The Tax Foundation

Minnesota

The Facts on Minnesota's Tax Climate

Last updated July 1, 2009

Here are some basic facts on Minnesota's tax system and how it compares to other states:

Tax Freedom Day Arrives on April 15 in Minnesota
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2009, Minnesota taxpayers had to work until April 15 (ranked 9th highest nationally) to pay their total tax bill, two days after national Tax Freedom Day (April 13). The Tax Freedom Days of neighboring states were: Wisconsin, April 13 (ranked 12th nationally); Iowa, April 4 (39th nationally); North Dakota, April 1 (46th nationally); and South Dakota, March 29 (47th nationally).
Full study of Tax Freedom Day, nationwide and in each state

Minnesota’s State/Local Tax Burden Above National Average
During the past three decades Minnesota’s state and local tax burden has consistently been among the nation's highest. Estimated at 10.2% of income, Minnesota’s state/local tax burden percentage stands at 12th highest nationally, above the national average of 9.7%. Minnesotans pay $4,688 per capita in state and local taxes.
Minnesota's State and Local Tax Burdens, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008

Minnesota's 2010 Business Tax Climate Ranks 43rd
Minnesota ranks 43rd in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: North Dakota (25th), South Dakota (1st), Iowa (46th) and Wisconsin (42nd).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)

Minnesota's Individual Income Tax System
Minnesota's personal income tax system consists of three separate brackets with a top rate of 7.85% kicking in at an income level of $74,650. Among states levying personal income taxes, Minnesota's top rate ranks 10th highest nationally. Minnesota's 2006 individual income tax collections were $1,337 per person, which ranked 7th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita 

Minnesota's Corporate Income Tax System
Minnesota's corporate tax structure consists of a flat rate of 9.8% on all corporate income. Among states levying corporate income taxes, Minnesota's rate ranks 3rd highest nationally. In 2007, state-level corporate tax collections (excluding local taxes) were $229 per capita, which ranked 12th nationally.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita 

Minnesota Levies Sales Tax above National Median
Minnesota levies a 6.875% general sales or use tax on consumers, which is above the national median of 6 percent. State and local governments combined collected approximately $878 per capita in sales taxes in 2006, which ranks 22nd highest nationally. Minnesota's gasoline tax stands at 25.6 cents per gallon, ranking 20th highest nationally. Minnesota's cigarette tax stands at $1.504 per pack of twenty, which ranks 18th highest nationally. The sales tax was adopted in 1967, the gasoline tax in 1925 and the cigarette tax in 1947.
50-State Table of Sales and Excise Tax Rates
50-State Table of  State and Local General Sales Tax Collections Per Capita and Per Household
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita

Minnesota Property Taxes:
Minnesota is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Minnesota's localities collected $916.57 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Minnesota collected $123.62 per capita during FY 2006, making its combined state/local property taxes $1,040.19 per capita, which ranks 27th highest nationally..
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Minnesota is a Donor State
Minnesota taxpayers receive less federal funding per dollar of federal taxes paid compared to the average state. Per dollar of Federal tax collected in 2005, Minnesota citizens received approximately $0.72 in the way of federal spending. This ranks the state 46th highest nationally and represents a decrease from 1995 when Minnesota received $0.78 per dollar of taxes in federal spending (44th highest nationally). Neighboring states and the amount of federal money they received per dollar of federal taxes collected were: North Dakota ($1.68), South Dakota ($1.53), Iowa ($1.10) and Wisconsin ($0.86).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

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