Are Union Dues Tax Deductible in Minnesota?

Whether you can deduct union dues on your tax return in Minnesota depends on which tax return is being discussed. The rules for federal income taxes and Minnesota state income taxes are different. A federal tax law change altered the deductibility of these expenses for many individuals across the country. The divergence in these rules means that while the deduction has been eliminated at one level of government, it remains available at another.

Federal Tax Treatment of Union Dues

For federal income tax purposes, union dues are categorized as an unreimbursed employee expense. Prior to 2018, taxpayers who itemized deductions could potentially deduct a portion of these expenses. This changed with the passage of the Tax Cuts and Jobs Act of 2017 (TCJA). This federal law suspended the miscellaneous itemized deduction for unreimbursed employee expenses for the tax years 2018 through 2025.

The change was part of a broader tax system overhaul that also significantly increased the standard deduction amount. As a result, W-2 employees who pay union dues cannot currently use that expense to reduce their federal taxable income. The rules under the TCJA are scheduled to expire at the end of 2025. Unless Congress acts to extend the current law, the deduction for miscellaneous itemized deductions, including union dues, may be reinstated for the 2026 tax year.

Minnesota State Tax Treatment of Union Dues

Minnesota’s state tax law does not align with the federal changes implemented by the TCJA regarding employee expenses. The state has chosen not to conform to the federal suspension of miscellaneous itemized deductions. Consequently, Minnesota taxpayers are still permitted to deduct unreimbursed employee expenses, which explicitly includes union dues, on their state income tax return.

The state continues to recognize these job-related costs as a valid deduction against state income. Therefore, while a Minnesota resident will find no place to claim union dues on their federal return, the expense is fully recognized for state tax calculations. This state-specific provision allows union members to reduce their Minnesota taxable income, provided they meet the necessary qualifications and choose to itemize their deductions at the state level. The process for claiming this deduction involves a specific state tax form and a calculation based on income.

How to Claim the Deduction in Minnesota

To claim the deduction for union dues on your Minnesota tax return, you must first gather the necessary documentation. The primary piece of information required is the total amount of union dues you paid throughout the tax year. This figure can be found on your final pay stub of the year or on a year-end statement provided by your union.

The deduction is not taken directly on the main Minnesota income tax form, Form M1. Instead, you must complete Schedule M1SA, Minnesota Itemized Deductions. Union dues are included with other job-related costs on the line designated for unreimbursed employee expenses. This category can also include other costs like required work clothes or professional education, so it is important to total all qualifying expenses.

A requirement for this deduction is the 2% of Adjusted Gross Income (AGI) limitation. You can only deduct the portion of your total unreimbursed employee expenses that exceeds 2% of your federal AGI. To calculate this, you multiply your federal AGI from Form M1 by 0.02. For example, if your AGI is $60,000, your threshold is $1,200. If your total employee expenses, including union dues, were $1,500, you could deduct $300.

After calculating the allowable amount on Schedule M1SA, the total from that schedule is then transferred to your Form M1. This process requires you to itemize deductions on your Minnesota return, which may be beneficial if your total itemized deductions exceed the state’s standard deduction amount.