ST.PAUL – State Rep. Walter Hudson, R-Albertville, has co-authored legislation to fully repeal the state tax on Social Security, providing some breathing room for seniors – particularly those on fixed incomes.
Hudson 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, Hudson said the time is right for a full repeal and is co-authoring both H.F. 136 and H.F. 516 to make that happen.
“Let’s not be proud of the fact Minnesota is an extreme outlier as one of the final states to still place an added financial burden on senior citizens by taxing Social Security for no good reason,” Hudson said. “It’s often said that budgets are moral documents. If that indeed is true, it would be quite the indictment of Democrats in St. Paul if they blow through a nearly $18 billion surplus, increase the state budget by 25 percent as the governor proposes – and still neglect to fully eliminate an unjust tax on our seniors.”
Hudson indicated a full 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, Hudson said. He noted 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.”
Hudson 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.
“There are many reasons to like Minnesota, but its tax structure is not one of them,” Hudson said. “Reports indicate our population growth has stagnated, with net domestic migration resulting in around 19,000 more people leaving our state than moved into it last year. While other factors – such as winter weather – have impacts, our onerous tax code is something to keep in mind as well. Fully eliminating the state tax on Social Security would be a step in the right direction.”
Democrats, Hudson 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 languished in the House.