Minnesota has made the following changes to the tax laws for the 2023 tax year:
What changes were made to deductions?
- The standard deduction is increased for each filing status; however, it is reduced, if your income exceeds $220,650 ($110,325 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 2023 tax year are as follows:
Single $13,825 Married Filing Joint, or Qualifying Widow(er) $27,650 Married Filing Separately $13,825 Head of Household $20,800
- 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 $220,650 ($110,325 if you are married and filing a separate return). If your adjusted gross income exceeds $1,000,000, you are limited to 20% of your itemized deductions.
What changes were made to exemptions?
The dependent exemption amount is $4,800 for each qualifying dependent in 2023. Your total exemption amount is reduced if your income
exceeds certain amounts based on your filing status:
• $220,650 for Single
• $330,950 for Married Filing Jointly or Qualifying Widow(er)
• $164,475 for Married Filing Separately
• $275,800 for Head of Household
Child Tax Credit and Working Family Credit
Beginning with tax year 2023, you may be eligible to claim a Child Tax Credit. You may be eligible to receive $1,750 per qualifying child. The credit is combined with the Working Family Credit and is reduced when the greater of your earned income or adjusted gross income exceeds $29,500 ($35,000 if you are married and filing a joint return). See Schedule M1DQC, Dependents and Qualifying Children to help determine qualifying children and Schedule M1CWFC, Minnesota Child and Working Family Credits, for details on the Child Tax Credit.
Social Security Subtraction
If you received social security benefits and your adjusted gross income is below certain thresholds, you may be eligible to subtract the full amount of your taxable benefits. The thresholds are $78,000 for Single or Head of Household, $100,000 for Married Filing Jointly or Qualifying Surviving Spouse and $50,000 for Married Filing Separately. If your income is greater than the threshold amounts, you may be eligible to subtract a portion of your benefits. See Line 12 of Schedule M1M for more information.
Qualified Retirement Benefit Subtraction
If you received a pension for certain public service, there is a new subtraction for pension income. You may be eligible for a subtraction up to $12,500 ($25,000 for a married taxpayer filing a joint return or qualified surviving spouse). See Line 29 of Schedule M1M for more information.
Minnesota Education Credit
Beginning in tax year 2023, there will be changes to the amount of the credit and the income limitations. The definition of income used for purposes of the credit has been changed to adjusted gross income rather than household income. The credit amount per qualifying child increased from $1,000 to $1,500. The total credit is then reduced as your income exceeds the $70,000. The previous limitation was $33,500. See Schedule M1ED, K–12 Education Credit for more information.
Dependent Care Credit
You do not have to be married and filing a joint return to claim the credit for a child born during the year. You may be eligible to calculate your credit using $3,000 of expenses for your child born in 2023, even if you did not have actual expenses for that child or only one spouse had earned income. See schedule M1CD, Child and Dependent Care Credit for more information.
Volunteer Mileage Reimbursement Subtraction
If you received mileage reimbursement in service of a charitable organization, you may now subtract the amount you received that exceeded the volunteer mileage rate (14 cents per mile). The maximum amount of the subtraction is limited to 58.5 cents per mile for reimbursements from January 1 to June 30 and 62.5 cents per mile for reimbursements from July 1 to December 31. For details, see Schedule M1M, Income Additions and Subtractions.