If you receive a qualifying public pension, Minnesota may allow you to subtract some or all of that income from your Minnesota taxable income. This tax break is called the Minnesota Qualified Public Pension Subtraction.
The subtraction can reduce the amount of state income tax you owe by excluding eligible pension income from your Minnesota return.
Tax year 2026 note: This subtraction is available only for certain public pension benefits and is subject to income limitations.
Who qualifies for the Minnesota Qualified Public Pension Subtraction?
You may qualify if:
- You received pension income that is taxable on your federal income tax return.
- The pension was earned through qualifying public service employment.
- Your income falls below Minnesota's eligibility limits for the year.
Eligible pension income generally includes benefits paid under certain public retirement plans, such as:
- Minnesota Public Employees Retirement Association (PERA) basic member plans
- Public Employees Police and Fire Plan
- Local Government Correctional Service Retirement Plan
- Minnesota Teachers Retirement Association (TRA) and qualifying teacher retirement plans
- Minnesota Legislators Retirement Plan
- State agency law enforcement retirement plans
- Certain federal government retirement plans based on service for which no Social Security benefits were earned
- Retirement plans established by another state, its political subdivisions, or the District of Columbia, when reciprocity requirements are met
You may also qualify if you're receiving eligible survivor benefits from one of these plans.
Income limits for the subtraction
Your eligibility depends on your Minnesota adjusted gross income (AGI).
For tax year 2026, you generally qualify only if your income is below the applicable threshold for your filing status. Minnesota updates these amounts periodically, so be sure to use the limits shown in the Minnesota income tax instructions for the tax year you're filing.
If your income exceeds the applicable limit, you won't qualify for the subtraction.
How much can you subtract?
The amount of the subtraction depends on:
- The amount of qualifying pension income you received
- Your filing status
- Your income level
- Any phaseout rules that apply for the tax year
Minnesota's instructions provide worksheets to help determine the exact subtraction amount. If you qualify, your software will calculate the allowable subtraction based on the information entered on your return.
How do I claim the subtraction?
Navigate to:
- State Section
- Edit the Minnesota return using the three dots
- Subtractions from Income
- Total Qualified Public service-related pension payments
What pension income does not qualify?
Not all retirement income is eligible for the Qualified Public Pension Subtraction.
Examples of retirement income that may not qualify include:
- Private employer pensions
- Most IRA distributions
- Most 401(k) and 403(b) distributions
- Pension income from plans that do not meet Minnesota's public pension requirements
Even if retirement income doesn't qualify for this subtraction, it may still be eligible for a different Minnesota retirement-income benefit.
Frequently asked questions
Can I claim the subtraction if I receive a federal government pension?
Maybe. Certain federal retirement benefits based on service for which no Social Security benefits were earned may qualify.
Can a surviving spouse claim the subtraction?
Yes. Eligible survivor benefits from a qualifying public pension plan may qualify for the subtraction.
Do I need to include the pension on my federal return first?
Yes. The pension income must generally be included in your federal taxable income before it can be considered for the Minnesota subtraction.
Additional Information
Is my military pension/retirement income taxable to Minnesota?