Minnesota allows the following subtractions from income:
K-12 Education Expense Subtraction
See the Minnesota instructions for full requirements and worksheet.
$200 maximum for computer and educational software expenses. Overall limit of $1,625 per child grades K-6, $2,500 for grades 7-12.
Deduction for Age 65 or Older and Disabled
To qualify for this subtraction, either the taxpayer or spouse (if filing joint) must meet the age requirements (65 or older by the end of the tax year), disability requirements (permanently and totally disabled), and must have received disability income that was federally taxed.
Certain Interest and/or Dividends on from U.S. Obligations
Federally taxed income received from US bills, bonds, savings bonds, notes, certificates of indebtedness, Sallie Mae bonds, dividends paid to mutual funds attributable to such bonds. Ginnie Mae, Fannie Mae, or Freddie Mac bonds are not included.
Indian Reservation Income
If you live and work on the reservation and you're a member of that tribe, enter your reservation sourced income that is taxable on the federal return.
Gain from the Farm Property Sale while you were insolvent
Deduct the gain the sale of farm property if:
- You operated and owned the farm
- Your debt, immediately before the sale, was greater than the fair market value of your assets
- The gain is included in your income on the federal return
- The proceeds of the sale were used to pay off the mortgage, contract or lien on the property
Active Duty Military Pay
US or UN Armed Forces members who are residents of Minnesota can deduct the active-duty military pay that is included in your federal taxable income.
National Guard Reservists Compensation
Income received for training and state active service that is included in your federal income.
Section 179 Expensing Subtraction
For tax years 2014 through 2019, if there was an addition for increased section 179 deductions, enter 20% of the total amount.
Please note: The 2019 Schedule M1M, Income Additions and Subtractions was updated on August 15, 2020. If your Form M1 was completed with a 2019 Schedule M1M from before the update, you may need to recalculate your section 179 expensing addition using an updated schedule to determine the allowable subtraction for 2020.
Expenses Related to Organ Donation (up to $10,000)
If you, your spouse, or dependents donated (while still living) an organ (kidney, liver, lung, pancreas, intestine, or bone marrow) to another individual. Only qualified expenses (i.e. unreimbursed travel and lodging expenses, or lost wages not covered by sick pay due to transplant) are eligible.
Subtraction for Prior Addback of Reacquisition of Indebtedness Income
Any discharge of indebtedness from reacquisition of business debt deferred in 2009 or 2010 and included in the prior year's Minnesota taxable income and included in the current year federal income
AmeriCorps National Service Program
Amount of post-service education award received and included in federal taxable income. If Student Loan Interest was claimed, reduce the subtraction amount by the interest attributed to the award.
Railroad Maintenance Expenses not allowed
If form 8900 was used to claim a federal credit for railroad maintenance expenses, enter the 2020 amount you were not able to claim.
Military Pension or Other Retirement Military Pay
Military retirement pay that is taxed on your federal return and received for active duty service, reserve retirement pay, or survivor benefit.
Federal Bonus Depreciation Subtraction
If you reported 80% of the federal bonus depreciation as an addition to income on your 2013 through 2019 Minnesota return or you received a federal bonus depreciation subtraction in 2020 from an estate or trust, complete the worksheet in the M1M instructions to determine the amount to enter.
Railroad Retirement Board Benefits (Tier I)
Unemployment, sick pay or retirement benefits from the Railroad retirement board that are included in federal taxable income.
Net Operating Loss (NOL)
Enter amount you are carrying forward for Minnesota purposes for 2020.
Section 529 Plan Subtraction (Education Savings account Contribution)
Contributions to a 529 Plan (started in tax year 2017) certain contributions can be deducted.
*Note The program will automatically calculate the credit unless you choose the subtraction.
First-Time Home Buyer Savings Account
Earnings from an account that was opened and contributions were made.
Military Pay for Residents of Another State
Active duty military pay for nonresident of Minnesota included in federal income
Disallowed Section 280E Expenses for Medical Cannabis Manufacturers
If you are registered with the Minnesota department of Health as a medical cannabis manufacturer, you may subtract any expenses that were not allowed for federal purposes under section 280E.
Income From Prior Year Partnership Sale
Only complete this subtraction if both of the following are true:
1. You filed a form M1AR in a prior year to report accelerated recognition of installment income from the sale of a partnership or S-corp.
2, You recognized a gain on your 2020 federal return from the sale which was reported on form M1AR in the prior year.
You may subtract the amount of gain included in your federal income for the current tax year.
Deferred Foreign Income Recognized Under Section 965 of the Internal Revenue Code
You may subtract the amount of deferred income that was recognized on your federal return under the IRC section 965. This amount should be the section 965(a) inclusion amount reduced by section 965(c).
Global Intangible Low-taxed Income Included Under Section 951A of the Internal Revenue Code
You may subtract any amount of global intangible low-taxed income that was included in your gross income for the year under section 951A of the IRC.
Federal Adjustments Not Adopted by Minnesota
Adjustments to federal income due to reporting differences between Minnesota and the federal government.
For additional information, please refer to the Instructions on Form M1M