Mostly taxed
How Minnesota taxes retirement income
Minnesota is one of the few states that can tax Social Security, but most retirees owe nothing on it. Single filers with adjusted gross income under $84,490 and joint filers under $108,320 can subtract all of their taxable Social Security for 2025. Above that, the subtraction shrinks by 10% for every $4,000 of extra income.
Pensions, 401(k), 403(b), 457(b) and IRA withdrawals are generally taxed at Minnesota’s rates of 5.35% to 9.85%. There is one break for public workers: a qualified public pension subtraction for the part of a government pension earned in years when you were not also paying into Social Security through that job.
Minnesota also has an age-based subtraction for people 65 and older with low incomes. For most middle-income retirees, though, Minnesota taxes pensions and account withdrawals in full, which makes it one of the higher-tax states for retirees.
Questions
Does Minnesota tax TRA and PERA pensions?
Yes, generally. Only the part of a public pension earned without Social Security coverage in that job can be subtracted.
Does Minnesota tax Social Security?
Not for single filers under $84,490 or joint filers under $108,320 of income (2025). Above that, part of it is taxed.
Are IRA withdrawals taxed?
Yes, at Minnesota’s normal rates.