Tool | August 2016

State-by-State Guide to Taxes

Compare state tax rates and rules -- on income, ordinary purchases, gas, "sin" products, property, and more -- across the U.S.


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The Bottom Line
Map of Minnesota

Least Tax-Friendly

The North Star State hits hard with income tax. It added a new top income tax rate of 9.85% in 2013. But what makes Minnesota really stand out is that its lowest income tax rate is 5.35%. Property taxes are on the high side. It's one of Kiplinger's top ten least tax-friendly states.

Sales Tax

6.875% state levy. Localities can add as much as 1.5%, with an average combined rate of 7.27%, according to the Tax Foundation. Most clothing and footwear are exempt.

Income Tax Range

Low: 5.35% (on less than $25,180 of taxable income for single filers and on less than $36,820 for joint filers)

High: 9.85% (on more than $155,650 of taxable income for single filers and on more than $259,420 for joint filers)

See’s Retiree Tax Map to learn how Minnesota taxes Social Security income and other forms of retirement income.

Motor Fuel Taxes

Gasoline: $0.29 per gallon.
Diesel: $0.29 per gallon.

Property Taxes

The median property tax on Minnesota's median home value of $188,300 is $2,148.

See’s Retiree Tax Map for details on tax breaks for seniors in Minnesota.

Vehicle Taxes

6.5% sales tax is due at purchase (slightly below general sales tax, and no local tax is computed).

Sin Taxes

Cigarettes and little cigars: $3.00 per pack
Premium cigars: 90% of the wholesale price with a $3.50 per cigar cap
Moist snuff: 90% of the wholesale price, or at least $2.83 per container
Other tobacco products: 90% of the wholesale price

Beer: $0.47 per gallon
Wine: $1.13 per gallon
Liquor: $8.67 per gallon
A 2.5% gross-receipts tax is also due except in the case of beer with an alcohol content of 3.2% (only sales tax applies). E-cigarettes/juice: 95% of wholesale price.

Travel Taxes

Hotel: There is no statewide lodging tax. Localities, however, can add their own lodging taxes. Sales tax is also due. In Minneapolis, this adds up to 13%.

Rental cars: 9.2%, plus sales tax.

Taxes On Wireless Service


Inheritance and Estate Taxes

Minnesota has no inheritance tax. But it does have an estate tax, with an exclusion of $1.6 million in 2016, and increasing gradually to $2 million in 2018. The maximum estate tax rate is 16%.

Oddball Tax

The champagne lifestyle will cost you in Minnesota. Bubbly is taxed six times as much as regular wine, even if the alcohol content is the same.

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