Minnesota has made the following changes to the tax laws for the 2025 tax year:
What changes were made to deductions?
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The standard deduction is increased for each filing status; however, it is reduced, if your income exceeds $238,950 ($119,475 if you are married and filing a separate return). If you are married and filing a separate return, you may only claim the standard deduction if your spouse did not itemize deductions.
The standard deductions for the 2025 tax year are as follows:Single $14,950 Married Filing Joint, or Qualifying Widow(er) $29,900 Married Filing Separately $14,950 Head of Household $22,500 - Minnesota enacted its own allowable itemized deductions beginning in 2019. You may itemize deductions on your Minnesota income tax return even if you claimed the standard deduction on your federal income tax return. Itemized deductions are reduced as your income exceeds $238,950 ($119,475 if you are married and filing a separate return). If your adjusted gross income exceeds $1,083,150, you are limited to 20% of your itemized deductions.
What changes were made to exemptions?
The dependent exemption amount is $5,200 for each qualifying dependent in 2025. Your total exemption amount is reduced if your income exceeds certain amounts based on your filing status:
• $239,050 for Single
• $358,550 for Married Filing Jointly or Qualifying Widow(er)
• $179,275 for Married Filing Separately
• $298,800 for Head of Household
Advance Payment of Child Tax Credit
Taxpayers may make an election to receive advance payments of their 2026 Child Tax Credit. You must be eligible for a child tax credit in 2025 to receive advance payments for 2026.
Reconciliation of Advance Payments of Child Tax Credit
Beginning with tax year 2025, taxpayers who made an election to receive advance payments of their 2025 Child Tax Credit on their 2024 income tax return, must file a 2025 Minnesota income tax return. You must file a Minnesota income tax return even if you are not otherwise required to file a return. Your 2025 refund will be reduced, or your tax liability will be increased by the amount of advance payments you are required to include on your 2025 return.
Coerced Debt Subtraction
If debt was incurred in your name, the debt was subsequently discharged by a court, and the court determined the discharged amount to be coerced debt, you are eligible to take a subtraction on Schedule M1M, Income Additions and Subtractions for the debt that was discharged and included in federal adjusted gross income.
Consumer enforcement public compensation subtraction
If you received consumer enforcement public compensation from the consumer protection restitution account after being harmed by certain unlawful behaviors of others as determined by a court order, you may may take the amount received as a subtraction on Schedule M1M, Income Additions and Subtractions to the extent it is included in federal adjusted gross income.
Foreign service retirement subtraction
If you received a pension for foreign service, a portion of the amount of your federal pension compensation or other retirement pay received for foreign service may be taken as a subtraction on Schedule M1M, Income Additions and Subtractions.
Service Employees International Union (SEIU) stipend payment subtraction
If you are a member of SEIU and received stipend payments from human services, you may subtract the amount of federally taxable stipend payments you received from the Minnesota Department of Human Services, per the collective bargaining agreement between the Service Employees International Union (SEIU) Healthcare Minnesota & Iowa and the State of Minnesota on Schedule M1M, Income Additions and Subtractions.
Federal tax law enacted since May 1, 2023
Rules used to determine Minnesota Individual Income Tax are generally based on the Internal Revenue Code (IRC) as amended through May 1, 2023, with certain exceptions. Since that date Congress has enacted H.R. 1 of 2025. If you are affected by any of the provisions included on Schedule M1NC, Federal Adjustments, complete Schedule M1NC to make the necessary adjustments when you file Form M1.