Minnesota Tax Burden Ranked: Where It Stands And A Key Surprise

ST. PAUL, MN — Minnesota has a reputation as a high-tax state, but a new national report suggests the reality is more nuanced.

Minnesota ranks 15th in the nation for overall state and local tax burden, with residents paying about 9.08 percent of their income toward taxes, according to a WalletHub analysis.

Here are five takeaways, including one that may surprise a lot of Minnesotans:

Iowa Actually Has A Higher Tax Burden Than Minnesota

Despite Minnesota’s reputation, neighboring Iowa ranks 12th in the nation for tax burden, compared to Minnesota at No. 15.

The difference comes down to how taxes add up across categories. Iowa’s total tax burden is about 9.21 percent of personal income, slightly higher than Minnesota’s 9.08 percent.

While the two states are fairly similar, Iowa edges higher due to a heavier overall mix of property, income and sales taxes relative to residents’ incomes. None of Iowa’s categories are dramatically higher on their own, but together they push the state ahead of Minnesota.

Minnesota may feel like the higher-tax state, but when measured as a share of income, Iowans actually pay slightly more overall.

Minnesota Is High, But Not Near The Top

Landing at No. 15 puts Minnesota in the top third nationally, but well below states like Hawaii, New York and Vermont, which top the list.

Income Taxes Drive The Burden

Minnesota’s income tax burden accounts for about 3.34% of personal income, making it the largest piece of the overall tax load.

Property Taxes Are More Moderate

At about 2.47% of income, Minnesota’s property tax burden is closer to the middle of the pack nationally, not among the highest.

Sales Taxes Still Take A Chunk

Sales and excise taxes make up roughly 3.27% of income, adding a significant layer to what residents pay each year.

The Bottom Line

Minnesota is still a relatively high-tax state, but not an outlier. And compared to at least one neighboring state, it may not be as heavy as many people assume.

Check out the full report here.