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Last Updated: 12/11/2018

Military Pensions

You may be able to subtract certain military retirement pay (including pensions) from your Minnesota taxable income and alternative minimum taxable income. This subtraction is available for tax years 2016 or later.

Do I qualify for this subtraction?

You may qualify if your retirement pay is taxable on your federal return and was for any of the following:

  • Service in the active component of the military (U.S. Code Title 10, sections 1401 to 1414)
  • Retirement pay for service in the reserve component (U.S. Code Title 10, section 12733)
  • Survivor benefit plan payments, including payments to a former spouse as part of a court order (U.S. Code Title 10, sections 1447 to 1455)

You may not claim this subtraction if you claim the Credit for Past Military Service.

How do I claim this subtraction?

Complete Schedule M1M, Income Additions and Subtractions.

Will the subtraction benefit me more than the Credit for Past Military Service?

If ​And ​Then
You received a military pension or other military retirement pay that qualifies for this subtraction. ​ ​
​Your federal adjusted gross income* is $37,500 or more.

*See your federal Form 1040, line 7

​The subtraction will provide a greater benefit.
​Your federal taxable income** is less than your qualifying military pension or retirement pay.

**See your Minnesota Form M1, line D.

​Generally, the subtraction will provide an equal or greater benefit.
​You received $14,018 or more in qualifying military pension or retirement pay.

What if I also receive a federal pension?

Your military pension is combined with your other federal pension. To determine your subtraction, you’ll need to find the percentage of your pension directly related to your past military service.

To find this percentage, contact the Office of Personnel Management (OPM) Retirement Services for a retirement benefit booklet. The booklet provides the years and months of military service along with the total years and months of creditable service.

          U.S. Office of Personnel Management – Retirement Services
          Phone: 1-888-767-6738

What if I was a Minnesota resident in tax years 2015 or earlier?

Your military pensions and other military retirement were taxable in Minnesota. Your pension became taxable once you became a Minnesota resident, even if you earned the pension before moving to Minnesota. If you moved out of Minnesota and established a new state of residence, your pension payments were not taxable to Minnesota after establishing your new residence.