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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 27 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 2008, Minnesota taxpayers had to work until April 27 (ranked 8th highest nationally) to pay their total tax bill, four days after national Tax Freedom Day (April 23). The Tax Freedom Days of neighboring states were: Wisconsin, April 24 (ranked 14th nationally); Iowa, April 16 (34th nationally); North Dakota, April 12 (39th nationally); and South Dakota, April 12th (41st nationally).

Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
Full study of Tax Freedom Day, nationwide and in each state

Minnesota's State/Local Tax Burden Among Nation's Highest in 2007
During the past three decades Minnesota's state and local tax burden has consistently been among the nation's highest. Estimated at 11.5% of income, Minnesota's state/local tax burden percentage stands at 11th highest nationally, above the national average of 11.0%. Minnesotans pay $4,971 per capita in state and local taxes, and per capita state income is $43,121.
Minnesota's State-Local Tax Burden, 1970-Present

Minnesota's 2008 Business Tax Climate Ranks 42nd
Minnesota ranks 42nd in 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 ranked as follows: North Dakota (30th), South Dakota (2nd), Iowa (45th) and Wisconsin (39th).
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth 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 $69,990. Among states levying personal income taxes, Minnesota's top rate ranks 10th highest nationally. Minnesota's 2005 individual income tax collections were $1,237 per person, which ranked 6th 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 2006, state-level corporate tax collections (excluding local taxes) were $207.44 per capita, which ranked 10th nationally.
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

Minnesota Levies Sales Tax above National Median; Per Capita Collections among Nation's Highest
Minnesota levies a 6.5% general sales or use tax on consumers, which is above the national median of 5.4 percent. State and local governments combined collect approximately $1,336 per capita in sales taxes, which ranks 16th highest nationally. Minnesota's gasoline tax stands at 22 cents per gallon, ranking 30th highest nationally. Minnesota's cigarette tax stands at $1.49 per pack of twenty, which ranks 17th 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 and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

Minnesota Property Taxes: Comparatively High
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 $4,312,311,000 in property taxes in fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Minnesota collected $607,863,000 in property taxes during FY 2004, making its combined state/local property taxes $4,920,174,000. That brings its per capita collections to $965, 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

Publications from The Tax Foundation