ST. PAUL – State Rep. Ben Davis, R-Mission Township, has authored legislation to fully repeal the state tax on Social Security, providing some breathing room for seniors – particularly those on fixed incomes.
Davis said Minnesota is one of just 12 states that still tax social security benefits. With a $17.6 billion state budget surplus, and price increases straining family budgets, Davis said the time is right for a full repeal. He is the chief author of H.F. 604 to make it happen.
“I look at the state tax on Social Security as a double tax that needs to end,” Davis said. “Seniors already paid payroll taxes on their Social Security contributions but still are required to list these benefits they’ve earned as taxable income on their tax returns. It’s fundamentally wrong for the state to continue doing this to our seniors, with our without a massive surplus. The fact our state has overtaxed citizens by some $18 billion just takes away any excuses to continue this injustice.”
Davis said a full Social Security tax repeal would benefit an estimated 473,000 people with an average tax savings of $1,276. In contrast, Gov. Tim Walz’s budget proposal doesn’t fully repeal the state Social Security tax, with only 43% of Minnesotans receiving some form of relief – on average, $278 per household.
Minnesota’s tax structure is unfriendly to retirees, Davis said. Reports indicate Minnesota loses vastly more domestic residents to other states than it gains. Business and personal finance publisher Kiplinger lists Minnesota among its “not tax-friendly” states for retirees, indicating, “The North Star State offers cold comfort on the tax front to retirees.”
Davis acknowledged cold winters play a role in Minnesota’s migration patterns, which he said simply underscores the importance of improving our state in areas the Legislature actually can control.
“Our state can do so much more to make itself a welcoming home for retirees and it starts with eliminating the Social Security tax,” Davis said. “Sure, a given percentage of people always will want to spend their golden years in warmer locales. Let’s just make it easier to make ends meet for the people who want to stay home, be close with family and watch their grandkids grow.”
Democrats, Davis said, signaled they were all-in for a repeal of the Social Security tax last fall. Now, more than a month in to the 2023 session, bills related to this subject have remained on the back burner in the House.
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