Minnesota

The Facts on Minnesota's Tax Climate

Here are some basic facts on Minnesota's tax system and how it compares to other states:

Tax Freedom Day Arrives on April 16 in Minnesota
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Minnesota taxpayers work until April 16 (ranked 8th highest nationally) to pay their total tax bill, 4 days after national Tax Freedom Day (April 12). The Tax Freedom Days of neighboring states were: Wisconsin, April 16 (ranked 7th nationally); Iowa, April 6 (29th nationally); North Dakota, April 11 (17th nationally); and South Dakota, March 20 (46th nationally).
Full study of Tax Freedom Day, nationwide and in each state

Minnesota's State and Local Tax Burden Above National Average
Minnesota's 2009 state and local tax burden of 10.3% of income is above the national average of 9.8%. Minnesota's tax burden has decreased overall from 11.0% (10th nationally) in 1977 to 10.3% (7th nationally) in 2009. Minnesotans pay $4,651 per capita in state and local taxes.
Minnesota's State and Local Tax Burdens, 1977-Present
Other States' State/Local Tax Burdens
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009

Minnesota's 2012 Business Tax Climate Ranks 45th
Minnesota ranks 45th the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states rank as follows: North Dakota (29th), South Dakota (2nd), Iowa (41st) and Wisconsin (43rd).
50-State Comparison of Business Tax Climates(data only)
2012 State Business Tax Climate Index, Ninth Edition (full study)

Minnesota's Individual Income Tax System
Minnesota's personal income tax system consists of three separate brackets with a top rate of 7.85% kicking in at an income level of $74,780. Among states levying personal income taxes, Minnesota's top rate ranks 9th highest nationally. Minnesota's 2008 state-level individual income tax collections were $1,493 per person, which ranked 5th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Minnesota's Corporate Income Tax System
Minnesota's corporate tax structure consists of a flat rate of 9.8% on all corporate income. Among states levying corporate income taxes, Minnesota's rate ranks 3rd highest nationally. In 2008, state-level corporate tax collections (excluding local taxes) were $200 per capita, which ranked 11th nationally.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita

Minnesota Sales and Excise Taxes
Minnesota levies a 6.875% general sales or use tax on consumers, which is above the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,456 per person, which ranks17th highest nationally. Minnesota's gasoline tax stands at 27.2 cents per gallon, ranking 20th highest nationally. Minnesota's cigarette tax stands at $1.504 per pack of twenty, which ranks 20th highest nationally. The sales tax was adopted in 1967, the gasoline tax in 1925 and the cigarette tax in 1947.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates.
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita

Minnesota Property Taxes:
Minnesota is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Minnesota's localities collected $916.57 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Minnesota collected $123.62 per capita during FY 2006, making its combined state/local property taxes $1,040.19 per capita, which ranks 27th highest nationally..
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Minnesota is a Donor State
Minnesota taxpayers receive less federal funding per dollar of federal taxes paid compared to the average state. Per dollar of Federal tax collected in 2005, Minnesota citizens received approximately $0.72 in the way of federal spending. This ranks the state 46th highest nationally and represents a decrease from 1995 when Minnesota received $0.78 per dollar of taxes in federal spending (44th highest nationally). Neighboring states and the amount of federal money they received per dollar of federal taxes collected were: North Dakota ($1.68), South Dakota ($1.53), Iowa ($1.10) and Wisconsin ($0.86).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

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