The Minnesota State Legislature has introduced Senate Bill 2011, aimed at revising the tax treatment of Social Security benefits for residents. Introduced on February 27, 2025, the bill seeks to provide a more equitable tax structure for retirees by adjusting the maximum allowable subtraction of taxable Social Security benefits based on income levels.

Key provisions of the bill outline specific thresholds for different taxpayer categories. For married couples filing jointly, the maximum subtraction is set at $5,840, which decreases by 20 percent for provisional incomes exceeding $88,630. Single filers and heads of households can subtract up to $4,560, with a similar reduction for incomes over $69,250. Taxpayers filing separately will receive half the maximum subtraction available to joint filers, with adjustments based on their income levels.

The bill defines "provisional income" as modified adjusted gross income plus half of the taxable Social Security benefits received, aligning with federal definitions. Additionally, the Minnesota Department of Revenue will adjust these thresholds annually to account for inflation, ensuring that the provisions remain relevant over time.

Debate surrounding Senate Bill 2011 has focused on its potential impact on state revenue and the fairness of tax burdens on retirees. Supporters argue that the bill will alleviate financial pressure on seniors, while opponents express concerns about the implications for the state budget and the potential for increased taxes on other demographics to offset the changes.

If passed, the bill will take effect for taxable years beginning after December 31, 2024. The outcome of this legislation could significantly affect Minnesota's senior population, potentially enhancing their financial stability while also raising questions about the state's fiscal health. As discussions continue, stakeholders from various sectors are closely monitoring the bill's progress and its implications for the future of taxation in Minnesota.