Taxes in Minnesota: Features and Advantages

Main Taxes in Minnesota

Income Tax

Minnesota applies a progressive income tax scale with rates ranging from 5.35% to 9.85%.

Sales Tax

The base sales tax rate is 6.875%, but local taxes can raise this to 9.03% in some areas.

We provide services for obtaining a Sales Tax Certificate, preparing and filing Sales and Use Tax Returns, and advising business owners on registration, calculation, and reporting.

Property Tax

The average property tax rate is 1.05% of housing value, considered moderate.

Corporate Income Tax

For companies, Minnesota levies a corporate income tax at 9.8% — one of the highest in the U.S. It applies to C corporations, while S corporations are exempt.

An Annual Renewal must be filed by December 31.

Commercial Property Tax Surcharge

Applies to business property above a certain threshold.

Estate Tax

Applies to asset transfers exceeding $3 million.

Excise Taxes

Minnesota levies excise taxes on goods such as alcohol, tobacco, and fuel.

Advantages of Minnesota’s Tax System

• High income tax rates, partially offset by tax credits.
• Rentals Tax Credit for individuals — among the highest in the U.S.
• Moderate property tax rates — make homeownership more affordable.
• Transparent conditions for business: simple and clear tax regime for small businesses.
• No Franchise Tax.

Taxes in Minnesota Compared to Other States

• High income tax (up to 9.85%).
• Estate tax exists (not in all states).
• High corporate tax rate (9.8%).
• No gross receipts tax (as in Tennessee or Washington) and no Franchise Tax.
• Average level of Sales and Property Tax.