Data Notice: Tax rates, brackets, and exemptions cited in “Taxes in Minnesota: State Tax Guide 2026” are projected 2026 figures based on enacted Minnesota legislation and IRS inflation adjustments. The Minnesota legislature may enact mid-year changes. Verify with the Minnesota Department of Revenue before filing. [taxes-minnesota-2026]

Taxes in Minnesota: State Tax Guide 2026

This article about taxes in minnesota: state tax guide 2026 provides general tax education and is not a substitute for professional tax advice. Laws and regulations discussed here may have changed since publication. Work with a licensed tax advisor for decisions affecting your specific tax 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.