Overview of Minnesota Taxes
Minnesota has a progressive income tax system with rates that range from 5.35% to 9.85%. Only a few states have a higher top tax rate than Minnesota. On the bright side, there are no local income taxes in the Land of 10,000 Lakes.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Minnesota Paycheck Calculator
Minnesota Paycheck Quick Facts
- Minnesota income tax: 5.35% - 9.85%
- Median household income: $68,411 (U.S. Census Bureau)
- Number of cities that have local income taxes: 0
How Your Minnesota Paycheck Works
If you’re a Minnesotan, your payroll taxes will include FICA taxes, federal income taxes and Minnesota’s own state taxes. Let’s break down what those taxes are and how much you can expect to pay.
In Minnesota, as in every other state, your employer will withhold 6.2% of your earnings for Social Security taxes and 1.45% of your earnings for Medicare taxes, every pay period. Your employer will match those contributions and the total contribution makes up the FICA taxes. Earnings that exceed $200,000 are subject to a 0.9% Medicare surtax. Your employer doesn’t match this surtax.
Then there’s the federal income tax. The W-4 form you give your employer indicates things like your marital status and any additional tax withholding you want your employer to take from your paychecks. How much your employer withholds will depend on what you put on your W-4 form, as well as on your earnings. Naturally the size of your paychecks will also depend on your pay frequency. Monthly paychecks will be larger than biweekly paychecks because they cover a longer pay period.
Note that withholding calculations changed for the 2018 tax year because of the tax plan that President Trump signed into law in December 2017. You should have seen changes to your paychecks starting in February 2018. Regardless, it’s a good idea to check your W-4 at the start of the year to ensure the information is all correct.
While there weren't any changes in 2019, the IRS has altered the W-4 for 2020. Specifically, the new W-4 removes the use of allowances, along with the option of claiming personal or dependency exemptions. Instead, it uses a five-step process that asks filers to enter personal information, claim dependents and indicate any additional income or jobs. These changes will mainly affect those adjusting their withholdings or changing jobs in 2020 and beyond. Employees hired before Jan. 1, 2020 don't need to complete the form, but anyone hired after that date is required to. The tax return you file in 2021 will account for any adjustments you make now.
In addition to the required tax withholding, there are also some voluntary contributions you may want to make. For example, contributions to a 401(k) plan, flexible spending account (FSA) or health savings account (HSA) will all come out of your paychecks. The money you put in these types of accounts is also pre-tax, which means it comes out of your pay before income taxes do. Pre-tax contributions lower your taxable income and may even push you into a lower tax bracket.
Any premiums you have to pay for employer-sponsored health, life or disability insurance will also come from your paychecks. The deductions for employer-sponsored insurance are generally pre-tax.
Minnesota Median Household Income
|Year||Median Household Income|
In Minnesota, your employer will deduct money to put toward your state income taxes. Like federal income taxes, Minnesota income taxes are pay-as-you-go. Money comes out of each of your paychecks throughout the year rather than you getting one giant tax bill in the spring.
As mentioned earlier, Minnesota has one of the highest top tax rates in the country. However, that top rate of 9.85% only applies to a high level of income (more than $161,720 for single filers). And because no Minnesota cities charge local income taxes, you don’t have to worry about getting hit with any other rates.
Minnesota also has a tax form that’s similar to the federal W-4 form, but for Minnesota taxes. It’s called the W4-MN and it’s where you claim allowances and exemptions from state taxes. Though you won't be able to claim allowances on the 2020 federal W-4, workers in Minnesota can use the 2020 Form W4-MN to determine their Minnesota withholding allowances. However, you only have to give your employer a W4-MN if one of the following applies to you:
- You claim more than 10 Minnesota withholding allowances.
- You checked Box A or B under Section 2, and you expect your wages to exceed $200 per week.
- Your employer believes you aren't entitled to the number of allowances claimed.
If you ask to have additional Minnesota withholding deducted, you can just give your employer a W-4. The Form W4-MN isn’t necessary.
If you receive supplemental wages like bonuses or commissions, the taxes you pay depend on how your employer disburses supplemental wages. The wages are either taxed at normal Minnesota income tax rates or they’re subject to a flat withholding rate of 6.25%.
Income Tax Brackets
|Minnesota Taxable Income||Rate|
|$0 - $26,520||5.35%|
|$26,520 - $87,110||6.80%|
|$87,110 - $161,720||7.85%|
|Married, Filing Jointly|
|Minnesota Taxable Income||Rate|
|$0 - $38,770||5.35%|
|$38,770 - $154,020||6.80%|
|$154,020 - $269,010||7.85%|
|Married, Filing Separately|
|Minnesota Taxable Income||Rate|
|$0 - $19,385||5.35%|
|$19,385 - $77,010||6.80%|
|$77,010 - $134,505||7.85%|
|Head of Household|
|Minnesota Taxable Income||Rate|
|$0 - $32,650||5.35%|
|$32,650 - $131,190||6.80%|
|$131,190 - $214,980||7.85%|
A financial advisor in Minnesota can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
How You Can Affect Your Minnesota Paycheck
If you want to adjust the size of your paycheck, first look to your W4-MN. You may be able to claim more or fewer allowances to change your paycheck. Remember that claiming more allowances means less withholding (larger paycheck) and fewer allowances means more withholding (smaller paycheck). If you want to make changes to your form, simply fill out a new copy and give it to your employer.
You can also think about boosting your contributions to a 401(k), FSA or HSA to shelter more of your income from taxes. Depending on your employer, you might also be able to stash pre-tax dollars in a commuter benefits plan or 529 college savings plan.
Minnesota may have high income taxes, but mortgage rates in the state have remained below the national average for the past 10 years. If you are interested in buying property in Minnesota or are looking to refinance, check out our Minnesota mortgage guide for all the information you need on mortgages and rates in the state.
Minnesota Top Income Tax Rate
|Year||Top Income Tax Rate|
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2017 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics