Updated September 4, 2026. Quick answer: Mostly yes. Minnesota taxes private pensions and IRA/401(k) distributions fully, with no exclusion. Public and federal pensions get a partial subtraction, but only for retirees whose service did not earn Social Security credit. Military retirement pay is fully exempt.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Minnesota taxes retirement income generally.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Partially exempt via the Qualified Public Pension Subtraction, but only for retirees whose covered service did not earn Social Security credit; capped (currently $13,540 single/$27,080 joint), phasing out above roughly $103,000 to $127,000 AGI. This structure only took effect for tax year 2023. |
|---|---|
| Private (employer) pensions | Fully taxable. No Minnesota subtraction exists for private pensions. |
| Federal government pensions (FERS/CSRS) | Taxable in general, but federal retirees whose service did not earn Social Security credit qualify for the same public-pension subtraction described above. |
| Military retirement pay | Fully exempt, no cap, in effect since 2016. |
| IRA and 401(k)/403(b) distributions | Fully taxable. No Minnesota-specific subtraction exists for IRA, 401(k), or 403(b) distributions. |
| General retirement-income exclusion | Two separate provisions, neither pension-specific: a Social Security subtraction (full below about $84,500 single/$108,300 joint AGI, phasing out above that), and an age-65-or-disabled subtraction (base $9,600 single/$12,000 joint, reduced by nontaxable retirement income and half of excess AGI). |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
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Social Security
Social Security has its own separate subtraction (full below roughly $84,500 single/$108,300 joint AGI), unrelated to the pension rules above. Social Security has its own rules in every state; see the full breakdown in how Minnesota taxes retirement income generally.
Statute and sources
Governing citation: Minn. Stat. sec. 290.0132, subd. 5 (elderly/disabled), subd. 21 (military), subd. 26 (Social Security), subd. 34 (public pension).
Read September 4, 2026.
Related: how Minnesota taxes retirement income generally · does Minnesota tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.