How Much Does Minnesota Take Out for Taxes?

Minnesota’s tax system includes various levies that fund public services and infrastructure across the state. Understanding how these taxes are applied provides clarity on the overall tax burden for residents and businesses.

Minnesota Individual Income Tax

Individual income tax is a primary consideration for many when evaluating their tax obligation in Minnesota. This tax applies to earnings and uses a progressive rate structure. For the 2024 tax year, Minnesota has four income tax brackets, with rates ranging from 5.35% to 9.85%. For instance, a single filer’s first $31,690 of income is taxed at 5.35%, while income above $193,240 is subject to the highest rate of 9.85%.

Taxpayers can reduce their taxable income through deductions. Minnesota offers a standard deduction, which for 2024 is $14,575 for single filers and married individuals filing separately, $21,900 for heads of household, and $29,150 for married couples filing jointly. Itemized deductions are also available, and Minnesota allows taxpayers to itemize on their state return even if they took the standard deduction federally. A dependent exemption of $5,050 per qualifying dependent can also be claimed.

Beyond deductions, several tax credits can directly reduce an individual’s tax liability. The Working Family Credit is a refundable credit for lower-income taxpayers. For 2025, the maximum Working Family Credit is $379, calculated as 4% of the first $9,480 of earned income, and is subject to income phase-outs. The Child Tax Credit, introduced in tax year 2024, offers $1,750 per qualifying child aged 0 to 17, with no limit on the number of qualifying children. This credit also phases out as income increases.

The Minnesota Child and Dependent Care Credit helps offset care expenses for qualifying individuals. This refundable credit allows taxpayers to receive a refund even if they owe no income tax. Eligibility for this credit depends on meeting certain income thresholds. Taxpayers can find current tax forms and instructions from the Minnesota Department of Revenue.

Minnesota Sales and Use Tax

Minnesota imposes a sales tax on the retail sale of goods and services purchased within the state. The statewide sales tax rate is 6.875%. This tax is generally collected by sellers at the point of sale. A use tax applies to taxable purchases made outside Minnesota for use within the state where sales tax was not collected or was collected at a lower rate.

Many common necessities are exempt from Minnesota sales tax, including most food, clothing, and prescription drugs. Over-the-counter drugs are also exempt under certain conditions. However, prepared food, candy, and soft drinks are generally subject to sales tax.

In addition to the statewide rate, some local jurisdictions levy their own sales taxes. These local sales taxes are added to the state rate. The maximum local sales tax rate allowed by Minnesota law is 1.5%, contributing to an average combined state and local sales tax rate of 8.04%.

Minnesota Property Tax

Property taxes in Minnesota are primarily assessed and collected at the local government level, including by counties, cities, townships, and school districts, rather than directly by the state. The amount of property tax owed is largely determined by a property’s estimated market value and its classification. County assessors annually determine the estimated market value of properties, aiming to reflect the most probable selling price in an open market.

Property classification, such as residential homestead, commercial, or agricultural, also influences the tax bill, as each classification is taxed at a different percentage of its market value. Local governments then establish tax rates, often expressed as mill rates or tax capacity rates, which are applied to the assessed value to calculate the tax due. Factors influencing an individual’s property tax bill include the property’s assessed value, its classification, and whether it qualifies for homestead status, which typically provides a lower tax rate for owner-occupied residences.

The Minnesota Property Tax Refund program offers relief to eligible homeowners and renters. This program has two main components: a regular refund based on household income and property taxes paid, and a special refund for homeowners whose net property tax increased significantly, provided the increase was not due to property improvements. Eligibility for this program depends on household income thresholds, which increase for additional dependents.

Other Common Minnesota Taxes

Beyond income, sales, and property taxes, individuals in Minnesota encounter other common taxes. Vehicle registration taxes are an annual expense for vehicle owners. This tax is calculated based on factors such as the vehicle’s manufacturer’s suggested retail price (MSRP) and its age, with the value depreciating each year.

Another significant tax impacting consumers is the gasoline tax. As of January 1, 2025, the state gasoline tax rate in Minnesota is 31.8 cents per gallon. This tax is included in the price paid at the pump and contributes to funding roads and bridges within the state.