Does Minnesota Tax Retirement Income?

Partly. Minnesota taxes some Social Security benefits, subject to an exclusion or age rule.

Social Security is fully subtractable in 2026 when adjusted gross income is no more than $86,410 for a single or head-of-household filer, $110,780 for a joint filer or qualifying surviving spouse, or $55,390 for married filing separately. Above the applicable threshold, the subtraction phases out, so higher earners pay Minnesota tax on more of their federally taxable benefits.

The Minnesota answer is separate from the federal one. Depending on combined income, up to 85% of Social Security benefits can be taxable on the federal return regardless of what Minnesota does, so the state rule changes the state line only. Our guide to states that do not tax Social Security shows where Minnesota sits among the states that still tax benefits.

Yes. Minnesota generally taxes pension income.

Private and most public pension income is generally taxable. For 2026, the qualified public pension subtraction is up to $13,850 for single, head-of-household, or married-filing-separately returns and $27,690 for joint returns or qualifying surviving spouses. It applies only to qualifying public plans where the worker did not also earn Social Security and begins phasing out above $86,410 for single filers and $110,780 for joint filers.

There is no general retirement income exclusion. The two targeted breaks are the Social Security subtraction with its income phase-out and the qualified public pension subtraction, each with its own AGI limits, plus the full military retirement subtraction.

Public and private pensions, annuities, and retirement-plan distributions do not always get the same treatment. The pension comparison lists which states exempt pensions broadly, partly, or only for certain plans.

Yes. Minnesota generally taxes traditional 401(k) and IRA withdrawals.

Traditional 401(k) and IRA withdrawals are fully taxable as ordinary income. Minnesota has no general age-based exclusion for retirement account distributions.

Two timing points matter in Minnesota. A Roth conversion is taxable in the year it is done, and Minnesota starts from federal adjusted gross income, so a large conversion can land in a year when the state exclusion does not cover it. Qualified Roth withdrawals later are generally not taxable at either level. Required minimum distributions follow the same Minnesota rules as any other traditional-account withdrawal.

Every state page on this site runs the same retiree profile so the states can be compared: $30,000 of Social Security, $40,000 withdrawn from a traditional 401(k), and a $20,000 private pension, $90,000 in total.

A 68-year-old with $30,000 of Social Security, $40,000 from a 401(k), and a $20,000 private pension has roughly $25,000 of federally taxable Social Security and an AGI near $85,000, close to the single-filer threshold. Most or all of the taxable Social Security can generally be subtracted at that income level, but the full $60,000 of 401(k) and pension income stays taxable to Minnesota.

The retiree's federal AGI of about $85,500 is just under the $86,410 single threshold, so Minnesota subtracts all $25,500 of federally taxable Social Security. Taxable income is $85,500 less $25,500 less the $17,300 standard deduction for a single filer over 65 ($15,300 plus $2,000), about $42,700. Tax is 5.35% on the first $33,310 and 6.8% on the rest, roughly $2,420. Contrast: a $150,000 lump-sum IRA withdrawal lifts AGI to about $235,500, and because the subtraction shrinks by 10 cents for every dollar of AGI over $86,410, the entire $25,500 Social Security subtraction is gone; taxable income becomes about $218,200 and the tax roughly $15,800, so the extra $150,000 costs about $13,400 in Minnesota tax, about $1,700 of which is the lost Social Security subtraction. Even a modest extra $5,000 withdrawal that pushes AGI to $90,500 trims the subtraction by about $410 on top of the 6.8% bracket rate.

The same $90,000 profile looks different a state line away. The rows below come from the reviewed 51-state table; each state name links to its own guide.

• Wisconsin: treats Social Security as exempt, pensions as partially taxed, and 401(k) and IRA withdrawals as partially taxed, with a top rate of 7.65% and up to $24,000 at age 67+; claiming it bars state credits.
• Florida: has no individual income tax at all.
• Arizona: treats Social Security as exempt, pensions as partially taxed, and 401(k) and IRA withdrawals as taxed, with a top rate of 2.50% and up to $2,500 for qualifying government pensions.

Minnesota gets labeled a high-tax state, and for large IRA balances it is. But a retiree living mainly on Social Security with modest account withdrawals can owe far less than the 9.85% headline suggests, because the Social Security subtraction does real work at moderate incomes.

Military retirement: Military retirement pay, including survivor benefits, is fully subtractable from Minnesota taxable income. See the military retirement tax map for every state's treatment.

Estate and inheritance tax: Minnesota has its own estate tax on estates above a $3 million exemption, with rates from 13% to 16%. There is no inheritance tax.

Selling a home or investments in Minnesota: retirement-income rules do not cover capital gains. See Minnesota capital gains tax before selling appreciated property or a brokerage position in the year you move or retire.

• Confirm the exclusion you are claiming. There is no general retirement income exclusion. The two targeted breaks are the Social Security subtraction with its income phase-out and the qualified public pension subtraction, each with its own AGI limits, plus the full military retirement subtraction.
• Part-year residents. If you moved into or out of Minnesota during the year, retirement income is generally allocated to the period of residency, and the former state may still tax distributions received before the move. Document the move date, the new domicile, and where each distribution was received.
• Withholding and estimates. Pension and IRA custodians often withhold federal tax but not Minnesota tax. If Minnesota taxes any part of your retirement income, check whether quarterly estimated payments are needed to avoid an underpayment penalty.
• Federal side. The federal return has its own rules: up to 85% of Social Security can be taxable, the temporary $6,000 federal senior deduction is available for 2025 through 2028 subject to income limits, and Roth conversions are taxed in the conversion year. State exemptions do not change any of that.
• Large one-time distributions. Watch the Social Security phaseout. An extra IRA withdrawal that pushes AGI past the threshold both adds taxable income and reduces the Social Security subtraction, so the marginal cost of that dollar can be much higher than the stated bracket. Estate planning matters here too given the $3 million exemption.

Comparing states before a move? Use the retirement taxes by state table and the moving states tax guide, and read retirement tax planning for how distributions, conversions, and a move are sequenced together.