Taxes in Minnesota: State Tax Guide 2026
Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.
Taxes in Minnesota: State Tax Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Minnesota has one of the highest overall tax burdens in the nation. Its top income tax rate of 9.85% is the fifth-highest among states, and property and sales taxes run above average as well. The trade-off is robust public services, consistently high quality-of-life rankings, and a strong social safety net. Understanding the full tax picture is essential for residents weighing Minnesota’s costs against its benefits.
Minnesota Income Tax Rates (2026)
Minnesota uses a progressive income tax with four brackets. Rates for single filers:
| Tax Rate | Taxable Income Range |
|---|---|
| 5.35% | $0 – ~$31,690 |
| 6.80% | ~$31,691 – ~$104,090 |
| 7.85% | ~$104,091 – ~$193,240 |
| 9.85% | Over ~$193,240 |
Married filing jointly brackets are approximately double. The top rate applies at ~$304,970 for joint filers.
Minnesota’s standard deduction is ~$14,575 for single filers and ~$29,150 for married filing jointly, generally conforming to the federal amounts.
Sales Tax
| Component | Rate |
|---|---|
| State base rate | 6.875% |
| Average combined (state + local) | ~7.49% |
| Highest combined rate | ~8.875% |
Minneapolis and St. Paul add local taxes that push the combined rate above 8%. Transit-area surcharges add 0.25%–0.50% in some metro areas.
Exempt from sales tax: Clothing (all clothing is exempt in Minnesota, a notable benefit), most groceries, and prescription medications.
Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | ~1.02% |
| National average | 0.99% |
Minnesota property taxes are slightly above average. The state uses a class rate system where different property types are assessed at different percentages of market value. Residential homestead property is assessed at 1.00% of the first ~$500,000 of market value and 1.25% of value above that.
Property tax refund (circuit breaker): Minnesota offers one of the most generous property tax refund programs in the nation. Homeowners and renters with property taxes exceeding a percentage of income can receive a refund of up to ~$3,310. This is claimed on a separate form (M1PR) and is available regardless of income, though the benefit phases out at higher incomes.
Homestead market value exclusion: Reduces the taxable value of homesteaded property by up to ~$30,400 for homes valued at ~$76,000 or less, phasing out for homes valued above ~$413,800.
Other Taxes
- Estate tax: Minnesota imposes an estate tax on estates above ~$3,000,000. Rates range from ~13% to ~16%. Unlike the federal estate tax, Minnesota’s exemption is not portable between spouses.
- No inheritance tax.
- Capital gains: Taxed as ordinary income at rates up to 9.85%.
- Fuel tax: ~$0.285 per gallon.
- Cigarette tax: ~$3.04 per pack.
- Alcohol tax: Among the highest in the nation, with excise taxes of ~$5.03 per gallon of spirits.
- MinnesotaCare tax: A 1.80% tax on the gross revenue of healthcare providers and health plan companies. This is not paid directly by individuals but is embedded in healthcare costs.
- No local income taxes.
Tax Breaks and Credits
- No sales tax on clothing: Minnesota is one of a handful of states that exempts all clothing from sales tax, saving families hundreds per year.
- Property tax refund: Available to both homeowners and renters, with refunds up to ~$3,310 (homeowners) and ~$2,280 (renters).
- K–12 education credits/deductions: Education credit of up to ~$1,000 per child for qualifying expenses (income-limited), plus a deduction of up to ~$2,500 per child for K–12 expenses.
- Working family credit: Minnesota’s state-level EITC, generally ~25%–45% of the federal credit depending on the number of children.
- Child tax credit: Minnesota enacted a state child tax credit of up to ~$1,750 per qualifying child (income-limited).
- Social Security subtraction: Minnesota allows a partial to full subtraction of Social Security benefits based on income. Filers with provisional income below ~$78,000 (single) or ~$100,000 (joint) can subtract all Social Security benefits.
- 529 plan: Minnesota offers a tax credit (not deduction) for contributions to any state’s 529 plan, up to ~$500 per year for joint filers.
Key Takeaways
- Minnesota’s top income tax rate of 9.85% is among the highest in the nation, starting at ~$193,240 for single filers
- No sales tax on clothing is a meaningful benefit, especially for families
- The property tax refund program is among the most generous in the country, providing real relief for moderate-income homeowners and renters
- The $3 million estate tax threshold can catch families with significant home equity or retirement assets
- Social Security subtraction provides full relief for many retirees, but high-income retirees still face the top marginal rate
Next Steps
- Compare Minnesota to other states at State Income Tax Comparison: All 50 States Ranked
- Understand your federal obligation with the Federal Income Tax Guide 2026
- Make sure you claim everything you can — Tax Deductions You’re Probably Missing
- Ready to file? See How to File Your Taxes Step by Step
Tax information is for educational purposes only. Consult a licensed tax professional.