According to Minnesota's Form M1M instructions, If you received certain pension pay for public service, you may be able to reduce your taxable income. To qualify, your pension pay must be taxable on your federal return and paid to you as a member (or for survivor benefits) under plans governed by:
- Chapter 353 (basic member of the Public Employees Retirement Association)
- Chapter 353, sections 353.63 to 353.666 (Public Employees Police and Fire plan)
- Chapter 353E (basic member of the Local Government Correctional Service Retirement Plan)
- Chapter 354 or 354A (basic member of the Teachers’ Retirement Association)
- Chapter 3A (basic member of the Legislators plan)
- Chapter 352B (State agency law enforcement retirement fund)
- Any federal government plan based on service for which no Social Security benefits were earned
- A plan created by another state or its political subdivisions or District of Columbia, if the other state allows a similar or reciprocal subtraction or exemption for the plans mentioned above"
Are there any limitations?
Based on your filing status, your Adjusted Gross Income (AGI) must be lower than the following amount to qualify for the subtraction.
- Married Filing Jointly or Qualifying Surviving Spouse - $118,000
- Single or Head of Household - $96,000
- Married Filing Separately - $68,000
See also Is my military pension/retirement income taxable to Minnesota?