Railroad Retirement Board Benefits Subtraction

Minnesota does not tax benefits you receive from the Railroad Retirement Board (RRB) for unemployment, sick pay, or retirement. If any of these benefits were taxed on your federal return, you may subtract them from your Minnesota taxable income.

You qualify if your federal adjusted gross income includes Tier 1 or Tier 2 RRB benefits.

• Tier 1 benefits are reported to you on federal Form RRB-1099, similar to the Social Security Administration’s SSA-1099. Tier 1 benefits are subject to federal tax under the Social Security benefit rules. Depending on your income level, these benefits may not be taxed on your federal return.
• Tier 2 benefits are traditional pension benefits and are reported to you on federal Form RRB-1099-R. At least a portion of these benefits is taxable at the federal level under pension and annuity rules.

Note: A pension you receive directly from a railroad company does not qualify for this subtraction.

To claim the subtraction, complete Schedule M1M, Income Additions and Subtractions. Include Schedule M1M when you file Form M1, Individual Income Tax.