Military Retirement in Minnesota
Complete 2026 Tax Guide for Veterans
100% Tax-Free Military Retirement
NEW: Full exemption starting 2024!
Quick Facts: Minnesota for Military Retirees
Minnesota Military Retirement Tax Overview
Major Change: 100% Exemption Starting 2024
NEW: Military Retirement Now Tax-Free!
Minnesota passed legislation in 2023 to exempt 100% of military retirement pay starting in 2024. Previously, military retirement was fully taxable at rates up to 9.85%. This is a major win for military retirees!
This exemption applies to all military retirement income regardless of amount, age, or other income. It includes traditional military retirement pay, Reserve/Guard retirement, and Survivor Benefit Plan (SBP) payments.
What's Now Exempt (2024+)
- - All military retirement pay (100%)
- - Survivor Benefit Plan (SBP) payments
- - VA disability compensation
- - Combat-Related Special Compensation (CRSC)
Still Taxable
- - Civilian employment income (5.35% - 9.85%)
- - TSP/401k withdrawals
- - Social Security (partially taxable in MN)
- - Other pension/retirement income
2026 Tax Savings Example
An E-8 with 26 years receiving $3,300/month ($39,600/year) in military retirement previously paid approximately $2,900/year in Minnesota state tax. Now: $0 tax on military retirement!
Minnesota Veteran Property Tax Benefits
100% Disabled Veteran Exclusion
Veterans rated 100% disabled (or receiving IU) receive market value exclusion up to $300,000 on their primary residence. This can eliminate property tax entirely for many homes.
70-99% Disabled Veteran Exclusion
Veterans with 70-99% VA disability rating receive market value exclusion up to $150,000 on their primary residence.
Property Tax Refund Program
Minnesota's "Circuit Breaker" program provides refunds when property taxes exceed a percentage of household income. Available to all homeowners including veterans.
Surviving Spouse Benefits
Surviving spouses of service members who died in the line of duty or from service-connected disabilities may qualify for the same exclusions as their veteran spouse.
Military Installations in Minnesota
Camp Ripley
Little Falls, Central Minnesota
- - Largest National Guard training center in US
- - 53,000 acres of training area
- - Year-round training operations
- - Joint training with allies
- - Growing cyber mission capabilities
Fort Snelling
Minneapolis-St. Paul
- - Historic military installation (1819)
- - Now primarily administrative
- - Army Reserve/National Guard HQ
- - VA Regional Office located here
- - Near MSP Airport
Minneapolis-St. Paul ARS
Minneapolis-St. Paul International Airport
- - Home of 934th Airlift Wing (AFRC)
- - C-130 Hercules operations
- - Air Force Reserve Command
- - Federal technician positions available
Duluth Air National Guard Base
Duluth, Northeast Minnesota
- - 148th Fighter Wing (F-16s)
- - Air defense mission
- - Growing intelligence mission
- - Beautiful Lake Superior location
Minnesota Cost of Living for Retirees
Cost Breakdown
- Overall Cost of Living 3% above average
- Median Home Price $330,000
- Property Tax Rate 1.08% average
- Sales Tax 6.875% + local
- Average Rent (2BR) $1,350/month
Regional Variations
- Twin Cities Metro: Higher costs, best job market
- Rochester: Mayo Clinic hub, above average costs
- Duluth: More affordable, cooler climate
- St. Cloud: Affordable, near Camp Ripley
- Southern MN: Very affordable, rural lifestyle
Education Benefits for Minnesota Veterans
Minnesota GI Bill
State-funded program providing up to $10,000 for education and training for eligible veterans and service members. Can be used at any accredited institution.
National Guard Tuition Reimbursement
Minnesota National Guard members receive up to 100% tuition reimbursement at state colleges and universities, stackable with federal benefits.
In-State Tuition for Veterans
All veterans qualify for in-state tuition at Minnesota public colleges regardless of previous residency under the Veterans Choice Act.
Free Application Fees
Minnesota waives college application fees for veterans applying to state universities and colleges.
Veteran-Friendly Campuses
University of Minnesota and Minnesota State system schools have dedicated veteran services offices, priority registration, and veteran student organizations.
Best Minnesota Cities for Military Retirees
1. Minneapolis-St. Paul Metro
Major metro area, diverse economy, excellent healthcare
2. Rochester
Home of Mayo Clinic, world-class healthcare
3. St. Cloud
Near Camp Ripley, affordable, VA clinic
4. Duluth
Lake Superior beauty, ANG base, outdoor recreation
VA Healthcare in Minnesota
VA Medical Center
- Minneapolis VAMC - Full-service medical center with teaching hospital affiliation (University of Minnesota)
- St. Cloud VAMC - Full-service facility in central Minnesota
Community-Based Clinics
13+ CBOCs throughout Minnesota including:
- - Rochester, Mankato, Hibbing
- - Maplewood, Ramsey, Brooklyn Park
- - Montevideo, Fergus Falls
Minnesota VA Healthcare Rating: Excellent
Minneapolis VAMC is a major teaching hospital with University of Minnesota partnership. Additionally, Mayo Clinic in Rochester (non-VA) is available for community care referrals - one of the world's best medical facilities.
Pros & Cons of Retiring in Minnesota
✅ Pros
- ✓ NEW: 100% military retirement tax exemption
- ✓ Excellent healthcare (Mayo Clinic, strong VAs)
- ✓ Strong job market (Fortune 500 companies)
- ✓ Beautiful lakes and outdoor recreation
- ✓ Excellent public schools and universities
- ✓ Strong veteran property tax exemptions
- ✓ Minnesota GI Bill ($10,000 education benefit)
❌ Cons
- ✗ Harsh, long winters (among coldest in US)
- ✗ High income tax rates on civilian income
- ✗ Social Security partially taxable
- ✗ Limited active-duty military presence
- ✗ Higher than average cost of living
- ✗ Remote from major military bases
Frequently Asked Questions
Does Minnesota tax military retirement pay?
No! Starting in 2024, Minnesota exempts 100% of military retirement pay from state income tax. This was a major change from previous years when it was fully taxable at rates up to 9.85%.
Is Minnesota a good state for military retirees?
Minnesota has become much more attractive with the new 100% military retirement exemption. Excellent healthcare (including Mayo Clinic), strong job market, and great quality of life. Main drawbacks are cold winters and high taxes on civilian income.
Does Minnesota tax Social Security?
Yes, Minnesota partially taxes Social Security benefits, though exemptions are available based on income. This is different from military retirement which is now fully exempt.
What military bases are in Minnesota?
Minnesota has limited active-duty presence. Main installations include Camp Ripley (largest National Guard training center in US), Fort Snelling (administrative), Minneapolis-St. Paul Air Reserve Station (C-130s), and Duluth ANG Base (F-16s).
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