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WASHINGTON, Jan. 12, 2007 – The Minnesota governor announced a new program this week to exempt troops and retirees who call the “Land of 10,000 Lakes” home from paying state income tax on military pay and pensions and provide other new benefits.
Gov. Tim Pawlenty unveiled the $74.8 million Military and Veterans Support Package Jan. 8. The package includes two dozen initiatives to assist servicemembers, their families and veterans. It will be included in the governor’s new budget proposal, to be submitted to the state legislature later this month.
“The brave men and women in the military raise their hands and courageously serve all of us,” Pawlenty said in announcing the initiative. “We owe them our appreciation and respect in our words and deeds. This Military and Veterans Support Package strongly sends that message.”
The package will allow active- and reserve-component troops who claim Minnesota as their state of residence to subtract 100 percent of their military pay and pensions and other payments related to military service when they compute their state income tax, state officials explained. These payments are taxable income under the current system.
The tax exemption is expected to be phased in over a four-year period. State officials predicted servicemembers and veterans could save $16.5 million in taxes during fiscal years 2008 and 2009, the first budget cycle to include the benefit, and more than twice that when it is fully phased in.
Pawlenty called the initiative an effort to reward troops and veterans for their service. “Exempting military pay from state income tax is a way to show veterans that we appreciate them and want them to stay in Minnesota to help build an even greater state,” he said. “We need their skills, their patriotism and their sense of service.”
In addition to tax exemptions, the governor’s package includes a Minnesota GI Bill that will provide education benefits to thousands of veterans and their dependents. The bill would supplement the federal GI Bill by providing eligible veterans and eligible family members $1,000 per semester for up to five years to help cover tuition, books, room and board, and other post-secondary school fees.
State officials say the program could benefit as many as 7,000 veterans and 600 spouses and dependents per semester and will provide $30 million in benefits over the next two years.
Among the first troops expected to benefit from the new benefits package are members of the Minnesota Army National Guard’s 1st Brigade Combat Team, 34th Infantry Division. The Defense Department announced yesterday that the unit, which has served in Iraq since March 2006, will have its deployment extended up to 125 days.
The Pentagon announcement of the 1st Brigade’s extension came one day after President Bush announced in an address to the nation that he had committed more than 20,000 additional American troops to Iraq, most of them to Baghdad.
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