Military pensions are now tax exempt in Minnesota

Military pensions now tax exempt in Minnesota

ST. PAUL, Minn. -- It may be one of Minnesota's most important military secrets, except it's not really a secret.

It's actually a piece of good news from the State Capitol that's been flying under the radar; military pensions are now tax exempt from state income taxes.

With tax filing season upon us veterans' agencies and lawmakers are making a concerted to remind veterans that military pensions are now exempt from Minnesota state income taxes.

"The tax benefit is one of the key decision factors as our people get ready to retire from the active army," General Larry Shellito, the Minnesota Veterans Affairs Commissioner, told reporters Wednesday.

"Ironically there’s still a number of people out there that have not heard this news, or have not taken advantage of this benefit."

The exemption can be found in 2016 Schedule M1M, the Income Additions and Subtractions form. The Minnesota Department of Revenue has created an online information page on the new tax benefit.

Long political battle

Rep. Bob Dettmer, a Republican from Forest Lake, worked on this legislation for years. One of factors his fellow lawmakers considered was that some veterans' publications gave Minnesota unfavorable ratings on lists of best places for career military members to retire.

He said some employers had trouble recruiting retirees here, and the tax issue was part of it.

"People like Minnesota. They want to come back to Minnesota. They want to raise their families here," Rep. Dettmer explained.  "These are things that are important to our veterans population, our men and women that serve."

Rep. Dettmer and Rep. Jerry Newton, a Coon Rapids Democrat, ushered through 18 veteran friendly provisions during the 2016 session that were signed into law. But that effort was largely overshadowed by a chaotic close to the session.

"Many of my friends that have retired are surprised that this in fact happened," Jerry Kyser of the United Veterans Legislative Council of Minnesota remarked. "But through the media, and us telling them, it is important that they take advantage of it."

The Dept. of Veterans Affairs estimates roughly 19,000 of Minnesota's 360,000 veterans served long enough to draw a pension, typically 20 years. And most of them arrived in search of a second career because a most pensions aren't enough to support a family.

The state will forego up to $23 million in tax revenue due to the new exemption, but Dettmer said military retirees bring far more than that in human capital to the state.

"What does a veteran have to offer? Look at all the skills they’ve learned over 20 years of service. The men and women, many of them, have been in leadership positions. Employers want people with leadership skills."

Detmer said he hoped who own sons, twins who went to West Point at the same time and have now logged 17 years in active duty military, will choose to retire here if it works out for them.

© 2017 KARE-TV


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