Minnesota State Tax Rate 2025 Guide – Are you a Minnesota resident, business owner, or considering a move to the North Star State? Understanding Minnesota state tax rates for 2025 is essential for accurate tax planning, budgeting, and maximizing refunds. This comprehensive guide covers individual income tax brackets, corporate rates, sales tax, property taxes, estate taxes, credits, and filing tips—based on the latest official data from the Minnesota Department of Revenue.
Minnesota’s tax system is progressive, with rates adjusted annually for inflation to prevent bracket creep. For tax year 2025 (returns filed in 2026), rates remain stable while brackets and deductions have increased. Whether you’re filing as an individual, running a business, or planning your estate, here’s everything you need to know.
Minnesota Individual Income Tax Brackets and Rates for 2025
Minnesota uses a graduated (progressive) individual income tax system with four brackets. The rates—unchanged from prior years—are 5.35%, 6.80%, 7.85%, and 9.85%. Brackets were adjusted upward by 2.886% for inflation (rounded to the nearest $10).
Here are the official 2025 tax brackets by filing status:
Married Filing Jointly or Qualifying Surviving Spouse
- 5.35%: $0 to $47,620
- 6.80%: $47,621 to $189,180
- 7.85%: $189,181 to $330,410
- 9.85%: Over $330,410
Married Filing Separately
- 5.35%: $0 to $23,810
- 6.80%: $23,811 to $94,590
- 7.85%: $94,591 to $165,205
- 9.85%: Over $165,205
Single
- 5.35%: $0 to $32,570
- 6.80%: $32,571 to $106,990
- 7.85%: $106,991 to $198,630
- 9.85%: Over $198,630
Head of Household
- 5.35%: $0 to $40,100
- 6.80%: $40,101 to $161,130
- 7.85%: $161,131 to $264,050
- 9.85%: Over $264,050
Pro tip: Only the income within each bracket is taxed at that rate (marginal taxation). Use the official Minnesota tax tables or software for precise calculations.
Standard Deductions and Dependent Exemptions for 2025
Minnesota offers standard deductions that reduce your taxable income. Amounts increased for 2025:
- Married Filing Jointly / Qualifying Surviving Spouse: $29,900
- Single or Married Filing Separately: $14,950
- Head of Household: $22,500
Dependent exemption: $5,200 per qualifying dependent.
High-income taxpayers may see reduced or limited itemized deductions if adjusted gross income exceeds certain thresholds (phased out above approximately $238,950 for most filers).
Minnesota Corporate Income Tax (Franchise Tax) Rate 2025
Businesses in Minnesota face one of the nation’s higher corporate tax rates. The flat corporate franchise tax rate is 9.8% on Minnesota-apportioned taxable income (primarily based on sales factor for multi-state companies).
Corporations pay the greater of the 9.8% tax or the minimum fee. Pass-through entities (S corps, LLCs, partnerships) generally avoid entity-level tax; income flows to owners’ individual returns.
Minnesota Sales Tax Rate 2025: State and Local
The statewide general sales tax rate is 6.875%. Local taxes (city and county) are added on top, so the combined rate varies by location—typically ranging from 6.875% to about 8.375% in many areas, with an average combined state + local rate around 8.13%.
Use tax applies at the same rate on out-of-state or online purchases where sales tax wasn’t collected. Special taxes may apply to lodging, alcohol, or admissions.
Check your exact rate: Use the Minnesota Department of Revenue’s Sales Tax Rate Calculator or map for any address.
Property Taxes in Minnesota 2025
Property taxes are primarily local but follow statewide class rates. For taxes payable in 2025:
- Residential homestead: 1.00% on the first $500,000 of market value; 1.25% on value above $500,000.
- Similar tiered rates apply to other property types (e.g., apartments, commercial).
Minnesota’s average effective property tax rate on owner-occupied homes is approximately 0.99%—slightly above the national average but varying by county and property classification.
Homeowners may qualify for homestead credits or refunds; renters can claim the Renter’s Credit (see below).
Minnesota Estate Tax 2025
Minnesota imposes its own estate tax (separate from federal). For deaths in 2025:
- Exemption: $3,000,000 per decedent.
- Additional exclusions for qualifying small business or farm property (combined limit often up to $5 million).
- Rates: Graduated from 13% to 16% on amounts above the exemption.
Gifts made within three years of death may be included. Minnesota has no separate gift tax. Federal estate tax exemption is much higher (over $13 million in 2025), so many estates owe only state tax.
Popular Minnesota Tax Credits and Deductions in 2025
Minnesota offers generous refundable credits to offset taxes or provide refunds:
- Child Tax Credit: Up to $1,750 per child under 18 (no limit on number of children). Advance payments available starting 2025.
- Working Family Credit: Up to $379 (no children) or more with qualifying older children; targets low-to-moderate income working families.
- Renter’s Credit: Now claimed directly on your M1 return (simplified and expanded in 2025 for faster refunds and broader eligibility).
- Other credits: K-12 education credit, homestead credit for homeowners, property tax refunds.
These credits phase out at higher incomes but can significantly boost refunds for eligible families.
How to File Your 2025 Minnesota State Taxes?
File Form M1 (Minnesota Individual Income Tax Return) alongside your federal return. Most residents file electronically for faster refunds.
- Deadline: Typically April 15, 2026 (or next business day).
- Free filing options and volunteer assistance available for lower-income or senior taxpayers.
- Track your refund via the Minnesota Department of Revenue’s “Where’s My Refund?” tool.
Businesses use corporate franchise tax forms. Always consult a tax professional for complex situations.
Key Changes and Updates for Minnesota Taxes in 2025
- Inflation-adjusted brackets and higher standard deductions.
- Expanded and simplified Renter’s Credit.
- Option for advance Child Tax Credit payments.
- No major rate increases; focus remains on inflation protection and family support.
Minnesota continues to conform to most federal tax rules with state-specific additions and subtractions.
How Minnesota Taxes Compare to Other States?
Minnesota has relatively high top individual (9.85%) and corporate (9.8%) rates compared to many states, but offers strong credits and services. Property taxes are moderate-to-high, and sales tax is average. Consult resources like the Tax Foundation for full rankings when evaluating moves.
Frequently Asked Questions About Minnesota State Tax Rates 2025
What is the top Minnesota state income tax rate in 2025?
9.85% on income above the highest bracket threshold.
Does Minnesota tax Social Security or retirement income?
Social Security is generally not taxed; other retirement income follows federal rules with possible subtractions.
Are there any new taxes in 2025?
No major new taxes—primarily inflation adjustments and credit enhancements.
Where can I find official forms and calculators?
Visit revenue.state.mn.us for the latest forms, rate calculators, and instructions.
Final Tips for Minnesota Taxpayers in 2025
Review your withholding, maximize eligible credits, and keep records organized. Tax laws can be complex—professional advice or free community resources can save you money and stress. For the most current details, always refer to the Minnesota Department of Revenue website.
This guide is for informational purposes and reflects 2025 tax year data as of early 2026. Tax rules can change, so verify with official sources or a qualified tax advisor for your specific situation.
Stay informed and file confidently—happy tax season!