Minnesota Statutes Various State Taxes and Programs (Ch. 289A-295) § 290.0132. Individuals, estates, and trusts; subtractions from federal taxable income or federal adjusted gross income

Subdivision 1. Definition; scope. (a) For the purposes of this section, “subtraction” means an amount that shall be subtracted from federal taxable income for a trust or an estate or federal adjusted gross income for an individual in computing net income for the taxable year to which the amounts relate.

(b) The subtractions in this section apply to individuals, estates, and trusts.

(c) Unless specifically indicated or unless the context clearly indicates otherwise, no amount deducted, subtracted, or otherwise excluded in computing federal taxable income for a trust or an estate or federal adjusted gross income for an individual is a subtraction under this section.

Subd. 4. Education expenses. (a) Subject to the limits in paragraph (b), the following amounts paid to others for each qualifying child are a subtraction:

(b) The maximum subtraction allowed under this subdivision is:

(c) The definitions insection 290.0674, subdivision 1a, apply to this subdivision.

Subd. 9.Delayed bonus depreciation. (a) In each of the five taxable years immediately following the taxable year in which an addition is required undersection 290.0131, subdivision 9, or290.0133, subdivision 11, for a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the delayed depreciation is a subtraction.

(b) For purposes of this subdivision, “delayed depreciation” means the amount of the addition made by the taxpayer undersection 290.0131, subdivision 9, or290.0133, subdivision 11, for a shareholder of an S corporation, minus the positive value of any net operating loss undersection 172 of the Internal Revenue Codegenerated for the taxable year of the addition. The resulting delayed depreciation cannot be less than zero.

Subd. 11.National Guard and reserve compensation. (a) Compensation paid to members of the Minnesota National Guard or other reserve components of the United States military for active service, including compensation for services performed under the Active Guard Reserve (AGR) program, is a subtraction.

(b) For purposes of this subdivision, “active service” means:

Subd. 13.Organ donation expenses. (a) An amount, not to exceed $10,000, equal to qualified expenses related to a qualified donor's donation, while living, of one or more of the qualified donor's organs to another person for human organ transplantation, is a subtraction.

(b) For purposes of this subdivision:

(c) An individual may claim the subtraction in this subdivision for each instance of organ donation for transplantation during the taxable year in which the qualified expenses occur.

Subd. 19. Standard or itemized deductions. (a) The standard deduction amount allowed undersection 290.0123, subdivision 1, is a subtraction.

(b) A taxpayer may elect to claim a subtraction equal to the amount of itemized deductions calculated undersection 290.0122, subdivision 1, in lieu of the subtraction for the standard deduction in paragraph (a).

Subd. 23.Contributions to a section 529 plan. (a) The amount equal to the contributions made during the taxable year to a qualified account is a subtraction.

(b) The definitions undersection 290.0684apply for the purposes of this subdivision.

(c) The subtraction under this subdivision must not exceed $3,000 for married couples filing joint returns and $1,500 for all other filers, and is limited to individuals who do not claim the credit undersection 290.0684.

Subd. 24.Student loan discharges. (a) The qualified student loan discharge of a taxpayer is a subtraction.

(b) For the purposes of this subdivision, "qualified student loan discharge" means a discharge of indebtedness eligible for the exclusion from gross income undersection 9675 of Public Law 117-2. A discharge of indebtedness that occurred after December 31, 2025, but otherwise qualifies for the exclusion under that section is a qualified student loan discharge.

(c) "Qualified student loan discharge" includes but is not limited to a discharge of indebtedness under:

Subd. 25.First-time home buyer savings account. (a) For purposes of this subdivision, the terms defined insection 462D.02have the meanings given in that section.

(b) The earnings on a first-time home buyer savings account allowed bysection 462D.06, subdivision 1, is a subtraction.

Subd. 26. Social Security benefits. (a) A taxpayer is allowed a subtraction equal to the greater of the simplified subtraction allowed under paragraph (b) or the alternate subtraction determined under paragraph (e).

(b) A taxpayer's simplified subtraction equals the amount of taxable social security benefits, as reduced under paragraphs (c) and (d).

(c) For a taxpayer other than a married taxpayer filing a separate return with adjusted gross income above the phaseout threshold, the simplified subtraction is reduced by ten percent for each $4,000 of adjusted gross income, or fraction thereof, in excess of the phaseout threshold. The phaseout threshold equals:

(d) For a married taxpayer filing a separate return, the simplified subtraction is reduced by ten percent for each $2,000 of adjusted gross income, or fraction thereof, in excess of the phaseout threshold.

(e) A taxpayer’s alternate subtraction equals the lesser of taxable Social Security benefits or a maximum subtraction subject to the limits under paragraphs (f), (g), and (h).

(f) For married taxpayers filing a joint return and surviving spouses, the maximum subtraction under paragraph (c) equals $5,840. The maximum subtraction is reduced by 20 percent of provisional income over $88,630. In no case is the subtraction less than zero.

(g) For single or head-of-household taxpayers, the maximum subtraction under paragraph (c) equals $4,560. The maximum subtraction is reduced by 20 percent of provisional income over $69,250. In no case is the subtraction less than zero.

(h) For married taxpayers filing separate returns, the maximum subtraction under paragraph (c) equals one-half the maximum subtraction for joint returns under paragraph (f). The maximum subtraction is reduced by 20 percent of provisional income over one-half the threshold amount specified in paragraph (d). In no case is the subtraction less than zero.

(i) For purposes of this subdivision, "provisional income" means modified adjusted gross income as defined insection 86(b)(2) of the Internal Revenue Code, plus one-half of the taxable Social Security benefits received during the taxable year, and "Social Security benefits" has the meaning given insection 86(d)(1) of the Internal Revenue Code.

(j) The commissioner shall adjust the phaseout threshold amounts in paragraphs (b) to (c) and (d) as provided insection 270C.22. The statutory year is taxable year 2023. The maximum subtraction and threshold amounts as adjusted must be rounded to the nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

Subd. 30. Volunteer driver reimbursement. (a) A taxpayer is allowed a subtraction equal to the amount of mileage reimbursement paid by a charitable organization to the taxpayer for work as a volunteer driver. The subtraction is limited to amounts paid by the organization that:

(b) For the purposes of this section, “charitable organization” means an organization eligible for a charitable contribution undersection 170(c) of the Internal Revenue Code.

Subd. 31. Delayed business interest. (a) For each taxable year an addition is required undersection 290.0131, subdivision 19, the amount of the addition, less the sum of all amounts subtracted under this paragraph in all prior taxable years, that does not exceed the limitation on business interest insection 163(j) of the Internal Revenue Code of 1986, as amended through December 15, 2022, notwithstanding the special rule insection 163(j)(10) of the Internal Revenue Code, is a subtraction. Any excess is a delayed business interest carryforward, the entire amount of which must be carried to the earliest taxable year. No subtraction is allowed under this paragraph for taxable years beginning after December 31, 2022.

(b) For each of the five taxable years beginning after December 31, 2022, there is allowed a subtraction equal to one-fifth of the sum of all carryforward amounts that remain after the expiration of paragraph (a).

(c) Entities that are part of a combined reporting group under the unitary rules ofsection 290.17, subdivision 4, must compute deductions and additions as required undersection 290.34, subdivision 5.

Subd. 34. Qualified retirement benefits. (a) The amount of qualified public pension income is a subtraction. The subtraction in this section is limited to:

(b) For a taxpayer with adjusted gross income above the phaseout threshold, the subtraction is reduced by ten percent for each $2,000 of adjusted gross income, or fraction thereof, in excess of the threshold. The phaseout threshold equals:

(c) For the purposes of this section, "qualified public pension income" means any amount received:

(d) The commissioner must annually adjust the subtraction limits in paragraph (a) and the phaseout thresholds in paragraph (b), as provided insection 270C.22. The statutory year is taxable year 2023.