Paycheck Calculator Minnesota - MN

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Minnesota - MN Paycheck Calculator: Hourly and Salary

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!

Moving to Minnesota:

Here are some of the essential points you must know before moving to Minnesota:

Cost of Living:

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.


Housing:

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.


Outdoor Activities:

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.


Education:

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).


Business and Job Opportunities:

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.


How to Calculate Paycheck in Minnesota?

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:

Minnesota Payroll Facts:

  • Employees in Minnesota are charged with 0% to 37% of Federal Income Tax on their paycheck. The rates are distributed in 7 tax brackets, depending on income level and filing status.
  • Both employers and employees are also required to pay FICA taxes of 15.3%, half of which are withheld from the employee's paycheck, and the employer pays the other half.
  • Minnesota State also levies a progressive state income tax, with rates ranging from 5.35% to 9.85%, having four tax brackets, depending on filing status and income level. Moreover, Supplemental wages (if paid separately from the basic wages) should be charged at a flat rate of 6.25%.
  • No city or county in Minnesota levy local income tax on its residents or non-residents.
  • The State requires the Minnesota employers 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.
  • The Federal Minimum wage rate for non-exempted employees is $7.25, whereas Minnesota Minimum wage rate of $10 must be paid by Large-employers and $8.15 by Small-employers to non-exempted employees. Moreover, unlike other states, Minnesota requires the employers to pay full minimum wage rates to Tipped Employees, regardless of how much tip they earn. (Note: Minimum Wage is discussed in detail ahead).
  • The Minnesota FLSA law requires the employers to pay overtime at the rate of one and half times a regular hourly rate to their non-exempted employees for each excess hour worked after 48 hours in a workweek. However, some employees are specifically exempt under Minnesota Statutes 177.23, subdivision 7.
  • Minnesota has a reciprocal agreement with Michigan and North Dakota, due to which non-resident employees working in Minnesota don't require to file nonresident state tax returns there.
  • The Livable wage for Minnesota state for a single adult with no child is $12.37, and for a couple (one working) with two children is $26.90. According to the Massachusetts Institute of Technology.
  • The Average Salary in Minnesota is $62,710 per year, which is equal to the average hourly rate of $30.
  • The Median Household income for Minnesota residents is $68,411, according to United States Census Bureau.

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.

Step 1 - Calculating Gross Pay:

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:

Gross Pay for Hourly Employee

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:

  1. Calculate total hours worked in a Pay Period using the data from Timesheet or Timecard.
  2. Multiply Total Hours worked with the Hourly Rate (Pay Rate).
  3. Add overtime hours (if any) worked by the employee.

Quick Tip: You can also use our Timecard with overtime Calculator to calculate Gross Wage for Hourly Employee instantly.


Gross Pay for Salaried Employee

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:

  • Divide the "employee's salary" by "number of pay periods." For example: If the employee's annual salary is $25000 and is paid on a semi-monthly pay period, then the employee's Gross Pay would be: $25000 / 24 = $1042.

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.


Step 2 – Subtracting Pre-Tax Deductions (If Any):

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:

  • FSA - Flexible Spending Accounts
  • HSA - Health Savings Accounts
  • Retirement savings accounts like a traditional 401(k)
  • Some of the Fringe Benefits
  • health insurance
  • accident insurance
  • dental and vision insurance
  • Commuter Benefits
  • Short-Term Disability

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:

All Filers(Updated Dec 2019)
Filing Status Standard Deduction Amount
Single Filers $12,200
Married, Filing Jointly $24,400
Married, Filing Separately $12,200
Head of Household $18,350

Step 3 – Calculate and Subtract Federal Taxes:

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:

Single Filers
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%

Married, Filing Jointly
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%

Married, Filing Separately
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%

Head of Household
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%

Step 4 – Deduct FICA Taxes:

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:

  1. Social Security:

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 2020.

  1. Medicare:

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.


Step 5 – Payment of FUTA Taxes

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.


Step 6 – Subtract Post-Tax Deductions (If any):

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:

  • Charitable contributions
  • Disability insurance
  • Garnishments
  • Specific Retirement Plans like Roth 401(k)
  • Life Insurance

Step 7 – Withhold State Payroll Taxes:

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.

Minnesota State Income Tax

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.

Single Filers
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%

Married, Filing Jointly
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%

Married, Filing Separately
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%

Head of Household
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.


State Unemployment Insurance (SUI) Tax

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.


Step 8 – Withhold Local Payroll Taxes:

No City or County in Minnesota State levy Local Income tax on to its resident or non-resident employees.


Step 9 – Calculate Pay Check:

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.


Federal and Minnesota Payroll Laws:

  1. Minnesota State requires the employees to be paid at least once every month (monthly pay frequency) or regular and scheduled paydays.
  2. Employees performing services on any project of a transitory nature like construction, paving, and repair, etc. as well as all public service corporations are required to be paid on at least semi-monthly basis.
  3. Minimum wage rates by Federal is $7.25, and by Minnesota State is $8.15 for small business employers and for large business employers (with at least $500,000 in gross annual sales or business) is $10 for non-exempted employees. However, the following employees are exempted from the minimum wage law:
    • bona fide executive employees
    • administrative employees
    • professional workers
    • babysitters
    • volunteers of nonprofit organizations
    • employees involved in transportations like drivers, loaders, etc.
    • For the complete Exemption list, you can visit Minnesota Statutes 177.23, subd. 7.
  4. The Federal FLSA law requires the employer to pay overtime at times and half of the regular hourly rates for each excess hours after 40 hours in a workweek to non-exempted. However, Minnesota FLSA law requires it for excess hours after 48 hours in a workweek, unless:
    • Employees of air carriers.
    • Employees employed in the construction of on-farm silos, if the regular rate of pay received per hour of work exceeds the standard minimum wage.
    • Employees employed the installation of appurtenant equipment on a unit or piece-rate basis if the regular rate of pay received per hour of work exceeds the standard minimum wage.
    • Individuals employed on a seasonal basis in a circus, carnival, ski, or fair facility.
    • The complete detail of non-exempted employees for overtime can be found on Minnesota Statutes 177.23, subdivision 7.
  5. The State requires the employees to receive a PAID rest or lunch break, if for less than 20 minutes or UNPAID if more than 30 minutes if the employee works eight or more consecutive hours.
  6. The employers in Minnesota are not required to provide either paid or unpaid vacation benefits to their employees.
Also Check: Minnesota Sales and Reverse Sales tax Calculator to Calculate the amount of tax included in a gross price as well as the amount you should add to a net price.

FAQs

Answer: Following are the taxes taken out of employee's paycheck in Minnesota:

  • Federal Income Tax: This tax is charged at the rates divided into seven tax brackets, ranging from 10% to 37%, depending on Filing Status and income level.
  • FICA – Social Security: This tax is charged at the rate of 6.2%, on the first $137,700 earned in a year.
  • FICA – Medicare: This tax is charged at the rate of 1.45%.
  • FICA – Additional Medicare: This surtax of 0.9% is only charged if the annual earning exceeds $200,000.
  • Minnesota Income Tax: This state income tax is charged at the rate ranging from 5.35% to 9.85%, distributed into four tax brackets depending on filing status and income level.

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.

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