ST. PAUL – State Rep. Jeff Dotseth, R-Silver Township, has authored legislation to fully repeal the state tax on Social Security, providing some breathing room for seniors – particularly those on fixed incomes.
Dotseth 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, Dotseth said the time is right for a full repeal. He is the chief author of H.F. 516 to do exactly that.
“This is a crucial issue in our region, where we have an aging community and price increases in today’s economy make it challenging to simply heat your home and put food on the table,” Dotseth said. “These dollars already were taxed once, so why is our state taxing them a second time? Eliminating this tax is not only the right thing to do, it also would be something of a thank-you to the people whose hard-earned dollars laid the foundation for us to enjoy the fruits of their labor today. If we can’t make this correction at a time the state has around $18 billion in surplus revenue, will we ever?”
Dotseth 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, Dotseth said. Reports indicate Minnesota loses far 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.”
Dotseth 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.
“It’s no secret winters are tough in Minnesota and, during the most bitter cold snaps, we sometimes can’t help but ask ourselves why on Earth we choose to live here,” Dotseth said. “While there always will be snowbirds flocking to warmer states – or even permanently relocating there – our state can’t afford to have bad policies causing additional incentive for people to leave. Our tax structure is one major thing we need to improve in that regard.”
Democrats, Dotseth said, signaled they were all-in for a repeal of the Social Security tax last fall but now, more than a month in to the 2023 session, bills related to this subject have remained on the back burner in the House.
-30-