Which states tax Social Security benefits?

As of 2025, approximately nine states tax Social Security to some extent: Minnesota, Colorado, Connecticut, Kansas, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont. Most of these states offer income-based deductions or exclusions that eliminate the tax for middle-income retirees. Minnesota's subtraction mechanism and its 9.85% top rate make it among the more impactful SS-taxing states.

How is "federally taxable Social Security" calculated?

The IRS uses a "combined income" formula. Combined income = AGI (excluding SS) + non-taxable interest + 50% of SS. If combined income is below $25,000 (single) or $32,000 (MFJ), no SS is taxable. Between those thresholds and $34,000 (single) / $44,000 (MFJ), up to 50% of SS is taxable. Above those thresholds, up to 85% of SS is taxable. Minnesota allows you to subtract whatever amount is federally taxable.

What income counts toward the MN phaseout threshold?

The phaseout is based on "total income" — essentially your Minnesota taxable income including the federally taxable portion of SS. Wages, pension, IRA distributions, business income, capital gains, and the federally taxable SS amount all count. The MN Department of Revenue specifies the exact income measure in the form instructions.

Is there a way to plan around the MN SS tax?

Yes. Keeping total income below the phaseout threshold (~$85K single, ~$110K MFJ) preserves the full subtraction. Strategies include: delaying Roth conversions to years with lower income, using qualified charitable distributions (QCDs) from IRAs (which reduce AGI and don't count as income), timing capital gains realizations, and coordinating Social Security claiming age with account drawdown strategy.

Should I move out of Minnesota to avoid SS taxation?

For high-income retirees with significant SS income, Minnesota's 9.85% top rate on fully taxable SS — combined with the federal rate — can mean an effective marginal rate above 40% on SS income. Neighboring Wisconsin, Iowa, and South Dakota do not tax SS. The move decision involves more than just tax, but for retirees spending many years in retirement, the cumulative tax savings can be substantial.

Tax

Minnesota Social Security Tax Calculator 2025 — MN SS Subtraction

Calculate Minnesota's tax on Social Security income. MN allows a subtraction for federally taxable SS, phasing out when income exceeds ~$84,880 (single) or ~$110,240 (MFJ). MN rates up to 9.85%.

By The FinCalc TeamUpdated May 31, 2026

Minnesota is one of approximately nine states that tax Social Security benefits — but it offers a partial relief through the "Social Security benefit subtraction." The subtraction allows you to deduct from Minnesota income the same amount of SS that is taxable at the federal level, subject to a phase-out based on income. For 2025, the subtraction begins to phase out when income exceeds approximately $84,880 (single) or $110,240 (MFJ). For retirees with moderate income, the subtraction can significantly reduce or eliminate MN tax on Social Security — but for higher earners, Social Security can be taxed at Minnesota rates up to 9.85%.

How the MN Social Security Subtraction Works

Minnesota allows you to subtract from MN income the federally taxable portion of Social Security, then phases out that subtraction based on total income:

Step 1 — Compute federally taxable SS (combined income formula):

Combined income = Other income + 50% of SS benefits
  If combined ≤ $25,000 (S) / $32,000 (MFJ): 0% of SS taxable
  If combined $25K–$34K (S) / $32K–$44K (MFJ): up to 50% of SS taxable
  If combined > $34K (S) / $44K (MFJ): up to 85% of SS taxable

Step 2 — Apply the MN phaseout:

Total MN income = Other income + federally taxable SS

Excess income = max(0, total MN income − phaseout start)
  Single/HOH: ~$84,880  |  MFJ: ~$110,240

Reduction = floor(excess income / 3)  ← $1 per $3 of excess
Subtraction = max(0, federally taxable SS − reduction)

Step 3 — Compute MN income tax with and without subtraction:

MN taxable income = total MN income − subtraction
MN tax = Brackets from 5.35% (≤ $31,690) to 9.85% (> $193,240) — single

Who the subtraction helps most:

Moderate-income retirees (income below ~$85K single / ~$110K MFJ)
Those whose SS would otherwise be taxed at 7.85%–9.85% MN rates

When to Use This Calculator

Use this calculator when:

Evaluating whether to stay in Minnesota — For high-income retirees whose SS is fully taxed at 9.85%, the combined federal + MN tax on SS can exceed 40%. This calculator quantifies the annual SS tax cost.
Planning IRA withdrawal strategy — Higher IRA withdrawals increase the phaseout of the MN subtraction in addition to increasing the federally taxable SS. This calculator shows the "total cost" of IRA distributions in MN.
Analyzing Roth conversion timing — Roth conversions in lower-income years may preserve more of the MN subtraction. Model the interaction of conversion income with the phaseout threshold.
Quantifying QCD benefits in Minnesota — Qualified charitable distributions (QCDs) reduce AGI and don't count toward the income measure for the phaseout, unlike regular IRA withdrawals donated to charity.
Comparing retirement income structures — Use this calculator alongside the Roth vs. Traditional calculator to see how different account types affect MN SS taxation over time.

Understanding the Inputs

Filing Status: Determines the phaseout threshold for the MN SS subtraction. Single and head of household filers begin to lose the subtraction at approximately $84,880; married filing jointly at approximately $110,240. These thresholds are adjusted for inflation annually by the Minnesota Department of Revenue.
Total Social Security Benefits Received: Your gross Social Security benefits before any reductions — the amount in box 5 of your SSA-1099 (net benefits plus Medicare premium deductions). Minnesota uses the federally taxable portion of this amount as the maximum subtraction, then phases it out based on your total income.
Other Minnesota Taxable Income: All income other than Social Security: wages, pension and IRA distributions, self-employment income, rental income, capital gains, interest and dividends. This determines two things: (1) how much of your SS is federally taxable (the combined income formula), and (2) whether the MN subtraction phases out. Higher other income means more federally taxable SS and a larger phaseout reduction.

Frequently Asked Questions

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The FinCalc Team

Personal Finance Experts

The FinCalc team is a group of personal finance writers, analysts, and engineers dedicated to building accurate, transparent financial calculators. Every formula is verified against industry standards and explained in plain language.

Last reviewed and updated: May 31, 2026