What Changes in Your Paycheck in Minnesota
Your paycheck in Minnesota shows a Minnesota state income tax line item that grows progressively with income, starting at 5.35% for the first $1-$1. For a $1 salary, you might see ~ $1-$1 annually (~ $1-$1 per biweekly paycheck) for state tax, reflecting the progressive brackets with effective rates around 6%-7% Minnesota paychecks only show state and federal tax deductions—no local income tax line items. The progressive brackets mean your state tax increases as you move through brackets, with very high earners reaching the 9.85% top rate. The high starting rate (5.35%) means even lower earners pay relatively high taxes compared to states with lower starting brackets.
Example State Tax in Minnesota
What you'll pay in Minnesota state income tax at different salary levels (single filer, no deductions):
| Gross Salary | State Tax (Year) | Effective Rate |
|---|---|---|
| $50,000 | $2,959 | 5.9% |
| $75,000 | $4,659 | 6.2% |
| $100,000 | $6,359 | 6.4% |
| $150,000 | $10,284 | 6.9% |
Use the calculator above to see your exact take-home pay with your filing status and deductions.
Understanding Minnesota Taxes
Who Benefits
Minnesota is relatively challenging for most income levels due to the high starting rate (5.35%), but lower-income earners (under ~ $1 for singles, $1 for couples) benefit slightly from the 5.35%-6.8% rates compared to the higher 7.85%-9.85% rates for higher earners. Retirees also benefit from exemptions on Social Security and most retirement income, making Minnesota attractive for those relying on retirement savings However, Minnesota's high rates mean most earners pay relatively high effective rates compared to other states.
Who May Not Benefit
Minnesota is challenging for most earners due to the high starting rate (5.35%) and high top rate (9.85%). A $1 earner pays an effective rate around 6%-7% (~ $1-$1 annually), while the same earner in a flat-tax state like Pennsylvania would pay $1 (3.07% flat, though PA may have local EIT), and in Illinois would pay $1 (4.95% flat). High earners face the 9.85% rate, making Minnesota one of the higher-tax states. Most earners with geographic flexibility would save $1-$1+ annually by moving to lower-tax states.
Key Facts That Affect Your Take-Home Pay
- Minnesota uses a progressive income tax system with four brackets, starting at 5.35% for the first $1 of income (single) or $1 (married) and escalating to a top rate of 9.85% for income above $1 (single) or $1 (married), making Minnesota's bracket structure relatively simple but with high rates across all brackets.
- Minnesota's progressive brackets have a relatively high starting rate (5.35%) compared to many other progressive states that start at 1%-3%, meaning even lower earners pay a higher percentage in Minnesota. For a $1 earner, income is taxed across multiple brackets creating an effective rate around 6%-7%, not the top 9.85% rate.
- Minnesota does not require local income tax withholding, so paycheck deductions remain the same everywhere. All Minnesota residents have the same income tax structure—only the state progressive brackets apply.
Common Mistakes People Make
Misconception: 'Progressive tax means I'll pay the top 9.85% on all my income in Minnesota.' Reality: Minnesota's progressive system starts at 5.35% for the first $1-$1 of income (depending on filing status), and most middle-income earners pay effective rates around 6%-7.5%, not 9.85%. The 9.85% rate only applies to income above $1 (single) or $1 (married). Someone earning $1 pays an effective rate around 6%-7% (~ $1-$1 annually).
Misconception: 'Minnesota has low taxes because it's a Midwestern state.' Reality: Minnesota's income tax starts at 5.35% (relatively high starting rate) and tops out at 9.85%, which is among the higher rates in the nation. A $1 earner in Minnesota pays around 6%-7% effective rate, while the same earner in a flat-tax state like Pennsylvania would pay $1 (3.07% flat, though PA may have local EIT), and in Illinois would pay $1 (4.95% flat). Minnesota's high starting rate means even lower earners pay more than in many other states, and high earners face the 9.85% top rate.
Misconception: 'The four brackets mean my tax is simple like flat-tax states.' Reality: While Minnesota has only four brackets (simpler than states with many brackets), the brackets are progressive with rates ranging from 5.35% to 9.85%. Unlike flat-tax states where everyone pays the same percentage, Minnesota's progressive system means higher earners pay significantly higher effective rates The high starting rate (5.35%) also means even lower earners pay more than in states with lower starting brackets or flat taxes.
One Thing to Know
Minnesota's starting rate of 5.35% is unusually high for a progressive state—most start at 1%-3%. This means even lower earners pay more in Minnesota than they would in many other states, which surprises people who assume progressive systems always favor lower earners.
Important Notes
These calculations are estimates based on current tax law. Your actual take-home pay varies based on:
- Pre-tax deductions (401(k), health insurance, HSA, etc.)
- Your W-4 withholding elections
- Additional income or deductions at tax time
- Individual circumstances and tax situations
Tax rates are subject to change. Federal and state tax laws may be updated annually. This is not tax advice. For personalized help, consult a tax professional familiar with Minnesota tax laws.