Minnesota imposes several different state taxes, with rates that vary depending on the type of tax.
Understanding how these taxes work can help individuals and businesses plan more effectively and avoid surprises at filing time.
Individual Income Tax
Minnesota uses a graduated (progressive) income tax system, meaning tax rates increase as income rises. Your exact rate depends on your taxable income and filing status (single, married filing jointly, head of household, etc.).
Individual Income Tax Rates
Minnesota’s individual income tax rates range from 5.35% to 9.85%, making it one of the higher-tax states for upper-income earners.
Individual Income Tax Brackets (Single Filers)
Minnesota adjusts its brackets for inflation:
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| Taxable Income | Tax Rate |
|---|---|
| Up to $32,570 | 5.35% |
| $32,571 – $198,630 | 6.80% |
| $198,631 – $330,410 | 7.85% |
| Over $330,410 | 9.85% |
Only the portion of income that falls within each bracket is taxed at that bracket’s rate—not your entire income.
Note: Tax brackets differ for married couples filing jointly, married filing separately, and heads of household. For full details, consult the Minnesota Department of Revenue.
State Sales Tax
Minnesota’s statewide sales tax rate is 6.875%. This tax applies to most retail sales of tangible goods and certain taxable services.
Local Sales Taxes
Many cities and counties impose additional local sales taxes. As a result, the average combined sales tax rate across the state is approximately 8.13%, though the exact rate varies by location.
Some essential items, such as most groceries and prescription medications, are generally exempt from sales tax.
Corporate Income Tax
Minnesota applies a flat corporate income tax rate of 9.8% to corporations doing business in the state. This rate applies regardless of income level and is among the higher corporate tax rates nationwide.
Businesses may still qualify for credits, deductions, or apportionment rules that reduce their effective tax liability.
Why Electronic Filing Is Recommended
Minnesota encourages electronic filing (e-file) for both individual and business tax returns. E-filing offers several advantages:
- Faster refunds, especially when combined with direct deposit
- Greater accuracy, with built-in error checks
- Immediate confirmation that your return was received
- Enhanced security compared to paper filing
- Lower processing delays, especially during peak filing season
Most major tax software programs support Minnesota returns and automatically apply the correct tax rates, deductions, and credits.
Final Tip
Because Minnesota’s tax system includes progressive income tax brackets and varying local sales taxes, filing electronically helps ensure calculations are correct and deductions aren’t missed.
Whether you are an individual taxpayer or a business owner, e-filing is the most efficient and reliable way to meet Minnesota’s tax requirements.
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