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HF152 (Legislative Session 94 (2025-2026))

Individual income tax subtraction modified for National Guard and reserve compensation.

Related bill: SF668

AI Generated Summary

Purpose

To modify how compensation paid for active service by National Guard and reserve members is treated for Minnesota income tax. Specifically, it expands and clarifies the subtraction (tax exemption) for compensation received for active service, including service performed under the Active Guard Reserve program, and applies to members of the Minnesota National Guard, the National Guard of a neighboring state, or other U.S. military reserve components.

Main Provisions

  • Subtraction for active-service compensation:
    • Compensation paid to members of:
    • Minnesota National Guard
    • National Guard of a neighboring state
    • Other U.S. military reserve components
    • For active service (including AGR) is a subtraction from Minnesota taxable income.
  • Definitions of active service (what counts for the subtraction):
    • State active service: service/duty on behalf of the state or neighboring states in response to public disaster, war, riot, breach of the peace, etc., or when aiding state civil authorities.
    • United States Code, Title 32 service: service or duty under this federal law (as amended through December 31, 1983), including travel to/from that service.
    • Service under section 190.08, subdivision 3.
    • Federally funded state active service: defined in section 190.05, subdivision 5b, and includes service performed under section 190.08, subdivision 3.
  • Neighboring state definition:
    • North Dakota, South Dakota, Iowa, or Wisconsin.

Significant Changes to Law

  • Expands the subtraction to include compensation paid for active service in both Minnesota and neighboring-state National Guards, as well as other reserve components, and includes AGR program service.
  • Clarifies which activities qualify as active service for the subtraction, incorporating both state and federal definitions and historical references (including Title 32 service and specific Minnesota statutes).

Practical Impact

  • Individuals who receive compensation for active service in the specified guards or reserve components may see reduced Minnesota income tax by the subtraction amount.
  • May affect tax planning for National Guard and reserve members who perform service across state lines (in neighboring states).

Terminology Highlights (Key terms from the bill)

  • National Guard
  • National Guard of a neighboring state
  • reserve components
  • active service
  • state active service
  • United States Code Title 32
  • Active Guard Reserve (AGR)
  • neighboring state
  • North Dakota
  • South Dakota
  • Iowa
  • Wisconsin
  • subtraction (income tax subtraction)
  • compensation
  • Minnesota Statutes 2024
  • section 190.05
  • section 190.08
  • subdivision 11

Relevant Terms National Guard, Active Guard Reserve (AGR), active service, state active service, neighboring state, North Dakota, South Dakota, Iowa, Wisconsin, subtraction, compensation, Minnesota income tax, United States Code Title 32, 190.05, 190.08, 190.08 subdivision 3.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 10, 2025HouseActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill amends Minnesota Statutes 2024, section 290.0132, subdivision 11, related to the subtraction for National Guard and reserve compensation.",
      "modified": []
    },
    "citation": "290.0132",
    "subdivision": "11"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Reference to federal law: United States Code, Title 32, as applicable to active service and the National Guard.",
      "modified": []
    },
    "citation": "32 U.S.C.",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Cross-reference to Minnesota Statutes section 190.05, subdivision 5a, clause 1, defining state active service.",
      "modified": []
    },
    "citation": "190.05",
    "subdivision": "5a, clause 1"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Cross-reference to Minnesota Statutes section 190.08, subdivision 3 related to active service.",
      "modified": []
    },
    "citation": "190.08",
    "subdivision": "3"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Cross-reference to Minnesota Statutes section 190.05, subdivision 5b, in active service context.",
      "modified": []
    },
    "citation": "190.05",
    "subdivision": "5b"
  }
]

Progress through the legislative process

17%
In Committee

Sponsors

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