Minnesota has a graduated state individual income tax, with rates ranging from 5.35 percent to 9.85 percent. Minnesota has a graduated corporate income tax with a top rate of 9.80 percent, a 6.875 percent state sales tax rate, and an average combined state and local sales tax rate of 8.14 percent. Minnesota has a 1.00 percent effective property tax rate on owner-occupied housing value. Minnesota has an estate tax. Minnesota’s gas tax is 32.7 cents per gallon, and its cigarette excise tax is $3.88 per pack of 20 cigarettes.
Minnesota raises tax revenue primarily through individual income taxes (31.0 percent of total state and local tax revenue), property taxes (22.9 percent), and general sales taxes (18.8 percent). Minnesota collects $7,860 in state and local tax collections per capita, carries $8,948 in state and local debt per capita, and has a 95 percent funded ratio of public pension plans. Minnesota’s tax system ranks 44th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Minnesota is no exception. Use the tabs below to compare Minnesota taxes with other states and to see how Minnesota raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
9 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
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New Jersey levies the highest top statutory corporate tax rate at 11.5 percent, followed by Minnesota (9.8 percent) and Illinois (9.50 percent). Alaska and Pennsylvania levy top statutory corporate tax rates of 9.40 percent and 8.99 percent, respectively.
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The pandemic has accelerated changes to the way we live and work, making it far easier for people to move—and they have. As states work to maintain their competitive advantage, they should pay attention to where people are moving, and try to understand why.
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While the wireless market has become increasingly competitive in recent years, resulting in steady declines in the average price for wireless services, the price reduction for consumers has been partially offset by higher taxes.
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The logic that has prevailed for local sales taxes should apply equally to other taxes that localities impose on multijurisdictional businesses, including local tourism taxes. The evidence is clear that central administration of local taxes reduces compliance costs without sacrificing local revenue.
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People respond to incentives. As tax rates increase or products are banned from sale, consumers and producers search for ways around these penalties and restrictions.
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In times of high inflation, states should consider adopting permanent full expensing because it boosts long-run productivity, economic output, and wages.
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All corporate income taxes fall on capital investment, but the structure should not make matters worse, and policymakers should take care not to distort investment decisions through the use of targeted incentives for select firms or activities instead of a lower rate for all businesses.
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Remote and flexible work opportunities are here to stay, whether states like it or not. With enhanced opportunities to take their job with them wherever they please, more workers can factor tax burdens into their decision of where to live.
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While there are many ways to show how much is collected in taxes by state governments, our Index is designed to show how well states structure their tax systems by focusing on the how more than the how much in recognition of the fact that there are better and worse ways to raise revenue.
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IRS and Census data show that people and businesses favor states with low and structurally sound tax systems, which can impact the state’s economic growth and governmental coffers.
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