M1LS: Tax on Lump-Sum Distribution (2025)
Minnesota · Minnesota DOR · Used for tax years 2025
Minnesota Schedule M1LS calculates the tax on the ordinary income portion of a lump-sum distribution using Minnesota’s five-year averaging method. You must complete federal Form 4972 before completing this schedule.
Who files this form
You must file 2025 Schedule M1LS if all three apply:
- You received a lump-sum distribution from a pension, profit-sharing, or stock bonus plan in 2025.
- You filed federal Form 4972, Tax on Lump-Sum Distributions.
- You were a Minnesota resident when you received any portion of the distribution.
What you'll need
- Federal Form 4972: Complete it before completing Schedule M1LS. Include a copy when you file Form M1.
- Form M1 and its instructions: You need the tax table in the instructions to calculate the tax and Form M1 to report the result.
- Schedule M1R, if you completed it: Use it with Form M1 to determine the subtraction on line 2.
- Federal Form 1099-R, if you shared the distribution: Use the percentage in box 9a to calculate your share of the tax.
- Schedule M1M, if you made a federal capital gain election: Report the amount from federal Form 4972, line 6, on Schedule M1M, line 4.
How to file
Include Schedule M1LS and a copy of federal Form 4972 when you file Form M1.
Enter the tax from Schedule M1LS, line 11, on Form M1, line 14. Check the box for Schedule M1LS on that line.
Estates and trusts: Include the tax on Form M2, line 12, and check the box for Schedule M1LS.
The supplied text does not provide a mailing address or e-file directions.
Common mistakes
- Starting before completing federal Form 4972. You must complete that form first.
- Not rounding amounts. Round to the nearest whole dollar.
- Using the wrong tax-table column. For lines 5 and 9, use the column for single persons in the Form M1 tax table.
- Completing lines that should be skipped. If you did not complete federal Form 4972, lines 20 through 22, skip Schedule M1LS, lines 7 through 10, and enter line 6 on line 11.
- Overlooking line 2. If you did not complete Schedule M1R, enter 0. If you did, follow the line 2 instructions.
- Leaving out required attachments or the checkbox. Include Schedule M1LS and a copy of federal Form 4972 with Form M1, and check the Schedule M1LS box on Form M1, line 14.
Questions people ask
What if I moved into or out of Minnesota in 2025?
Complete Schedule M1LS if you were a Minnesota resident when you received any portion of the distribution. If you received part as a nonresident and part as a resident, include the full amount from federal Form 4972 on this schedule.
Can I use the federal ten-year averaging method for Minnesota?
No. Although federal Form 4972 allows only ten-year averaging, Minnesota requires five-year averaging.
Does Minnesota allow a capital gain election for lump-sum distributions?
No. Report any capital gain election amount from federal Form 4972, line 6, as an addition to federal taxable income on Schedule M1M, line 4.
What if I shared the lump-sum distribution with other recipients?
For a shared distribution from a qualified retirement plan, subtract Schedule M1LS, line 10, from line 6. Multiply the result by the percentage in box 9a of federal Form 1099-R. Enter that amount on line 11 and print “MRD” in the space to the left of line 11.