Don't overlook these 5 new tax benefits when filing your 2017 Minnesota tax return

Jan. 2, 2018  |  Carolyn LaViolette

With the first day to file taxes a few weeks away, individuals and businesses are beginning to prepare for the season.

Much of the focus has been on the tax law changes coming from Washington, D.C. However, in early 2017, the Minnesota Legislature passed a new tax bill that will affect state taxes filed in 2018. Among the changes are new individual tax benefits Minnesotans may be able to take advantage of in the coming year.

The Minnesota Society of Certified Public Accountants offers a look at five of the key tax benefits that could affect many Minnesotans. (You can also check out the Minnesota Department of Revenue website for a full list of changes for individual 2017 taxes.) A certified public accountant (CPA) can help you navigate these benefits and determine which may apply for you.

Social Security benefits subtraction

Those who receive Social Security may qualify for a new subtraction from income on their state return, on top of the federal exclusion. The maximum subtractions range from $2,250 to $4,500.

Subtraction amounts and eligibility are based on filing status and provisional income, and will be adjusted for inflation in the future. A CPA can help you determine if you are eligible and how much your subtraction amount may be.

529 College Savings Plan credit or subtraction

There are two new provisions this year for Minnesota taxpayers who contribute to a 529 College Savings Plan: a tax credit or a subtraction. Working with a CPA can help you figure out which option is most beneficial for you.

With the tax credit, Minnesotans can receive a maximum of $500 or 50% of contributions made during the year. Income limits apply, and this credit is only available to Minnesota residents.

Those opting for the subtraction can qualify for up to $3,000 if married filing jointly, or up to $1,500 if filing single, head of household, or married filing separate. There are no income limits, and this credit is available to non-residents as well.

If you contributed to a relative’s College Savings Plan in Minnesota or another state, you may also qualify.

Student loan tax credit

Minnesotans may now qualify for a nonrefundable tax credit on their student loan payments each year. Full-year and part-year state residents who make payments on qualifying post-secondary education loans may be eligible for a credit up to $500 per year, or $1,000 for married couples who both make payments and file their taxes jointly.

Parents cannot make payments on their student’s loans and take the tax credit – only the taxpayers whose loan it is may qualify.

Teachers earning a master’s degree

Minnesota educators who earn their master’s degree may now be eligible for a single-time nonrefundable tax credit. Credits are available up to $2,500 or the sum of tuition, fees, books and instructional materials not covered by scholarships or reimbursements.

Some restrictions apply. Teachers must be enrolled after June 30, 2017, and claim the credit in the year the program is completed. The degree cannot include a pedagogy component, but must focus on one of the following subjects: reading, English or language arts, mathematics, science, foreign languages, civics and government, economics, arts, history or geography.

First-time homebuyer savings account

2017 was the first year that Minnesota individuals could contribute to a first-time homebuyer savings account. Any account holder – whether or not you are also the beneficiary – can subtract the interest earned on the account from your Minnesota taxable income.

There are annual contribution limits, and earnings can only have a 10-year lifespan before being subjected to a 10 percent tax.

CPAs are experts in both individual and business taxes, and can help you make the most of these benefits. Don't have a CPA? Visit or call 800-331-4288 to connect with a CPA today.

The author wishes to thank Mike Crabtree, CPA for contributing to this blog post.

Topics: Tax

Carolyn LaViolette

Carolyn LaViolette is the MNCPA’s communications manager, working to enhance members’ professional reputations through content, media relations and public affairs. She is also the MNCPA’s unofficial pianist and has tickled the ivories at multiple MNCPA events. Outside of her love for writing and music, Carolyn spends her time playing with her two daughters, attending Tommie football games with her husband, and memorizing the lyrics to musicals. If you can’t get tickets to Hamilton, she is happy to sing the soundtrack for you. She can be reached at 952-885-5530 or

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