Minnesota has a state income tax, and it applies to most residents and workers
Yes, Minnesota charges a state income tax on wages, investment income, and other earnings. The tax rate depends on your income level — Minnesota uses a progressive system with multiple tax brackets, meaning higher earners pay a higher percentage. Unlike some states, Minnesota does not have a flat tax rate that applies equally to everyone.
If you work in Minnesota or live there, you will owe state income tax on most forms of income. This includes wages from employment, self-employment income, interest, dividends, and capital gains. The state also taxes retirement income in some cases, though certain pensions and Social Security benefits receive preferential treatment under state law.
Key Takeaways
- Minnesota's state income tax uses five tax brackets ranging from 5.35% to 9.85%, with the rate you pay determined by your total income.
- You must file a Minnesota state tax return if you earned income in the state or lived there for the full tax year, even if you owe no tax.
- Minnesota taxes most retirement income, but Social Security benefits and certain military pensions are excluded from taxation.
- The state offers a property tax refund for renters and homeowners with lower incomes, which you claim on your state return.
- Minnesota allows you to claim federal tax credits and deductions on your state return, which can reduce the amount you owe.
The five tax brackets and what rate you pay
Minnesota's income tax brackets change each year because they are adjusted for inflation. For the 2024 tax year, the brackets are approximately 5.35%, 6.80%, 7.85%, 8.85%, and 9.85%, but the exact income ranges that trigger each bracket shift annually. You can find the current year's brackets on the Minnesota Department of Revenue website before you file.
The way progressive brackets work: you do not pay the top rate on all your income. If you earn $75,000, you pay 5.35% on the first portion, then 6.80% on the next portion, and so on — only the income that falls into the highest bracket gets taxed at that rate. This means your actual tax rate (called your effective rate) is lower than the top bracket you fall into.
Minnesota also allows you to claim the standard deduction, which reduces the income you actually pay tax on. The standard deduction amount varies by filing status and age, and it also changes yearly. Married couples filing jointly receive a higher deduction than single filers.
Who must file a Minnesota state return
You must file a Minnesota state return if you lived in the state for the entire tax year and had income above a certain threshold. The threshold depends on your filing status and age — it is lower for single filers than for married couples, and it increases if you are 65 or older. Even if you earned less than the threshold, you may want to file anyway if you paid state taxes through withholding, because you could receive a refund.
If you moved to or from Minnesota during the year, you are considered a part-year resident. Part-year residents must file a Minnesota return and report only the income earned while living in the state. You will also file a return in the state where you lived for the other part of the year.
Non-residents who worked in Minnesota must also file a state return on the income earned there, even if they lived elsewhere. This applies to people who crossed state lines for work or had a job in Minnesota while maintaining a home in another state.
How Minnesota taxes retirement income and pensions
Minnesota taxes most retirement income, including distributions from 401(k) plans, traditional IRAs, and pension payments. However, the state excludes Social Security benefits from taxation entirely — you will never owe Minnesota state tax on Social Security, regardless of your total income.
Military pensions and certain other government pensions receive special treatment. Military retirement pay is excluded from Minnesota taxation if you served on active duty. Some public employee pensions also may have access to for partial or full exclusion, depending on when you retired and the type of plan.
If you receive a pension from a private employer, that income is taxable at the regular rates. The same applies to distributions from retirement accounts — they are taxed as ordinary income in the year you withdraw them. Minnesota does not offer a blanket pension exclusion the way some states do.
The property tax refund for renters and homeowners
Minnesota offers a property tax refund (sometimes called a property tax credit) for renters and homeowners with lower incomes. You claim this refund on your state tax return, not through a separate process. The refund is based on your household income and the amount of property tax or rent you paid during the year.
Renters can claim the refund even though they do not directly pay property tax — Minnesota assumes that a portion of rent goes toward the landlord's property tax. Homeowners claim the refund based on the actual property tax they paid. The refund amount decreases as your income rises, and it phases out completely at higher income levels.
To claim the refund, you will need to know your household income and either your property tax bill (for homeowners) or your annual rent (for renters). The refund is calculated on a worksheet that comes with the Minnesota tax form, or you can use tax software that handles the calculation automatically.
Deductions and credits available on your Minnesota return
Minnesota allows you to claim many of the same deductions and credits you use on your federal return. If you itemize deductions on your federal return, you can also itemize on your Minnesota return. If you take the standard deduction federally, you take it on your state return as well — you cannot mix and match.
The state offers credits for dependent care expenses, education costs, and earned income (similar to the federal Earned Income Tax Credit). Some credits are refundable, meaning you can receive money back even if you owe no tax. Others reduce your tax bill to zero but do not generate a refund.
Minnesota also allows you to deduct contributions to certain retirement accounts, such as traditional IRAs, if you meet income limits. Self-employed individuals can deduct half of their self-employment tax, just as they do on the federal return.
How to file your Minnesota state return
You can file your Minnesota return by mail or electronically. The state accepts federal tax software that includes Minnesota forms, and many free options are available through the IRS Free File program if your income is below a certain threshold. You can also read forms directly from the Minnesota Department of Revenue website and file by hand.
The filing important date for Minnesota is the same as the federal important date — typically April 15 of the year following the tax year. If you file your federal return late, your Minnesota return is also considered late, and penalties and interest may explore. You can request an extension, which gives you until October 15 to file.
If you owe Minnesota state tax, you can pay online through the Department of Revenue website, by mail with a check, or through your tax software. If you are due a refund, the state typically processes it within four to six weeks of receiving your return, though electronic filing is faster than paper filing.
Frequently Asked Questions
Do I have to pay Minnesota income tax if I work there but live in another state?
Yes. Minnesota taxes income earned within the state, regardless of where you live. You will file a Minnesota return on that income and also file a return in your home state. Most states offer a credit for taxes paid to other states to prevent double taxation, so you typically will not owe tax twice on the same income.
Is Social Security taxed in Minnesota?
No. Minnesota does not tax Social Security benefits at all. You can exclude all of your Social Security income from your Minnesota return, even if you have other income that pushes you into a higher bracket.
What happens if I do not file a Minnesota return when I am supposed to?
The state charges penalties and interest on any unpaid tax. If you are due a refund, you cannot receive it without filing. The longer you wait, the more penalties accumulate. If you missed a important date, you can still file — there is no time limit on filing a return to claim a refund, but penalties explore if you owed tax.
Can I claim the property tax refund if I rent?
Yes. Renters are may be able to access for the property tax refund based on the rent they paid. You do not need to own the property — Minnesota assumes that part of your rent covers the landlord's property tax obligation. The refund is claimed on your state tax return.
What is the difference between Minnesota's tax brackets and my actual tax rate?
Your tax bracket is the highest rate that applies to your income, but your actual rate (effective rate) is lower because only the income in that bracket is taxed at that rate. For example, if you fall into the 7.85% bracket, you do not pay 7.85% on all your income — you pay lower rates on the income in the lower brackets first.