Minnesota Tax Calculator 2026

Minnesota Income Tax

Minnesota levies one of the highest state income taxes in the country with four graduated brackets for 2026. The rates are 5.35% on taxable income up to approximately $31,690 for single filers, 6.80% on income from $31,690 to $104,090, 7.85% on income from $104,090 to $183,340, and 9.85% on all income above $183,340. Married couples filing jointly have approximately double the bracket thresholds. Minnesota’s top marginal rate of 9.85% is the fifth-highest in the nation, behind only California, Hawaii, New Jersey, and Oregon (and New York for NYC residents).

Minnesota indexes its tax brackets annually for inflation, which prevents bracket creep. The state uses federal taxable income as its starting point, which means taxpayers who take the federal standard deduction or itemize get the same treatment at the state level. Minnesota then applies its own adjustments, additions (income taxable by Minnesota but not federally), and subtractions (income not taxable by Minnesota). The state offers its own standard deduction of approximately $14,575 for single filers and $29,150 for married filing jointly.

The Minnesota income tax brackets for single filers in 2026 are:

Taxable Income	Rate
$0 – $31,690	5.35%
$31,690 – $104,090	6.80%
$104,090 – $183,340	7.85%
Over $183,340	9.85%

Minnesota Sales Tax

Minnesota has a 6.875% state sales tax, one of the higher base rates in the nation. Local jurisdictions can add additional taxes, primarily in the Twin Cities metropolitan area where transit and county taxes bring the combined rate to approximately 8.025% in Minneapolis and St. Paul. Outside the metro area, combined rates are generally lower, typically between 7% and 7.875% depending on the county. One of Minnesota’s most distinctive features is its exemption of clothing from sales tax, a benefit that residents value highly, especially during the state’s harsh winters.

Minnesota also exempts grocery food, prescription drugs, and most medical devices from sales tax. The state taxes most tangible personal property and certain services. Minnesota was one of the first states to adopt economic nexus rules for remote sellers following the Supreme Court’s Wayfair decision, requiring collection by out-of-state businesses with $100,000 in Minnesota sales or 200 transactions. Digital products, including streaming services and downloaded content, are subject to Minnesota sales tax.

Minnesota Property Tax

Minnesota’s average effective property tax rate is approximately 1.02%, which is near the national average. Minnesota uses a unique property classification system where different types of property are assessed at different percentages of market value. Residential homestead property is classified at 1.0% of the first $500,000 in market value and 1.25% on value above $500,000. Commercial and industrial property is classified at 1.5% (first $150,000) and 2.0% (above $150,000). These classification rates are then multiplied by the local tax rate to determine the actual tax bill.

Minnesota’s Property Tax Refund (PTR) program, often called the “circuit breaker,” is one of the most generous in the nation. It provides refundable credits to homeowners and renters whose property taxes exceed a specified percentage of their household income. The regular refund is available to homeowners with household income up to $128,280 and can refund a significant portion of property taxes that exceed the income-based threshold. A separate special refund is available when property taxes on a home increase by more than 12% and more than $100 in a single year, regardless of income.

Minnesota Social Security Tax Phase-Out

Minnesota has historically been one of only a few states that taxed Social Security benefits, following the federal formula that includes up to 85% of benefits in taxable income based on combined income thresholds. This changed with the passage of legislation in 2023 and 2024 that began phasing out the state tax on Social Security benefits. The phase-out is being implemented gradually over several years, with increasing subtraction amounts that will eventually make all Social Security benefits exempt from Minnesota state income tax.

The Social Security subtraction is means-tested during the phase-out period, meaning higher-income retirees will see the benefit of full exemption last. For the 2026 tax year, a significant portion of Social Security income is now subtractable, with complete exemption expected to be reached within the next few years. This change addresses one of the most common complaints from Minnesota retirees and removes a significant incentive for retirees to relocate to neighboring states like South Dakota (no income tax) or Iowa (which already fully exempts Social Security).

Minnesota also offers a generous estate tax that has been a point of contention. The state estate tax applies to estates exceeding approximately $3 million (indexed for inflation), which is well below the federal estate tax exemption of over $13 million. This relatively low threshold has prompted some wealthy Minnesotans to establish domicile in other states. Combined with the high income tax rates, estate planning is a significant consideration for affluent Minnesota residents.

Minnesota vs. Neighboring States

• Minnesota vs. Wisconsin: Wisconsin’s top income tax rate of 7.65% is lower than Minnesota’s 9.85%. Wisconsin’s sales tax is 5% (vs. 6.875%), and property taxes are higher (1.51% vs. 1.02%). For higher-income earners, Minnesota’s income tax is notably more expensive.
• Minnesota vs. Iowa: Iowa’s reformed rates top out at 5.7%, dramatically lower than Minnesota’s 9.85%. Iowa property taxes (1.52%) are higher than Minnesota’s, and Iowa’s average sales tax (6.94%) is comparable. Iowa is significantly cheaper for higher earners.
• Minnesota vs. South Dakota: South Dakota has no state income tax, no corporate income tax, and no estate tax. Its sales tax of 4.5% (plus local) is lower than Minnesota’s. For high-income earners, the savings from relocating to South Dakota can be substantial, making Sioux Falls a popular destination for Minnesota retirees.
• Minnesota vs. North Dakota: North Dakota recently moved to a flat 1.95% income tax rate (with potential elimination), dramatically lower than Minnesota. North Dakota’s sales tax is 5% with local additions, and property taxes are about 0.94%. The tax savings are significant, though employment options are more limited.