State Taxes on Social Security: Social Security income is taxable, but a married couple can subtract $4,500 of their federally taxable Social Security benefits from their state income. (The break is $3,500 for single and head of household, $2,250 for married separate filers). Make more than $77,000 of income (for married filers) and the break gets phased out, and is gone for those with more than $99,500 of taxable income.
Sales Tax: 6.875% state levy. Localities can add as much as 1.5%, with an average combined rate of 7.30%. Most clothing and footwear are exempt.
Income Tax Range: Low: 5.35% (on less than $25,390 of taxable income for single filers and on less than $37,110 for joint filers); High: 9.85% (on more than $155,911 of taxable income for single filers and on more than $261,510 for joint filers); Effective income tax rate: 5.8%/individual, 6.6%/joint.
Property Taxes: The median property tax on Minnesota’s median home value of $188,300 is $2,148.
Inheritance and Estate Taxes: Minnesota has no inheritance tax. But it does have an estate tax, though it has been easing its burden. Midyear in 2017, the state raised the 2017 exemption to $2.1 million, rising to $2.4 million in 2018, $2.7 million in 2019, and $3.0 million in 2020. Rates range from 12% to 16%, with the bottom rate increasing to 13% in 2018.
For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Minnesota.
