Yes, Social Security is taxed in Minnesota, but a state subtraction wipes out that tax for most retirees. For tax year 2026, joint filers with adjusted gross income below $110,780 can subtract 100 percent of the Social Security benefits included in their federal return, and the threshold is $86,410 for single or head-of-household filers.1Minnesota Department of Revenue. Inflation-Adjusted Amounts for 2026 Above those limits, the subtraction shrinks gradually rather than vanishing, so many higher-income retirees still owe less than the full state rate on their benefits.
What Minnesota Actually Starts With
The state subtraction works against the Social Security amount already taxable on your federal return, so that federal figure is where the Minnesota calculation begins. Federally, up to 50 percent of benefits become taxable once combined income exceeds $25,000 for single filers or $32,000 for joint filers, and up to 85 percent once combined income exceeds $34,000 or $44,000. Combined income equals half your annual benefits plus all other income, including tax-exempt interest.2Office of the Law Revision Counsel. 26 USC 86 – Social Security and Tier 1 Railroad Retirement Benefits3Internal Revenue Service. Publication 915, Social Security and Equivalent Railroad Retirement Benefits Whatever amount ended up taxable federally is the number Minnesota then reduces.
The Simplified Method: Full Subtraction Below the Threshold
Since 2023, Minnesota has offered two ways to calculate the subtraction, and you use whichever produces the larger benefit.4Minnesota Department of Revenue. Social Security Benefit Subtraction For most filers, the simplified method wins. If your AGI is under the threshold for your filing status, you subtract 100 percent of the taxable Social Security from your Minnesota return, meaning the state effectively taxes none of it.
The 2026 simplified method thresholds are:1Minnesota Department of Revenue. Inflation-Adjusted Amounts for 2026
- Married filing jointly or surviving spouse: $110,780
- Single or head of household: $86,410
- Married filing separately: $55,390
These thresholds are adjusted each year for inflation.5Minnesota House of Representatives. Taxation of Social Security Benefits in Minnesota
What Happens if Your Income Is Above the Threshold
The subtraction does not disappear the moment you cross the threshold. It shrinks by 10 percent for each $4,000 of AGI above the limit, and any fraction of a $4,000 increment counts as a full increment.5Minnesota House of Representatives. Taxation of Social Security Benefits in Minnesota So a married couple with $118,780 of AGI is $8,000 over the $110,780 threshold, which is two full $4,000 increments; their subtraction drops by 20 percent, leaving 80 percent of their taxable benefits still shielded. A couple just $1 over the threshold loses 10 percent, because that partial amount rounds up to one full increment.
Ten increments phase the simplified subtraction out entirely. That happens at $150,780 of AGI for joint filers and $126,410 for single or head-of-household filers. Above those points, the alternative method may still deliver a partial subtraction, so it is worth running the numbers both ways or letting tax software compare them.
The Alternative Method
The alternative method resembles Minnesota’s pre-2023 rules. Instead of AGI, it measures provisional income, which is your gross income plus tax-exempt interest plus half of your Social Security and Tier 1 Railroad Retirement benefits.4Minnesota Department of Revenue. Social Security Benefit Subtraction It also caps the subtraction at a fixed dollar amount rather than allowing 100 percent.
The 2026 phase-out thresholds for the alternative method are $88,630 for joint filers and surviving spouses, $69,250 for single or head-of-household filers, and $44,315 for married filing separately.1Minnesota Department of Revenue. Inflation-Adjusted Amounts for 2026 These numbers are not indexed to inflation, so the alternative method loses ground each year against the simplified method.5Minnesota House of Representatives. Taxation of Social Security Benefits in Minnesota Both methods draw their legal authority from Minnesota Statutes Section 290.0132, subdivision 26.6Minnesota Office of the Revisor of Statutes. Minnesota Statutes 290.0132
Married Filing Separately
The rules are tighter if you file separately from your spouse. The 2026 simplified method threshold is $55,390, roughly half the joint figure, and the phase-out accelerates: the subtraction drops 10 percent for each $2,000 of AGI over the threshold rather than each $4,000.4Minnesota Department of Revenue. Social Security Benefit Subtraction The subtraction reaches zero at $75,390 of AGI.
Railroad Retirement Benefits
Tier 1 Railroad Retirement benefits are treated the same as Social Security for this subtraction. If they were included in your federal AGI, you can claim the Minnesota subtraction using the same thresholds and methods, reporting the amount from Form RRB-1099.4Minnesota Department of Revenue. Social Security Benefit Subtraction
Claiming the Subtraction on Your Return
The subtraction is calculated on line 12 of Schedule M1M (Income Additions and Subtractions), using the worksheet in that form’s instructions. Your total M1M subtractions then flow to line 7 of Form M1, the Minnesota individual income tax return.7Minnesota Department of Revenue. 2025 Schedule M1M, Income Additions and Subtractions You have to attach Schedule M1M when you file; if you send Form M1 without it, the Department of Revenue may disallow the subtraction and bill you for the additional tax.
For the simplified method, you only need two numbers off your federal return: your AGI and your taxable Social Security. The alternative method also requires your tax-exempt interest and your gross benefits from Form SSA-1099 (or RRB-1099). Form SSA-1099 reports gross benefits before Medicare premiums or voluntary withholding, and that gross figure is what the alternative method uses.3Internal Revenue Service. Publication 915, Social Security and Equivalent Railroad Retirement Benefits
Estimated Payments if You Still Owe
If your income is high enough that the subtraction only partially offsets your Minnesota tax, quarterly estimated payments may be required. You must pay estimated tax if you expect to owe $500 or more after withholding and refundable credits. To avoid an underpayment penalty, your combined withholding and estimated payments must equal at least 90 percent of the current year’s tax or 100 percent of the prior year’s (110 percent if federal AGI exceeds $150,000).8Minnesota Department of Revenue. Estimated Tax
Quarterly due dates are January 15, April 15, June 15, and September 15.9Minnesota Department of Revenue. Tax Due Dates Underpayments accrue interest at 7 percent for 2026 until paid.10Minnesota Department of Revenue. Penalties and Interest for Individuals If quarterly filing sounds like a chore, you can ask the Social Security Administration to withhold Minnesota-adjacent federal tax directly from your monthly benefit by filing Form W-4V.