Updated October 4, 2026. Quick answer: Partly. Minnesota Revenue says “You may be able to subtract certain military retirement pay” on Schedule M1M, line 25, if it is taxable on the federal return, and the subtraction cannot be combined with the Credit for Past Military Service.
How Minnesota treats military retired pay
| Item | What the documents say |
|---|---|
| Treatment | Subtraction of certain military retirement pay (including pensions) from Minnesota taxable income, Schedule M1M line 25 |
| Pay that counts | Active component retirement pay under Title 10 sections 1401 to 1414, reserve component retirement pay under Title 10 section 12733, or Survivor Benefit Plan payments under Title 10 sections 1447 to 1455, taxable on the federal return |
| Does not count | Pensions received exclusively from service as a dual-status technician |
| Either or | The subtraction cannot be claimed together with the Credit for Past Military Service |
| Which is better | The Department says the subtraction gives a greater benefit when federal adjusted gross income is $37,500 or more |
| Cap, age or rates | The documents read print no dollar cap, no age threshold and no income tax rates |
A $30,000 example
A retiree with $30,000 of military retired pay taxable on the federal return can subtract it on line 25 if no Credit for Past Military Service is claimed, and the documents print no dollar cap on the subtraction.
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What changes in 2026
No 2026 change is printed in the documents read.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Publication 3, Armed Forces’ Tax Guide.
Related: whether Minnesota taxes pensions, how Minnesota taxes retirement income, military retirement pay by state, and the military retirement calculator.
Sources
- Military Pension Subtraction: https://www.revenue.state.mn.us/military-pension-subtraction
- 2025 Schedule M1M, Income Additions and Subtractions: https://www.revenue.state.mn.us/sites/default/files/2026-07/m1m-25.pdf
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.