State-by-State Guide to Taxes on Middle-Class Families
Tool | November 2020

Minnesota State Tax Guide for Middle-Class Families

State tax rates and rules for income, sales, gas, property, cigarette, and other taxes that impact middle-class families.


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The Bottom Line
Flag of Minnesota

Mixed Tax Picture

If you look at Minnesota's income tax rates, which start at 5.35% and continue up to 9.85%, you might get alarmed. But in the North Star state, you can both take generous standard deductions and still claim a partial write-off for charitable deductions. The result is middling income taxes, matched by middling sales taxes. Property taxes are a bit higher than average.

Income Tax Range

Low: 5.35% (on less than $26,960 of taxable income for single filers and on less than $39,410 for joint filers)

High: 9.85% (on more than $164,400 of taxable income for single filers and on more than $273,470 for joint filers)

For 2021, the 5.35% rate applies to taxable income less than $27,230 for single filers and less than $39,810 for joint filers. The 9.85% rate applies to taxable income over $166,040 for single filers and over $276,200 for joint filers.

Sales Tax

6.875% state levy. Localities can add as much as 2%, with an average combined rate of 7.47%, according to the Tax Foundation.

Groceries: Exempt
Clothing: Exempt
Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 6.5% excise tax ($10 for certain older vehicles; $150 for certain collector vehicles)
Prescription Drugs: Exempt

Real Property Taxes

In Minnesota, the median property tax rate is $1,082 per $100,000 of assessed home value.

Motor Fuel Taxes

Gasoline: 30.6¢ per gallon.
Diesel: 30.6¢ per gallon.

Sin Taxes

Cigarettes and little cigars: $3.673 per pack (excise tax plus special sales tax)
Premium cigars: the lesser of 95% of the wholesale price or $0.50 per cigar
Moist snuff: the greater of 95% of the wholesale price or $3.04 multiplied by the ounces and divided by 1.2
Other tobacco products: 95% of the wholesale price
Vapor products: 95% of wholesale price

Beer: $0.15 per gallon
Wine: $0.30 per gallon ($1.82 per gallon for sparkling)
Liquor: $5.03 per gallon
A 2.5% gross-receipts tax is also due on all alcohol purchases, in addition to sales tax.

Annual Car Taxes and Fees

An annual vehicle registration tax based on the car's sticker price (MSRP) and age is imposed.

Estate and Inheritance Taxes

Minnesota's estate tax exemption is $3 million, but the state looks back to include any taxable gifts made within three years prior to death as part of your estate. Tax rates range from 13% to 16%.