Minnesota Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)

Local Income Taxes

Minnesota does not permit local income taxes. Only state-level income tax applies. Residents of Minneapolis, St. Paul, or any other Minnesota city are not subject to a separate city or county income tax.

Remote Workers and Multi-State Taxation

Living in Minnesota, Working for an Out-of-State Employer

As a Minnesota resident, you owe Minnesota income tax on ALL income, regardless of where your employer is located. Employer location does not determine your Minnesota tax obligation.

What this means:

• Income earned working remotely for a California, New York, or any other out-of-state employer is fully taxable in Minnesota.
• Your employer’s state may also withhold income tax from your wages based on the physical-presence sourcing rules of that state.
• If another state taxes the same income that Minnesota taxes, you may claim a Credit for Taxes Paid to Another State (Schedule M1CR) on your Minnesota return.

Example: A Minnesota resident working remotely from their home for a Texas company owes Minnesota income tax on that income. Texas has no state income tax, so no double taxation would arise.

Source: https://www.revenue.state.mn.us/income-tax-fact-sheet-1-residency Source: https://www.revenue.state.mn.us/taxes-paid-another-state-credit

Working in Minnesota, Living in Another State

Nonresidents who perform work physically in Minnesota owe Minnesota income tax on income earned from Minnesota sources. Work is sourced to Minnesota based on where it is physically performed.

Physical Presence Rule: If you travel to Minnesota for work, those wages are subject to Minnesota income tax. If you work from your home office located outside Minnesota for a Minnesota-based employer, that income is generally not taxable in Minnesota.

Source: https://www.revenue.state.mn.us/how-minnesota-taxes-nonresident-income

Interstate Tax Risk Indicator

Remote workers involving Minnesota commonly encounter multi-state taxation complications with these states:

• New York — Applies a “convenience of the employer” rule; New York may tax income of employees working remotely outside New York for New York employers if the remote work is for the employee’s own convenience.
• Pennsylvania — Has 2,500+ local income tax jurisdictions and its own sourcing rules.
• California — Aggressive residency audits; any days spent working in California may create California tax obligations.
• Connecticut — Complex credit system; coordinates with states that do or do not apply convenience rules.

Minnesota itself does not apply a convenience of the employer rule. Minnesota nonresidents are taxed only on income from work physically performed in Minnesota.

Source: https://www.revenue.state.mn.us/how-minnesota-taxes-nonresident-income

“Convenience of the Employer” Rule

Minnesota does not apply a “convenience of the employer” rule. If you live outside Minnesota and work remotely for a Minnesota employer, Minnesota does not tax that income solely because your employer is based in Minnesota. You are taxed only on income earned from work physically performed in Minnesota.

Source: https://www.revenue.state.mn.us/nonresidents-income-tax-fact-sheet-3

Reciprocal Agreements

Minnesota has income tax reciprocity agreements with Michigan and North Dakota.

What reciprocity means: Reciprocity prevents both states from taxing the same personal service income (wages, salaries, tips, commissions, fees, and bonuses). Residents pay income tax only to their state of residence on qualifying personal service income.

Qualifying conditions (all must apply):

• You are a Minnesota resident working in Michigan or North Dakota, OR a Michigan or North Dakota resident working in Minnesota.
• You receive personal service income from the reciprocity state.
• You return to your home state at least once a month.

For Minnesota residents working in Michigan or North Dakota: You do not need to file an income tax return with the other state for personal service income. Report all income on your Minnesota return and pay tax only to Minnesota. You may need to file with the reciprocity state only if the other state withheld income tax, to claim a refund.

For Michigan or North Dakota residents working in Minnesota: You are not required to file a Minnesota return for personal service income. File only in your home state. To avoid Minnesota withholding on your wages, provide your Minnesota employer with Form MWR, Reciprocity Exemption/Affidavit of Residency, each year by February 28.

Important limitations:

• Reciprocity covers only personal service income. Business income, rental income, and other non-wage income earned in Minnesota is not covered by reciprocity and remains taxable to Minnesota.
• Most types of business income generated in Minnesota are taxable by Minnesota even for Michigan or North Dakota residents.

Reciprocity form: Form MWR (https://www.revenue.state.mn.us/sites/default/files/2025-12/mwr.pdf)

Source: https://www.revenue.state.mn.us/reciprocity Source: https://www.revenue.state.mn.us/reciprocity-income-tax-fact-sheet-4

Multi-State Tax Filing

When earning income in multiple states:

• File a resident return in Minnesota reporting all income from all sources.
• File nonresident returns in other states where income was physically earned.
• Claim a credit on your Minnesota return for income taxes paid to other states (Schedule M1CR).

Note: The credit for taxes paid to another state is generally available only to full-year Minnesota residents. Part-year residents and nonresidents should review the Schedule M1CR instructions for applicable rules.

Source: https://www.revenue.state.mn.us/taxes-paid-another-state-credit