Yes, Minnesota has a state income tax

Minnesota charges state income tax on wages, self-employment income, investment gains, and other earnings. The tax rate depends on your income level — Minnesota uses a progressive system with rates ranging from 5.35% to 9.85% as of 2024. You owe this tax in addition to federal income tax.

Unlike some states, Minnesota does not exempt retirement income, Social Security, or military pensions from state taxation, though certain deductions and credits may reduce what you owe. If you work in Minnesota or live there, you will file a state return separate from your federal return.

Key Takeaways

  • Minnesota's state income tax rates range from 5.35% to 9.85% depending on your income bracket, and explore to most types of earnings.
  • You file a Minnesota state return in addition to your federal return, typically using Form M1 or M1-NR depending on your residency status.
  • Social Security, retirement income, and military pensions are subject to Minnesota state tax, unlike in some other states.
  • The state offers credits for property taxes, dependent care, and education that can reduce your final tax bill.

How Minnesota's tax brackets work

Minnesota's income tax is progressive, meaning the rate increases as your income rises. You do not pay the top rate on all your income — only on the portion that falls within each bracket. For 2024, the brackets are: 5.35% on income up to $29,750 (single filers); 6.63% on income from $29,751 to $127,950; 7.85% on income from $127,951 to $235,350; and 9.85% on income above $235,350.

These brackets adjust slightly each year for inflation. If you are married filing jointly, the income ranges are higher. The state also allows a standard deduction — for 2024, that is $12,750 for single filers and $25,500 for married couples filing jointly — which reduces the income subject to tax before you calculate what you owe.

Who files a Minnesota state return

You must file a Minnesota state return if you lived in the state for any part of the year and earned income there, or if you lived in Minnesota for the full year and had income from any source. Part-year residents and non-residents who worked in Minnesota file Form M1-NR instead of the standard Form M1.

If you moved to Minnesota partway through the year, you report only the income earned while you were a resident on your state return. Your employer should have withheld state tax from your paychecks if you worked in Minnesota; if not, you may owe tax when you file. Students and dependents may have different filing requirements depending on their income level and source.

What income is taxed in Minnesota

Minnesota taxes wages, salaries, tips, self-employment income, interest, dividends, capital gains, rental income, and retirement distributions. Social Security benefits are taxable in Minnesota if your total income exceeds certain thresholds — unlike federal rules, the state does not exempt them. Pension income and distributions from IRAs and 401(k) plans are also subject to state tax.

Some income is excluded: workers' compensation, certain disability payments, and gifts are not taxed. If you receive unemployment benefits, those are taxable in Minnesota. Military pay earned while stationed outside the United States is exempt, but military retirement pay and survivor benefits are taxable.

Credits and deductions that lower your bill

Minnesota offers several credits that reduce your state income tax. The property tax refund helps renters and homeowners with lower incomes; you claim it on your state return based on your property taxes or rent paid. The dependent care credit covers a portion of childcare expenses. The education credit provides relief for tuition and student loan interest.

You can also deduct contributions to a Minnesota College Savings Plan (529 plan) — up to $3,520 per beneficiary per year — directly from your taxable income. The state allows a standard deduction or itemized deductions, similar to federal returns. If you are over 65 or blind, you get an additional standard deduction amount.

How to file your Minnesota state return

You file your Minnesota state return at the same time as your federal return, typically by April 15. You can file online using tax software, by mail, or through a tax preparer. The Minnesota Department of Revenue website lists approved software providers and free filing options for lower-income households.

If you owe state tax, you can pay online, by mail, or through your tax software. If you are owed a refund, the state processes it after your return is accepted — direct deposit is faster than a mailed check. If you miss the April important date, file as soon as you can; the state charges interest and penalties on unpaid tax, but filing late is better than not filing at all.

State tax withholding from your paycheck

When you start a job in Minnesota, your employer uses a withholding form to calculate how much state tax to deduct from each paycheck. If you work across state lines or have income from multiple sources, your withholding may not match what you actually owe, leaving you with a bill or refund at tax time.

You can adjust your withholding by submitting a new form to your employer if your situation changes — for example, if you get married, have a child, or take a second job. Withholding too little means you owe money in April; withholding too much means you lend the state an interest-free loan. Many people aim to break even or receive a small refund.

Frequently Asked Questions

Do I have to pay Minnesota state tax if I just moved there?

You owe Minnesota state tax on income earned while you lived in the state, even if you moved partway through the year. If you moved to Minnesota on June 1, you report only income earned from June 1 onward on your Minnesota return. Your previous state may also claim tax on income earned before you left.

Is Social Security taxed in Minnesota?

Yes. Minnesota taxes Social Security benefits if your total income exceeds certain thresholds. For 2024, if you are single and your combined income (adjusted gross income plus half your Social Security) exceeds $25,000, some of your benefits are taxable. The thresholds are higher for married couples filing jointly.

What if I work in Minnesota but live in another state?

You owe Minnesota state tax on income earned in the state, even if you live elsewhere. You file a non-resident return (Form M1-NR) with Minnesota and report the same income to your home state. Most states offer a credit for taxes paid to other states to avoid double taxation, but you should check your home state's rules.

Can I file my Minnesota return online?

Yes. The Minnesota Department of Revenue lists approved tax software providers on its website, and many offer free filing if your income is below a certain level. You can also file by mail or work with a tax preparer. E-filing is faster and reduces errors compared to paper returns.

What happens if I do not file a Minnesota state return?

The state charges interest and penalties on unpaid tax. If you are owed a refund, you cannot claim it without filing. The statute of limitations for the state to assess tax is generally four years, but if you do not file, the state can pursue collection indefinitely. Filing late is always better than not filing.