Ranking and TaxScore #49

Important Tax Facts: 

-The State of Minnesota has both Corporate income tax and personal income tax with maximum rates of 9.80% and 9.85%, respectively. Minnesota is also one of the few states that also has an estate tax. Read more below.

9.85%

State Income Tax

State
Income
Tax

9.80%

Cost of Setting Up A Business

state
business
tax

HIGH

Property
Taxes

7.46%

STATE & lOCAL
Sales Tax

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.

Here is a link to the Minimum Fee Tax Brackets – Click Here.

State and Local Sales Taxes in Minnesota

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

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.

State 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 –

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 you register with the state, you pay a one time fee of $155
  • Secretary of State of Minnesota – click here
  • If you would like help setting up your LLC, we recommend using IncFile.com. They are simple and easy to use.

State #48

State #50