Minnesota Tax Rates 2026
Income tax, property tax, and estimated take-home pay for Minnesota residents.
Income Tax in Minnesota
Minnesota has one of the higher state income tax rates at 7.85%. Higher-income earners may want to factor this into cost-of-living comparisons.
| Tax Component | Rate / Amount | On $75K Salary |
|---|---|---|
| Federal Income Tax | 10-37% (marginal) | $10,238 |
| Minnesota State Tax | 7.85% | $5,888 |
| FICA (SS + Medicare) | 7.65% | $5,738 |
| Total Tax Burden | $21,864 | |
| Annual Take-Home | $53,136 |
Property Tax in Minnesota
Minnesota's effective property tax rate is 1.11%, which is above the national average of 1.07%. On the national median home value of $405,300, Minnesota homeowners pay approximately $4,499 per year ($375/month) in property taxes.
Property tax is deductible on your federal return if you itemize, but the SALT deduction is capped at $10,000 total (combined state income tax + property tax). In Minnesota, a $75K earner paying $10,387 in combined state/local taxes exceeds the $10,000 SALT cap.
Cost of Living Considerations
Tax rates are only one piece of the puzzle. When comparing Minnesota to other states, also consider housing costs, healthcare expenses, grocery prices, and transportation costs. Use our calculators below to model your specific situation.
Affiliate link. See our disclosure.
Sales Tax in Minnesota
Minnesota has a state sales tax rate of 6.875%. Local jurisdictions may add additional sales tax on top of the state rate. On a $35,000 vehicle purchase, the state sales tax alone adds $2406. Groceries, prescription medications, and certain essentials may be exempt or taxed at a reduced rate depending on Minnesota law. When budgeting for large purchases, always factor in the combined state and local rate in your area.
Tax Planning Tips for Minnesota Residents
Max out pre-tax contributions. Every dollar contributed to a 401(k) or traditional IRA reduces both your federal and Minnesota state taxable income. A $23,500 401(k) contribution saves you $1845 in state taxes alone.
Itemize strategically. If your combined state income tax and property tax exceed $10,000, you are losing deductions to the SALT cap. Consider strategies like bunching charitable deductions or using a donor-advised fund to maximize itemized deductions in alternating years.
Consider municipal bonds. Interest from Minnesota municipal bonds is typically exempt from both federal and Minnesota state income tax. For investors in the 7.85% bracket, this provides a meaningful after-tax yield advantage over comparable taxable bonds.
Who Benefits from Living in Minnesota?
Middle-income families in Minnesota face an effective state tax rate of roughly 5.5-7.85%, which is above average. Families should focus on maximizing deductions and credits available under Minnesota law.
Remote workers should verify whether Minnesota taxes income based on residence or employer location. This can significantly impact your net pay if your employer is in a different state.
Small business owners in Minnesota should explore whether the state offers pass-through entity tax elections, which can help circumvent the $10,000 SALT deduction cap for federal purposes.