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Minnesota Lawmakers Down to the Wire on Budget Negotiations

Retirees in Minnesota pay taxes on the Social Security benefits they receive. Only a dozen other states tax these benefits. (Virginia Carter)
Retirees in Minnesota pay taxes on the Social Security benefits they receive. Only a dozen other states tax these benefits. (Virginia Carter)
May 19, 2017

ST. PAUL, Minn. – With a budget deadline looming, Gov. Mark Dayton and state legislative leaders are still working on the framework of an agreement.

Sticking points include how much of Minnesota's budget surplus will go to tax cuts, and which specific tax cuts will be included in the final package.

One group hoping to be included in a final agreement is retirees, who pay state income taxes on their Social Security benefits.

Tom Counters is retired and moved to Minnesota a few years ago from Iowa. He says the difference in Minnesota's tax rate hit home the first year he filed his income taxes.

"Our tax burden in Iowa for those seven months was zero dollars, while our tax burden for Minnesota was $1,500 - so yeah, that was quite a shock," he says.

Minnesota is one of 13 states that taxes the income of Social Security beneficiaries, and Minnesotans pay the maximum amount allowable by federal law.

Counters says some seniors are exempt from this tax, but the income guidelines were put in place more than 30 years ago and have never been adjusted for inflation. He says that means many more seniors are being taxed today than when the tax on Social Security income was first established.

Counters points out that many retired people worked hard all their lives, are now on fixed incomes and struggle to make ends meet. He says since Minnesota has a big budget surplus, he'd like to see some of it go to help those who need it the most.

"Obviously there is no free lunch, so we need to pay for the services that are there, but they did have a huge balance," he adds.

The state budget must be finalized soon. The Minnesota Legislature adjourns at midnight on Monday.

Veronica Carter, Public News Service - MN