5/13/2022 11:00:00 AM
On Tuesday morning, Governor Walz signed SF 4233, the Veterans and Military Affairs omnibus finance bill into law. Most of the provisions will take effect at the start of the new state fiscal year on July 1.
There are still several Veterans related issues left to be resolved before May 23 that weren’t included in SF 4233. The largest item is a potential Capital Investment bill to pay for infrastructure needs, including the campus upgrade at the Minnesota Veterans Home – Hastings, which has many buildings that need to be completely renovated. Funding is also needed at the other Veterans homes around the state, as well as the state Veterans cemeteries.
The House tax bill contains two Veterans related pieces. The first changes the disabled Veterans’ exclusion application window for spouses of Veterans who died due to service-connected cause, allowing applications within two years of the service member’s death, within two years of the spouse receiving a Dependency and Indemnity Compensation determination, or by Dec. 31, 2023, whichever is later. Any surviving spouse whose application under this provision was previously denied may reapply. This provision also provides this same extension of the application window for spouses of Veterans who would have been eligible for the exclusion amount to Veterans with a 100% total and permanent disability but died (from any cause) before applying for the exclusion. Any surviving spouse whose application under this provision was previously denied may reapply.
The second provision expands the subtraction for individuals who receive military pensions by allowing a portion of the pension income received through a federal civilian pension if calculation of the pension includes a credit for military service. Civilian federal employees who served in the armed forces may elect to receive “service credit” to their civilian pensions for their military service. To receive a service credit, most individuals must waive their military retirement pay and pay a military service credit deposit based on a percentage of their military base pay. Recipients typically opt to do this to increase their federal civilian pensions. The provision would allow individuals receiving a civilian pension through the Federal Employee Retirement System (FERS) or the Civil Service Retirement System (CSRS) to subtract the percentage share of their federal pension that was earned by converting a military pension into service credit for a civilian pension. The bill requires the taxpayer to calculate their “military service ratio,” which equals the years of service for the taxpayer’s federal pension that were credited for military service, divided by the taxpayer’s total years of service. The subtraction equals the “military service ratio,” multiplied by the amount of FERS or CSRS pension received in the taxable year.
The Senate State Government, Transportation and Elections omnibus bill contains language that authorizes a new Air Medal special license plates and modifies language for those applying for a Veteran drivers license.
All of these remaining issues will be negotiated in conference committees or among leaders of the House and Senate.