Minnesota taxes your income at rates between 5.35% and 9.85%, depending on how much you earn

Minnesota has a progressive income tax system, meaning the rate you pay increases as your income rises. The state does not have a flat tax — instead, your income is divided into brackets, and each bracket is taxed at its own rate. For the 2024 tax year, Minnesota has four tax brackets ranging from 5.35% for the lowest earners to 9.85% for the highest. This means if you earn $100,000, you do not pay 9.85% on all of it; you pay the lower rates on the first portions and only the higher rate on income above the threshold for that bracket.

Minnesota taxes wages, salaries, investment income, business income, and other sources of earnings. The state also taxes Social Security benefits under certain conditions — if your combined income (adjusted gross income plus half your Social Security benefits) exceeds $25,000 as a single filer or $32,000 as a married couple filing jointly, a portion of your benefits becomes taxable. This rule applies only to Minnesota state tax, not federal tax, so you may owe state tax on Social Security even if the federal government does not tax it.

Key Takeaways

  • Minnesota's income tax rates range from 5.35% to 9.85% across four brackets, with higher earners paying higher rates on income above each threshold.
  • You must file a Minnesota state return if you earned income in the state, even if you owe no tax, because the state uses your return to verify federal filings.
  • Social Security benefits are taxable in Minnesota if your combined income exceeds $25,000 (single) or $32,000 (married filing jointly).
  • Minnesota allows deductions for federal income tax paid, property tax, and charitable contributions, which can lower your state tax bill.
  • If you work in Minnesota but live in another state, you may owe tax to both states, though Minnesota has reciprocal agreements with some neighboring states.

The four tax brackets and what they mean for your paycheck

Minnesota's four brackets for 2024 are structured so that each portion of your income is taxed at the rate for that bracket only. The brackets are: 5.35% on income up to $29,750 (single filers); 7.05% on income from $29,750 to $79,750; 7.85% on income from $79,750 to $174,900; and 9.85% on income above $174,900. Married couples filing jointly have higher thresholds — for example, the first bracket extends to $44,630 instead of $29,750.

This structure means your effective tax rate — the actual percentage of your total income that goes to Minnesota — is lower than your marginal rate (the rate on your last dollar earned). If you are a single filer earning $50,000, you pay 5.35% on the first $29,750 and 7.05% on the remaining $20,250. Your total tax is roughly $3,300, which is about 6.6% of your income, not 7.05%. Understanding this difference matters when you are deciding whether a raise or second job is worth your time — you keep more of the additional income than the marginal rate alone suggests.

Who must file a Minnesota state return

You must file a Minnesota state return if you earned income in Minnesota during the tax year, even if you owe no state tax. This includes wages, self-employment income, rental income, and investment income. The threshold for filing is lower than the federal threshold — Minnesota requires a return from anyone with gross income above $4,350 (single filers in 2024), though the exact amount changes yearly. If you are claimed as a dependent on someone else's return, the threshold is even lower.

Minnesota also requires you to file if you want to claim a refund of taxes withheld from your paycheck, even if your income falls below the filing threshold. Many workers have too much tax withheld and receive a refund — you cannot get that money back without filing. Additionally, if you received Minnesota property tax refunds or credits in prior years, you may need to file to report changes in your situation.

Deductions and credits that lower your Minnesota tax

Minnesota allows you to deduct federal income tax paid to the IRS, which is one of the largest deductions available to most filers. You can also deduct state and local property taxes (up to $20,000 combined with other state and local taxes under federal rules, though Minnesota's state deduction has no cap). Charitable contributions to may have access to organizations are deductible, as are medical and dental expenses that exceed 7.5% of your adjusted gross income.

The state also offers credits — which reduce your tax dollar-for-dollar rather than reducing your taxable income — for dependent care expenses, education costs, and property taxes. The Minnesota Working Family Household and Dependent Care Credit helps lower-income workers pay for childcare. The Education Credit covers tuition, fees, and textbooks for post-secondary education. Renters and homeowners may also may have access to for property tax credits if their property taxes exceed a certain percentage of their household income. These credits can result in a refund even if you owe no tax.

How Minnesota taxes work income from other states

If you live in Minnesota but work in another state, you typically owe tax to both states on the income you earned there — Minnesota taxes all income of its residents, regardless of where it was earned. However, Minnesota has reciprocal tax agreements with Illinois, Indiana, Michigan, and Missouri. Under these agreements, if you live in Minnesota and work in one of those states, you pay tax only to your home state (Minnesota) and not to the state where you work. You must file a form with your employer in the other state to claim the exemption.

If you live in another state but work in Minnesota, you owe Minnesota tax on the income you earned here. You may also owe tax to your home state, depending on that state's rules. Some states tax only residents; others tax anyone who earned income within their borders. You should check your home state's tax rules or speak with a tax preparer to understand your obligations in both states. Minnesota allows a credit for taxes paid to other states, which prevents you from being taxed twice on the same income, though the credit is limited to the lesser of what you paid or what you would owe Minnesota.

Self-employment income and Minnesota tax

If you are self-employed or own a business in Minnesota, you owe state income tax on your net business income (revenue minus business expenses). You also owe self-employment tax to the federal government, which covers Social Security and Medicare — Minnesota does not have a separate self-employment tax, but you may owe state income tax on the same income. The self-employment tax is a federal obligation, not a state one, but it affects your total tax burden.

Self-employed filers can deduct business expenses such as supplies, equipment, rent, utilities, and a portion of health insurance premiums. You can also deduct half of your self-employment tax when calculating your adjusted gross income for Minnesota purposes. If your business operates in multiple states, you may owe tax to each state where you have income-producing activity, though Minnesota's reciprocal agreements may explore if you work in one of the partner states.

Filing your Minnesota return and where to send it

Minnesota returns are filed with the Minnesota Department of Revenue. You can file online using approved tax software, by mail, or through a tax preparer. The state accepts federal e-file, which allows you to file both your federal and state returns electronically at the same time. If you file electronically, your refund typically arrives within two to three weeks; paper returns take longer.

The important date to file is April 15 each year, the same as the federal important date. If you cannot file by that date, you can request an extension, which gives you until October 15 to file. An extension to file is not an extension to pay — if you owe tax, you should pay by April 15 to avoid penalties and interest, even if you have not filed yet. Minnesota charges interest on unpaid tax at a rate set quarterly, currently around 8% annually, plus penalties for late filing and late payment.

Frequently Asked Questions

Do I owe Minnesota tax if I work remotely for a company in another state?

Yes, if you live in Minnesota and work remotely, you owe Minnesota tax on your wages. Minnesota taxes all income earned by its residents, regardless of where the employer is located. Your employer should withhold Minnesota tax from your paycheck if you provided them with a Minnesota address.

What happens if I do not file a Minnesota return when I am supposed to?

Minnesota charges a penalty of 5% of the unpaid tax per month, up to 25% total, plus interest. If you owe a refund and do not file, you lose the refund after three years — the state keeps the money. Filing late is better than not filing at all, because penalties and interest stop accumulating once you file.

Can I deduct student loan interest on my Minnesota return?

No. Minnesota does not allow a deduction for student loan interest. The federal government allows up to $2,500 in deductions, but Minnesota does not conform to that federal rule. You can deduct tuition and fees paid directly to a school through the Minnesota Education Credit, but not loan interest.

How do I know if my employer is withholding the right amount of Minnesota tax?

Check your pay stub to see how much Minnesota tax is being withheld. You can also use the Minnesota Department of Revenue's withholding calculator on their website to estimate what you should owe. If too much is being withheld, you can adjust your W-4 form with your employer; if too little is being withheld, you can increase it to avoid owing a large bill at tax time.

Do I have to file a Minnesota return if I only earned income from Social Security?

Not necessarily. If Social Security is your only income and it falls below the filing threshold, you do not have to file. However, if you have other income that pushes your combined income above the threshold, or if you want to claim a refund of taxes withheld, you should file. It is worth checking because you may be may have access to to a property tax refund or other credits.