State Income Taxes in Minnesota
The state of Minnesota does have an individual income tax. Like most states with income tax, it is calculated on a marginal scale, with four (4) tax brackets. They range from 5.35% to 9.85%. The highest bracket of 9.85% starts for income greater than $164,400.
State Business Taxes in Minnesota
The state of Minnesota does have a business income tax. Minnesota’s state tax is a flat tax of 9.80% on all net income. For other business entities, such as S Corporations, Partnerships, LLCs, etc., since they flow-thru to the owner, the tax is paid at the individual tax rate. In other words, the business tax is only accessed on C Corporations.
In addition to a business tax on C Corporations, all business entities must also pay a Minimum Fee. The fee is based on your Business’ Apportionment which are the values of: Property, Capitalized Rents, Payroll, and Gross Receipts all added together. The Minimum Fee ranges between $0 and $10,210, based on the value of your Apportionment.
Sales and Property Taxes in Minnesota
Sales Taxes – Like many states, Minnesota has multiple sales tax rates. One at the state level and another at the local level. The state rate is 6.88% the average local rate is 0.58% (total average rate for Minnesota Sales Tax is 7.46%).
Property Taxes in Minnesota – the average property tax rate for residential property in the state of Minnesota is 1.11%, which is a high property tax as far as a percent of a taxpayer’s main home.
Estate Taxes in Minnesota
The state of Minnesota has an estate tax that ranges between 13% and 16%. The first $3 Million dollars of the estate is exempt from tax.
Payroll taxes in Minnesota
Payroll (Unemployment Insurance) taxes are paid by business on the behalf of their employees to fund unemployment insurance to the state. It consists of multiple factors. Below is an outline of the most common ones in Minnesota –
- Wage Base – Minnesota’s wage base is $35,000 (which is very high).
- New Employers – UI Contribution Tax rates change yearly and are based on the industry that your business is in. Here is a link to the list of possible UI rates for new employers in the state of Minnesota – Click here.
- UI Rates – range from 0.10% to 9.30%
Minnesota Business Entities – LLCs
Minnesota has an inexpensive cost of opening an LLC. Here are some important facts:
- Minnesota does not have any annual LLC fee, Yay!
- When youregister with the state, you pay a one time fee of $155
- Secretary of State of Minnesota – click here