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Overview of Minnesota Taxes

Minnesota has a progressive income tax with rates that are among the highest in the nation. Property and sales taxes are also above average.

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Minnesota state tax quick facts
  • Income tax: 5.35% - 9.85%
  • Sales tax: 6.875% - 7.875%
  • Property tax: 1.17% average effective rate
  • Gas tax: 28.6 cents per gallon for regular gasoline and diesel

State income tax rates in the “Land of 10,000 Lakes” are among the highest in the nation, ranging from 5.35% to 9.85%, the 4th highest top rate in the country. The state’s property taxes and sales taxes are likewise above average, each ranking in the top 20 of all states. However, the impact of those rates will vary greatly depending on a taxpayer’s income level, home value and spending habits. Below, we’ll take a close look at Minnesota’s tax rates, as well as all of the most important rules and exceptions.

Minnesota Income Tax

The Minnesota state income tax is based on four tax brackets, with higher marginal rates for higher income earners. The table below shows the brackets filers in Minnesota.

Income Tax Brackets

Single Filers
Minnesota Taxable IncomeRate
$0 - $25,1805.35%
$25,180 - $82,7407.05%
$82,740 - $155,6507.85%
$155,650+9.85%
Married, Filing Jointly
Minnesota Taxable IncomeRate
$0 - $36,8205.35%
$36,820 - $146,2707.05%
$146,270 - $259,4207.85%
$259,420+9.85%
Married, Filing Separately
Minnesota Taxable IncomeRate
$0 - $18,4105.35%
$18,410 - $73,1407.05%
$73,140 - $129,7107.85%
$129,710+9.85%
Head of Household
Minnesota Taxable IncomeRate
$0 - $31,0105.35%
$31,010 - $124,6007.05%
$124,600 - $207,5407.85%
$207,540+9.85%

As mentioned above, those are among the highest state income tax rates in the country. But these rates apply to taxable income, not gross income. Taxable income takes into account all applicable deductions and exemptions, which, in Minnesota, track very closely to federal deductions and exemptions.

With the exception of the deduction for state and local income taxes, all federal itemized deductions can also be claimed on Minnesota state income tax returns. The Minnesota standard deduction also matches the federal deduction of $6,300 for single filers. For married couples, the standard deduction is $12,600 total if filing jointly and $6,300 (each) if filing separately. Minnesotans, whether married or single, may also claim personal exemptions of $4,000 for themselves and each of their dependents.

Itemized deductions in Minnesota phase out for taxpayers above a certain income level. For married persons filing separately, the phase out begins at $90,575 of federal adjusted gross income (AGI). For all other filers, the phase out begins at $181,150 of federal AGI.

One rule that may be important to many retirees is that Minnesota taxes Social Security benefits at the same level as the federal government. Most states do not tax social security benefits at all.

Minnesota Tax Credits

There are a number of tax credits which can lower the overall tax bill in Minnesota. The three most significant tax credits are the Working Family Credit (available to taxpayers who are eligible for the federal Earned Income Tax Credit), the Dependent Care Credit and the k-12 Education Credit (which allows taxpayers with children in school to deduct expenses).

Minnesota Sales Tax

The state sales tax rate in Minnesota is 6.875%. Additionally, many counties and cities in Minnesota levy their own local sales taxes, with rates ranging from 0.25% up to 1%. The table below shows the sales tax rates for every county and the largest cities in Minnesota.

Sales Tax Rates (Updated January 2016)

CountyState RateCounty RateTotal Sales Tax
Aitkin6.875%0.000%6.875%
Anoka6.875%0.250%7.125%
Becker6.875%0.500%7.375%
Beltrami6.875%0.500%7.375%
Benton6.875%0.000%6.875%
Big Stone6.875%0.000%6.875%
Blue Earth6.875%0.000%6.875%
Brown6.875%0.000%6.875%
Carlton6.875%0.500%7.375%
Carver6.875%0.000%6.875%
Cass6.875%0.000%6.875%
Chippewa6.875%0.000%6.875%
Chisago6.875%0.000%6.875%
Clay6.875%0.000%6.875%
Clearwater6.875%0.000%6.875%
Cook6.875%1.000%7.875%
Cottonwood6.875%0.000%6.875%
Crow Wing6.875%0.000%6.875%
Dakota6.875%0.250%7.125%
Dodge6.875%0.000%6.875%
Douglas6.875%0.500%7.375%
Faribault6.875%0.000%6.875%
Fillmore6.875%0.500%7.375%
Freeborn6.875%0.000%6.875%
Goodhue6.875%0.000%6.875%
Grant6.875%0.000%6.875%
Hennepin6.875%0.400%7.275%
Houston6.875%0.000%6.875%
Hubbard6.875%0.500%7.375%
Isanti6.875%0.000%6.875%
Itasca6.875%0.000%6.875%
Jackson6.875%0.000%6.875%
Kanabec6.875%0.000%6.875%
Kandiyohi6.875%0.000%6.875%
Kittson6.875%0.000%6.875%
Koochiching6.875%0.000%6.875%
Lac qui Parle6.875%0.000%6.875%
Lake6.875%0.000%6.875%
Lake of the Woods6.875%0.000%6.875%
Le Sueur6.875%0.000%6.875%
Lincoln6.875%0.000%6.875%
Lyon6.875%0.500%7.375%
Mahnomen6.875%0.000%6.875%
Marshall6.875%0.000%6.875%
Martin6.875%0.000%6.875%
McLeod6.875%0.000%6.875%
Meeker6.875%0.000%6.875%
Mille Lacs6.875%0.000%6.875%
Morrison6.875%0.000%6.875%
Mower6.875%0.000%6.875%
Murray6.875%0.000%6.875%
Nicollet6.875%0.000%6.875%
Nobles6.875%0.000%6.875%
Norman6.875%0.000%6.875%
Olmsted6.875%0.250%7.125%
Otter Tail6.875%0.000%6.875%
Pennington6.875%0.000%6.875%
Pine6.875%0.000%6.875%
Pipestone6.875%0.000%6.875%
Polk6.875%0.000%6.875%
Pope6.875%0.000%6.875%
Ramsey6.875%0.250%7.125%
Red Lake6.875%0.000%6.875%
Redwood6.875%0.000%6.875%
Renville6.875%0.000%6.875%
Rice6.875%0.500%7.375%
Rock6.875%0.000%6.875%
Roseau6.875%0.000%6.875%
Scott6.875%0.500%7.375%
Sherburne6.875%0.000%6.875%
Sibley6.875%0.000%6.875%
St. Louis6.875%0.500%7.375%
Stearns6.875%0.000%6.875%
Steele6.875%0.500%7.375%
Stevens6.875%0.000%6.875%
Swift6.875%0.000%6.875%
Todd6.875%0.500%7.375%
Traverse6.875%0.000%6.875%
Wabasha6.875%0.000%6.875%
Wadena6.875%0.500%7.375%
Waseca6.875%0.000%6.875%
Washington6.875%0.250%7.125%
Watonwan6.875%0.000%6.875%
Wilkin6.875%0.000%6.875%
Winona6.875%0.000%6.875%
Wright6.875%0.000%6.875%
Yellow Medicine6.875%0.000%6.875%
CityState RateCounty + City RateTotal Sales Tax
Albert Lea6.875%0.500%7.375%
Alexandria6.875%0.500%7.375%
Andover6.875%0.250%7.125%
Anoka6.875%0.250%7.125%
Apple Valley6.875%0.250%7.125%
Arden Hills6.875%0.250%7.125%
Austin6.875%0.500%7.375%
Bemidji6.875%1.000%7.875%
Big Lake6.875%0.000%6.875%
Blaine6.875%0.250%7.125%
Bloomington6.875%0.400%7.275%
Brainerd6.875%0.500%7.375%
Brooklyn Center6.875%0.400%7.275%
Brooklyn Park6.875%0.400%7.275%
Buffalo6.875%0.000%6.875%
Burnsville6.875%0.250%7.125%
Champlin6.875%0.400%7.275%
Chanhassen6.875%0.000%6.875%
Chaska6.875%0.000%6.875%
Cloquet6.875%1.000%7.875%
Columbia Heights6.875%0.250%7.125%
Coon Rapids6.875%0.250%7.125%
Cottage Grove6.875%0.250%7.125%
Crystal6.875%0.400%7.275%
Duluth6.875%1.500%8.375%
Eagan6.875%0.250%7.125%
East Bethel6.875%0.250%7.125%
Eden Prairie6.875%0.400%7.275%
Edina6.875%0.400%7.275%
Elk River6.875%0.000%6.875%
Fairmont6.875%0.000%6.875%
Faribault6.875%0.500%7.375%
Farmington6.875%0.250%7.125%
Fergus Falls6.875%0.500%7.375%
Forest Lake6.875%0.250%7.125%
Fridley6.875%0.250%7.125%
Golden Valley6.875%0.400%7.275%
Grand Rapids6.875%0.000%6.875%
Ham Lake6.875%0.250%7.125%
Hastings6.875%0.250%7.125%
Hermantown6.875%1.500%8.375%
Hibbing6.875%0.500%7.375%
Hopkins6.875%0.400%7.275%
Hugo6.875%0.250%7.125%
Hutchinson6.875%0.500%7.375%
Inver Grove Heights6.875%0.250%7.125%
Lakeville6.875%0.250%7.125%
Lino Lakes6.875%0.250%7.125%
Little Canada6.875%0.250%7.125%
Mankato6.875%0.500%7.375%
Maple Grove6.875%0.400%7.275%
Maplewood6.875%0.250%7.125%
Marshall6.875%1.000%7.875%
Mendota Heights6.875%0.250%7.125%
Minneapolis6.875%0.900%7.775%
Minnetonka6.875%0.400%7.275%
Monticello6.875%0.000%6.875%
Moorhead6.875%0.000%6.875%
Mounds View6.875%0.250%7.125%
New Brighton6.875%0.250%7.125%
New Hope6.875%0.400%7.275%
New Ulm6.875%0.500%7.375%
North Branch6.875%0.000%6.875%
North Mankato6.875%0.500%7.375%
North Saint Paul6.875%0.250%7.125%
Northfield6.875%0.500%7.375%
Oakdale6.875%0.250%7.125%
Otsego6.875%0.000%6.875%
Owatonna6.875%0.500%7.375%
Plymouth6.875%0.400%7.275%
Prior Lake6.875%0.500%7.375%
Ramsey6.875%0.000%6.875%
Red Wing6.875%0.000%6.875%
Richfield6.875%0.400%7.275%
Robbinsdale6.875%0.400%7.275%
Rochester6.875%0.750%7.625%
Rogers6.875%0.400%7.275%
Rosemount6.875%0.250%7.125%
Roseville6.875%0.250%7.125%
Saint Cloud6.875%0.500%7.375%
Saint Louis Park6.875%0.400%7.275%
Saint Michael6.875%0.000%6.875%
Saint Paul6.875%0.750%7.625%
Saint Peter6.875%0.000%6.875%
Sartell6.875%0.500%7.375%
Sauk Rapids6.875%0.500%7.375%
Savage6.875%0.500%7.375%
Shakopee6.875%0.500%7.375%
Shoreview6.875%0.250%7.125%
South Saint Paul6.875%0.250%7.125%
Stillwater6.875%0.250%7.125%
Vadnais Heights6.875%0.250%7.125%
Waconia6.875%0.000%6.875%
Waseca6.875%0.000%6.875%
West Saint Paul6.875%0.250%7.125%
White Bear Lake6.875%0.250%7.125%
Willmar6.875%0.000%6.875%
Winona6.875%0.000%6.875%
Woodbury6.875%0.250%7.125%
Worthington6.875%0.500%7.375%

As you can see, in Minnesota’s four largest cities, sales taxes (local plus state) exceed 7.5%. In Minneapolis, there are surtaxes of 3% on restaurants, liquor and entertainment in the downtown area. Two other cities, Mankato and Proctor have their own surtaxes on food and beverages, of 0.5% and 1.0% respectively.

While those taxes apply to prepared food (as does the regular state sales tax), food purchased at a grocery store, for off-premises consumption, is generally not taxable in Minnesota. So, for example, you would pay no sales tax on cereal, spaghetti sauce, sugar or food coloring. On the other hand candy, soft drinks and food from vending machines are all taxable.

Additionally, most clothing is not taxable in Minnesota, an important exception that separates Minnesota from many other states. Blue jeans, shoes, coats, t-shirts and even diapers are all nontaxable. “Clothing accessories,” however, like hair clips, umbrellas and backpacks, are taxable.

Many services are also subject to sales tax in Minnesota. Among the services for which Minnesotans have to pay sales tax are: installations, laundry services, lawn-care, parking services and telecommunications services.

Minnesota Property Tax

Property taxes in Minnesota are primarily administered and collected by county authorities. This means that rates will vary depending on where you live. They range from a low of less than 0.5% (in Aitkin County), to a high of more than 1.3% (in Traverse County). On average, annual property tax payments in Minnesota are about $2,200, 19th highest in the country.

Minnesota Estate Tax

The estate tax in Minnesota currently applies to taxable estates worth more than $1.4 million, however that exemption amount will rise by $200,000 per year until it reaches $2 million in 2018. Estates with a taxable value greater than that amount must file an estate tax return. Note that recent gifts (those made within three years prior to the decedent’s death) are considered when evaluating the estate. The table below shows the marginal rates and brackets to which those rates apply.

Minnesota Estate Tax Rates

Minnesota Taxable EstateMarginal Tax Rate
$1,400,000 - $3,600,00010.00%
$3,600,000 - $6,100,00012.00%
$6,100,000 - $7,100,00012.80%
$7,100,000 - $8,100,00013.60%
$8,100,000 - $9,100,00014.40%
$9,100,000 - $10,100,00015.20%
$10,100,000+16.00%

Minnesota Cigarette Tax

Minnesota has increased its tobacco taxes in recent years, up to the current rate of $2.90 per pack of 20 cigarettes. That is 7th highest in the country.

Minnesota Gas Tax

The statewide gas tax in Minnesota is 28.6 cents per gallon of regular gasoline, which ranks as the 20th highest gas tax in the U.S.

Photo credit: flickr
  • There are 11,842 separate lakes that are at least ten acres in surface area in Minnesota.
  • The average high January temperature in the city of Minneapolis is 23.7 degrees Fahrenheit.
  • The Mayo Clinic, based in Rochester, Minnesota, is considered one of the best medical practices in the world.

Places with the Lowest Tax Burden

Are you curious how your tax burden stacks up against others in your state? SmartAsset’s interactive map highlights the counties with the lowest tax burden. Scroll over any county in the state to learn about taxes in that specific area.

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Rank County Income Tax Sales Tax Property Tax Fuel Tax

Methodology

Where you live can have a big impact on both which types of taxes you have to pay each year and how much money you spend on them. SmartAsset calculated the amount of money a specific person would pay in income, sales, property and fuel taxes in each county in the country and ranked the lowest to highest tax burden.

To better compare income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes.

In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a county by the household income less income tax. This product is then multiplied by 35% to estimate the sales tax paid.

For property taxes, we compared the median property taxes paid in each county.

For fuel taxes, we first distributed statewide vehicle miles traveled down to the county level using the number of vehicles in each county. We then calculated the total number of licensed drivers within each county. The countywide miles were then distributed amongst the licensed drivers in the county, which gave us the miles driven per licensed driver. Using the nationwide average fuel economy, we calculated the average gallons of gas used per driver in each county and multiplied that by the fuel tax.

We then added the dollar amount for income, sales, property and fuel taxes to rank the counties to calculate a total tax burden.

Sources: US Census Bureau 2015 American Community Survey, Government Sources, Avalara, American Petroleum Institute, GasBuddy, UMTRI, Federal Highway Administration, SmartAsset

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