Included in the Supplemental Budget bill was the provision of a new income tax subtraction for military retirement pay. The new language amends Minnesota Statutes Chapter 290 which covers Income Taxes, specifically that Section defining items which shall be subtracted from federal taxable income. The language reads as follows:

“... to the extent included in federal taxable income, compensation received from a pension or other retirement pay from the federal government for service in the military, as computed under United States Code, title 10, sections 1401 to 1414, 1447 to 1455, and 12733.”

Individuals, estates and trusts eligible for this subtraction from taxable income may
include:

• Members of active components of the armed forces who have performed the required years of qualifying service
• Members of a reserve component, the National Guard, Army National Guard or Air National guard who have performed or were credited for the required years of qualifying service
• Eligible combat-related disabled uniformed services retirees
• Members retired under 10 U.S.C. Chapter 61 - Retirement or Separation for Physical Disability
• Individuals, including Surviving Spouses and/or Dependent Children, eligible for the federal Survivor Benefit Plan