Minnesota Small Business Tax Guide — 2026
Income Tax Rate
5.35% — 9.85% (progressive, 4 brackets)
Sales Tax Rate
6.875% state + local (total typically 7% — 8.5%)
Filing Deadline
April 15 (matches federal deadline)
Minnesota Income Tax
Minnesota imposes a state income tax with rates of 5.35% — 9.85% (progressive, 4 brackets). Self-employed individuals, freelancers, and sole proprietors pay this tax on their net business income in addition to federal income tax and federal self-employment tax (15.3%).
Self-Employment in Minnesota
Minnesota taxes self-employment income at progressive rates up to 9.85% — one of the highest in the nation. No separate state SE tax. Minnesota conforms to most federal provisions.
Estimated Tax Requirements
Quarterly estimated payments required if you expect to owe $500 or more. Standard federal due dates apply.
Minnesota Deductions & Credits
- Minnesota conforms to federal standard and itemized deductions
- Minnesota allows the QBI deduction
- Credit for taxes paid to other states
- Working family credit (similar to federal EITC)
Business Filing Fees
LLC: $155 formation + $0 annual renewal (just file annual renewal online for free). Corporation: $135 formation + annual renewal.
Key Facts About Minnesota Taxes
- Minnesota's top rate of 9.85% is among the highest in the nation
- Minnesota conforms to most federal deductions including QBI
- No annual LLC fee — just a free online renewal
- Clothing is exempt from Minnesota sales tax
The Part Minnesota Does Not Do For You
Whatever Minnesota takes, it takes on your net profit — and net profit is just what you earned minus what you can prove you spent. The proving is on you, and it is where most of the money leaks out.
TaxTidy is where the proof lives. Photograph a receipt and it reads the vendor, the amount and the date in about three seconds, then files the expense on its Schedule C line. Nothing gets typed in twice, and nothing depends on you remembering a purchase from eight months ago.
Because Minnesota wants its own return alongside the federal one, the same organized record does double duty — one set of receipts, sorted once, ready for whichever deadline comes first. Your Audit Readiness Score shows you how solid that record is before anyone else asks.
Frequently Asked Questions
What is Minnesota's income tax rate for high earners?
Minnesota's top rate is 9.85% on income over approximately $193,000 (single). The four brackets are 5.35%, 6.8%, 7.85%, and 9.85%.
Does Minnesota allow the QBI deduction?
Yes. Minnesota conforms to the federal Section 199A QBI deduction, allowing self-employed individuals to deduct up to 20% of qualified business income.
When are Minnesota estimated taxes due?
Quarterly on April 15, June 15, September 15, and January 15. Required if you expect to owe $500 or more.
Official source: Minnesota Department of Revenue
TaxTidy provides expense organization tools based on the most current US tax law available to it. TaxTidy is not a CPA, Enrolled Agent, or licensed tax professional. All categorizations, deductions, and tax calculations are estimates. Please verify all data for accuracy and consult a certified tax professional before filing.
Start Tracking Your Minnesota Business Expenses
Your first 25 scans are on us — free for life, no card required. Enough to sort this quarter's receipts by Schedule C line and see your Audit Readiness Score for the first time.
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