To determine your take-home pay, input your period or annual income and the required federal, state, and local W4 information into our free Minnesota paycheck calculator. The state of Minnesota has a progressive income tax system with rates ranging from 5.35% to 9.85%.
So you're offered one or more jobs in Minnesota and can't decide which one to join or planning to move here for some other reasons, but looking for a push to make a final decision. Well, friend. You have landed at the right place. Just continue reading to find out.
Minnesota, a state bordering Canada and Lake Superior, is located in the Midwestern part of the United States. This state is full of thousands of beautiful lakes (more than 10,000 plus), as well as cultural landmarks, especially in twin cities of Minneapolis and state capital Saint Paul.
From fast and urban life in Twin cities to a calm and peaceful life in farms, surrounded by mountains and lakes, Minnesota State offers a high quality of life for everyone.
So if you are offered a new job here, or planning to move to this North Star state to start your new life, then you must be aware of all the pros and cons of relocation. Moreover, for starting a new job, you must also know how to calculate paycheck in Minnesota, as it's is essential to determine the take-home pay you are going to earn from your job. Additionally, small business employers can also take advantage of paycheck calculations to assess their employment costs for their business in Minnesota. So, this guide is a One-in-all solution for many problems. So let's get started!
Here are some of the essential points you must know before moving to Minnesota:
The cost of living in Minnesota is slightly higher than other states, with a cost of living index of 106.3 points as compared to a national index of 100 points. These indexes are deduced after considering the cost of housing, utilities, food, transportation, health, grocery, etc.
The cost of Housing in Minnesota is somewhat equal to the national average, as the median home cost in this state is $235,000, and the median rent is around $1,500/month. Moreover, for the one-bedroom apartment in State capital is available for an average rent of $1,076/month, and in Minneapolis, it a bit costlier, with one-bedrooms costs for $1,223/month, and two-bedrooms for $1,635/month in rent. However, there's undoubtedly a good chance of finding a home at lower prices in the state's smaller towns, like Hoyt Lakes.
Minnesota is known as the Land of 10,000 Lakes and has tons of water-based recreation activities, including boating, ice fishing, swimming, canoeing, and fishing.
Moreover, you can also enjoy your weekends and vacations by visiting numerous other outdoor and tourist spots including Parks like Lebanon Hills Regional Park, Hiking Trails like Cascade River State Park, Museums like Lake Superior Art Glass, Zoos & Aquariums like Sibley Park Zoo (Mankato) and Water & Amusement Parks like Nickelodeon Universe (Bloomington).
However, besides all these pros mentioned above for Outdoor Activities, the extreme weather, especially winters (as low as -35 degrees) and overall bland cuisine, may turn you off.
Besides, a better job and house, it is also vital to give your kids a better education. Wherefore, the Minnesota state offers a complete package of top schools, colleges, and universities, making it rank on #10 among best in the nation for Geographic Disparity: States with the Best (and Worst) Schools by USA Today. Some of the renowned schools and colleges in the state include Carlton College (Northfield) and Minnetonka Public School District (Minnetonka).
As we are done with all other facts, let's jump to the main topic of Business & Job Opportunities and Paycheck Calculation.
Minnesota has a highly active major-metropolitan area, with plenty of employment opportunities, including the majority of jobs created by 17 Fortune 500 companies housed in the state, including Best Buy, UnitedHealth Group, 3M, and CHS. The state is also ranked high in Economy ranking, especially in categories like Business Environment, Employment, and Growth.
Some of the booming industries for business and job opportunities in this state are Manufacturing, Agriculture, Healthcare / Biomedical, Technology, and Finance.
However, besides all these perks, the state levy some of the highest state income tax rates in the country. Therefore, employees are suggested to make up their mind & budget as well as choose their jobs accordingly.
The best way to choose the best job in Minnesota is to compare different job offers according to their paycheck amount and select the highest paying one. Likewise, employers are also suggested to follow the same strategy to deduce their employment costs for their business.
Paycheck calculation goes through several steps, including gross wage determination, federal and state payroll tax deductions, while complying with all federal and payroll laws. But before jumping to the calculation steps, you must go through the following Minnesota Payroll facts:
As we are done with relocation to Minnesota and its payroll facts, now it's time to calculate paycheck. This paycheck calculation can help you compare different job offers, your take-home pay from your job in Minnesota, or your employment cost as an employer.
The very first step to calculating the paycheck amount is to determine Gross Pay. It is a wage that an employee earned in the last pay period.
Gross Pay is calculated differently for both hourly and salary-based employees, which is discussed in detail as follow:
Hourly Employees are paid at a mutually agreed pay rate for each hour they work in a pay period. Usually Pay periods for Hourly employees are Hourly, Daily, Weekly, and Bi-Weekly. However, the Federal, State, and Local Wage law requires the employers to set the pay rate equals to or more than the defined Minimum Wage Law for the non-exempted employees.
Hourly employees are also entitled to receive overtime, for each excess hour worked after regular hours in a workday or a workweek. Remember, like Minimum wage, the employers are also required to follow Overtime wage law provided by the federal, state, or local authorities.
Note: All the relevant laws are discussed in detail ahead.
To calculate gross wage for an hourly employee:
Quick Tip: You can also use our Timecard with overtime Calculator to calculate Gross Wage for Hourly Employee instantly.
Salaried Employees are paid at the flat amount rather than on an hourly basis. The amount is usually mutually agreed as an Annual Salary, which is then paid in Semi-monthly or Monthly Pay periods.
Salaried employees are mostly exempted from overtime law. However, their salaries must be according to Federal and State Minimum Wage law.
To calculate Gross Pay for Salaried Employees:
Don't forget that Supplemental Wages like Bonuses, commissions, tips, paid leaves, fringe benefits, or other taxable wages earned by the employee must be added into the Gross wages.
Once you are done with Gross Wages, it's time to subtract any Pre-Tax deductions from the gross wage to get taxable wages as Pre-tax deductions are not taxable for federal payroll taxes.
Pre-tax deductions are offered to the employees as benefits like fringe benefits, HSA plans, etc., to reduce their taxable income, hence, increasing their take-home pay amount. Remember, not all benefits are exempted from taxes, so choose the pre-tax deductions wisely.
Some of the common pre-tax deductible benefits are:
Note: Pre-Tax deduction rate, contribution limits, special tax withholding rules change from year to year, according to inflation and costs of living by the federal government. Therefore, you must keep yourself updated with all rates before making any deductions.
Many Taxpayers find it hard to itemize their deductions to calculate taxable wages, for which they go for standard deductions, that varies according to the filing status, as shown in the table below:
Filing Status | Standard Deduction Amount |
---|---|
Single Filers | $12,200 |
Married, Filing Jointly | $24,400 |
Married, Filing Separately | $12,200 |
Head of Household | $18,350 |
Once you have determined the taxable wages, it's time to deduct Federal Income taxes for the Taxable wages.
IRS requires the employers to withhold federal income tax from the employee's paycheck, according to the details provided by the employee on Form W-4. The employee fills this form at the start of the job. The form includes all the necessary information, including income, number of allowances to claim, number of dependents, amount of additional taxes to deduct, and much more.
The employees are required to keep their Form W-4 up to date with all their current information, especially marriage, divorce, or child's birth.
The federal income tax is charged according to the tax brackets in which the taxpayer's income falls. The latest income tax brackets and rates are as follow:
Taxable Income | Rate |
---|---|
$0 - $9,700 | 10% |
$9,700 - $39,475 | 12% |
$39,475 - $84,200 | 22% |
$84,200 - $160,725 | 24% |
$160,725 - $204,100 | 32% |
$204,100 - $510,300 | 35% |
$510,300+ | 37% |
Taxable Income | Rate |
---|---|
$0 - $19,400 | 10% |
$19,400 - $78,950 | 12% |
$78,950 - $168,400 | 22% |
$168,400 - $321,450 | 24% |
$321,450 - $408,200 | 32% |
$408,200 - $612,350 | 35% |
$612,350+ | 37% |
Taxable Income | Rate |
---|---|
$0 - $9,700 | 10% |
$9,700 - $39,475 | 12% |
$39,475 - $84,200 | 22% |
$84,200 - $160,725 | 24% |
$160,725 - $204,100 | 32% |
$204,100 - $306,175 | 35% |
$306,175+ | 37% |
Taxable Income | Rate |
---|---|
$0 - $13,850 | 10% |
$13,850 - $52,850 | 12% |
$52,850 - $84,200 | 22% |
$84,200 - $160,700 | 24% |
$160,700 - $204,100 | 32% |
$204,100 - $510,300 | 35% |
$510,300+ | 37% |
Besides, Federal Income Tax, the IRS also requires the employer to withhold FICA tax (15.3%) for the employee's paycheck and also requires the employer to pay a matching amount for each employee.
Federal Insurance Contributions Act (FICA) Taxes comprises of two types of taxes which are as follow:
A total of 12.4% of social security tax is charged from which 6.2% is withheld from the employee's gross, and the employer pays the matching 6.2%. However, Social Security is only charged on the maximum taxable earnings of $137,700 for 2025.
A total of 2.9% of Medicare is charged, from which 1.45% is withheld from the employee's gross, and the employer pays the matching 1.45%. Unlike Social Security, there is no maximum table earning limit for this tax. However, an additional surtax of 0.9% is charged as Additional Medicare Surtax on the employees having income over the specified level along with filing status, which is as follow:
Income Over | Filing Status |
---|---|
$250,000 | Married Filing Jointly |
$125,000 | Married Filing Separately |
$200,000 | Single |
Note: Employers are not required to pay an equal amount for Additional Medicare Surtax.
IRS requires the employer to pay another tax, known as The Federal Unemployment Tax Act (FUTA) Tax. This tax is paid at the rate of 6% on the first $7000 earned by each employee in a year. However, the IRS doesn't require the employees to contribute to it.
The employers who pay State Unemployment Insurance (SUI) tax in full and on time are given relieving FUTA tax credit of up to 5.4%, which saves a whopping 90% from FUTA Tax.
Post-tax deductions (after-tax deductions) is an amount the employer takes out from the employee's paycheck after taxes. Therefore, it does not affect taxable wages and the amount of tax payable.
Here are some of the types of post-tax deductions that employee may voluntarily choose:
As you are done with Federal Payroll Taxes, now it's time to discuss State Payroll Taxes. The very first State Payroll Tax is State Income Tax charged by Minnesota State on employee's paycheck. Another one is State Unemployment Insurance (SUI) tax that is to be paid by the employers only.
Like Federal Income tax, Employers are required to withhold State Income tax from the employee's paycheck, at the rates ranging from 5.35% to 9.85%, distributed in 4 tax brackets depending on Income Level and filing status.
Minnesota Taxable Income | Rate |
---|---|
$0 - $26,520 | 5.35% |
$26,520 - $87,110 | 6.80% |
$87,110 - $161,720 | 7.85% |
$161,720+ | 9.85% |
Minnesota Taxable Income | Rate |
---|---|
$0 - $38,770 | 5.35% |
$38,770 - $154,020 | 6.80% |
$154,020 - $269,010 | 7.85% |
$269,010+ | 9.85% |
|
|
---|---|
Minnesota Taxable Income | Rate |
$0 - $19,385 | 5.35% |
$19,385 - $77,010 | 6.80% |
$77,010 - $134,505 | 7.85% |
$134,505+ | 9.85% |
Minnesota Taxable Income | Rate |
---|---|
$0 - $32,650 | 5.35% |
$32,650 - $131,190 | 6.80% |
$131,190 - $214,980 | 7.85% |
$214,980+ | 9.85% |
This tax should be charged according to the details, including the number of allowances to claim, a number of dependents, additional state withholding amounts, etc. provided by the employee in Form W-4MN. Besides Form W-4, this form must also be updated regularly by the employee, especially on significant events like marriage, child's birth, or divorce.
The State Unemployment Insurance (SUI) Tax is an employer-funded program that provides temporary income to unemployed workers who have lost their job without fault of their own.
The Minnesota employers are required to pay State Unemployment Insurance (SUI) Tax, at the rates ranging from 0.2% to 9.1% (0.1% of workforce development assessment charges included), on maximum taxable earnings of $35000 for each employee. However, new employers are to be charged according to their industry average. You can view new employer rates here.
No City or County in Minnesota State levy Local Income tax on to its resident or non-resident employees.
Now that you are done with all payroll taxes and calculated the net take-home pay of an employee, it's time to cut the paycheck. Moreover, you, as an employer, must pay your portion of FICA tax along with FUTA and SUI tax in full and on time regularly.
Answer: Following are the taxes taken out of employee's paycheck in Minnesota:
Answer: The average hourly wage in Minnesota is $30, which is equal to the average annual salary of $62,710 per year.
Answer: The Minimum wage rate in Duluth, MN, is $10 for large employers (with annual gross revenues of $500,000) and $8.15 for other employers.
Answer: The Minnesota Minimum wage rate of $10 must be paid by Large-employers and $8.15 by Small-employers to non-exempted employees.
Answer: The cost of living index in Minnesota is 97.2, whereas the nationwide living index is 100.