Minnesota has primarily 4 state income rates. These include:

  • 5.35%
  • 7.05%
  • 7.85%
  • 9.85%

Personal income tax

The state of Minnesota carries out its tax collection process using four tax brackets:

1. Single taxpayer

  • 5.35% (on the first $25,070 of taxable income)
  • 7.05% (on taxable income between $25,071 and $82,360)
  • 7.85% (on taxable income between $82,361 and $154,950)
  • 9.85% (on taxable income of $154,951 and over)

2. Married couples who file their returns jointly

  • 5.35% (on the first $36,650 of taxable income)
  • 7.05% (on taxable income between $36,651 and $145,620)
  • 7.85% (on taxable income of between $145,621 and $258,260)
  • 9.85% (on taxable income of $258,261 and over)

Minnesota residents are obligated to file their tax returns by April 15th or on the following business day in case the original date falls on a holiday or weekend. Are you interested in a detailed list of Minnesota taxes? Click here to visit the its revenue website.

Sales taxes

The sales tax in the Minnesota stands at 6.875%. The department in charge of collecting these revenues also administers sales tax for various local governments. The Minnesota Department of Revenue is responsible for issuing a fact sheet on specialized local taxes. In addition, the state charges a tax on goods purchased elsewhere but are used within the borders of Minnesota.

Personal and real property taxes

Minnesota property owners receive a property tax bill from the county every spring. The three elements that impact this bill include:

  • The amount that local governments (such as those in town, counties, and cities) utilize to provide services to the community
  • The estimated market value of the property
  • Classification of the property (or rather how it is used)

The property assessor of each county is responsible for determining the classification of all property based on its use, ranging from homes, cabins, apartments, farms, and businesses. Each class is taxed using different percentages of its value determined by the state’s legislature.

Homeowners in Minnesota have access to 2 property tax refund programs:

  • Regular property tax refund
  • Special tax property refund

Taxpayers can apply for one or both based on their income and size of the property tax bill.

Inheritance and estate taxes

Minnesota failed to adopt the changes implemented in federal tax laws in regards to estate taxation. In case a descendant resides in Minnesota at the time of their loved one’s demise, the estate will be obligated to file form M706 if the federal gross estate surpasses $1.4 million at the time of death in 2015, or if the estate is beholden to file a federal estate tax return. In most cases, the estate tax rates run from 10% to 16% for 2015 descendants. Estates that exceed $1.6 million for deaths in 2016 are also liable for estate tax. The others are $1.8 million in 2017 and $2 million in 2018 onwards.

The instructions contained in the M706 form highlight details on how to calculate the Minnesota estate tax rate or federal gross. Online calculators are provided by the Department of Revenue to assist taxpayers in verifying Minnesota estate obligation.

Finally, note that Minnesota lacks an inheritance tax, which can prove to be a good thing for some.

Do you need help understanding your tax situation?
Click here to learn about our tax consulting services.

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