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Last Updated: 12/27/2016

State Income Tax Refund Subtraction

Minnesota does not tax your state income tax refund, though it is subject to federal tax. If you reported a state refund on your federal return for the previous tax year, you may subtract this amount from taxable income on your Minnesota return.
 
This subtraction only applies if you itemized deductions on your federal return for the previous tax year. If you didn’t itemize – or filed using federal Form 1040A or Form 1040EZ – then your state refund was not taxed on this year’s federal return and you can’t claim this subtraction.
 
To claim the subtraction:
  • Check the amount of your state refund reported on your federal return for the previous tax year. (You’ll find it on line 10 of federal Form 1040, line 11 of Form 1040NR, or line 4 of Form 1040NR-EZ.)
  • On your Minnesota return, enter the refund amount on line 5 of Form M1, Individual Income Tax return.