when filing their 2025 state tax returns. This change aims to provide tax relief for federal foreign service workers by reducing their state tax liability proportional to their years of foreign service.

Budget and Finance

https://www.revisor.mn.gov/bills/bill.php?b=House&f=HF1632&ssn=0&y=2025