Veterans Alliance is privately owned and operated to serve veterans. We are not affiliated with the Department of Veterans Affairs.

Veterans Alliance — Veterans Alliance
← All Minnesota benefits
otherstate

$750 for Past Military Service — but Choose Between This and the Retirement Subtraction

Minnesota pays a refundable $750 credit to a separated member who has either 20 years' service, a 100% total and permanent service-connected rating, or an entitlement to federal military retirement pay. It is income-tested: the $750 falls by 10% of adjusted gross income over $30,000, so it runs out around $37,500. The point to get right is that YOU CANNOT TAKE BOTH this credit and the military retirement pay subtraction under Minn. Stat. 290.0132 subd. 21. For a lower-income retiree the credit is usually worth more; higher up, the subtraction is. Work out both before filing.

Verified August 27, 2026

What this benefit is

Minnesota pays a refundable $750 credit to a separated member who has either 20 years' service, a 100% total and permanent service-connected rating, or an entitlement to federal military retirement pay. It is income-tested: the $750 falls by 10% of adjusted gross income over $30,000, so it runs out around $37,500. The point to get right is that YOU CANNOT TAKE BOTH this credit and the military retirement pay subtraction under Minn. Stat. 290.0132 subd. 21. For a lower-income retiree the credit is usually worth more; higher up, the subtraction is. Work out both before filing.

What it's worth: $750, phasing out above $30,000 of adjusted gross income

  • $750, reduced by 10% of adjusted gross income over $30,000, and not below zero — so it is exhausted at roughly $37,500.
  • REFUNDABLE: it pays out even where no Minnesota tax is owed.
  • You must be separated from military service before the end of the taxable year.
  • Three qualifying routes: twenty years' service; a 100% total and permanent service-connected rating; or entitlement to federal military retirement pay. Two of them need no disability at all.
  • YOU CANNOT ALSO TAKE the military retirement pay subtraction under Minn. Stat. 290.0132 subd. 21 in the same year.
  • Which is worth more depends on your income and retirement pay. Compute both.

Who is entitled to it

  • You served in the U.S. armed forces.
  • You meet one of the three routes.
  • You served at least twenty years.
  • You are rated 100% permanent and total.
  • You receive federal military retirement pay.
  • Minnesota pays this credit.

Not sure whether that describes you?

Answer a few questions about this benefit specifically — we only ask what this one actually depends on, and we stop as soon as we know.

How to claim it

Deadline: With the annual Minnesota return
  1. 1Work out both figures before you file: this $750 credit, and the retirement pay subtraction. You may take only one.
  2. 2The credit tends to win at lower incomes, because it is a flat sum and refundable; the subtraction tends to win higher up.
  3. 3Check which of the three routes you meet — twenty years, 100% permanent and total, or entitlement to retirement pay.
  4. 4If your adjusted gross income is near $37,500, compute the phase-out rather than assuming the credit is gone.
  5. 5Claim it even with no Minnesota tax liability.
Form
Minnesota Form M1C, with the M1
File with
Minnesota Department of Revenue
Documents you will need
dd214 · va benefit summary letter
Annual
Claimed once a year.
Worth knowingThe election between this credit and the retirement subtraction is annual. A year where your income drops can flip which one is better.

Sources

This finder provides an informational match, not a government eligibility determination. The responsible agency decides your application.