The Minnesota legislature was very active in 2023 when it came to new tax implications. Minnesota enacted multiple changes that will impact taxpayers, such as adjustments in tax rates, deductions, credits and reporting requirements. Below are some changes that may affect you when filing for the 2023 tax year.

Individual Tax Law Changes

Social Security Income Subtraction

Minn. Stat, 290.0132(26) has been amended and allows Minnesota taxpayers who earn Social Security income to subtract a greater amount than previous years. For 2023, the new method takes into account inflation and allows taxpayers to subtract the greater of a new simplified method or alternative method subtraction. The “simplified method” subtraction is 100% of taxable Social Security income, and for every $4,000 over the phase-out thresholds the subtraction is reduced by 10%. The simplified method phase-out amounts and the 2023 alternative amounts will be released at a later date.

Child Tax Credit

Minnesota taxpayers can now earn up to $1,750 for each dependent under the age of 18 at the end of tax year 2023. Joint filers making less than $35,000 and all other filers who earn less than $29,500 are eligible for the maximum credit of $1,750. Households which earn more than these listed amounts may still be eligible for the credit, but at a reduced amount. Keep an eye out for updates, as these phase-out values are not yet finalized.

K-12 Education Credit

The qualifications for the K-12 Education Credit were adjusted during 2023. Previously, the income eligibility was capped at $33,500. For 2023, the maximum adjusted gross income limit will increase to $76,000 for 1 or 2 qualifying children and $79,000 for 3 or more qualifying children. Additionally, the credit amount was increased from $1,000 to $1,500 per qualified child in grades K-12.

Property Tax Refund Changes

If your property tax increased by more than 6% in 2022 or 2023, you may be eligible for a property tax refund of 20.572%. If you filed for your 2022 property tax refund (Form M1PR) before June 14, 2023, you may need to amend:

• If you filed Form 2022 M1PR as a renter or homeowner, no amendment is necessary. Minnesota Revenue will adjust your refund.
• If you are a homeowner who didn’t originally file a M1PR in 2022, review the updated 2022 M1PR instructions and determine if you qualify under the amended rules. If you determine that you now qualify for a 2022 M1PR refund, you should file the 2022 Form M1PR by August 15th, 2024, to receive your appropriate refund.