---
title: "Minnesota Payroll 2026: Income Tax, UI & Leave"
description: "Minnesota taxes wages on four brackets from 5.35% to 9.85%, plus a new 0.88% Paid Leave premium from 2026. Teamed EOR guide."
canonical: https://www.teamed.global/country-hiring-guides/united-states/minnesota/state-income-tax-and-unemployment-insurance
---

United States · Minnesota · State tax child

Served by Teamed US Inc., Delaware · Payroll via SUNA Solutions

# How does *Minnesota state income tax and unemployment insurance* work in 2026?

Hire in Minnesota and you withhold state income tax on four brackets, from 5.35% to 9.85%. On top sit a $44,000 unemployment wage base and the new 0.88% Paid Leave premium that started this year.

Last reviewed 17 July 2026 · Minnesota, United States guide

![The Minneapolis skyline at dusk along the Mississippi River: glass office towers and the Stone Arch Bridge reflected in the water under a deep blue evening sky.](/cluster-assets/country-hiring-guides/united-states/minnesota/state-income-tax-and-unemployment-insurance/images/hero.webp)

Illustration · Minneapolis, Minnesota

Hire someone in Minnesota and you feel the difference on the first payroll. There **is** a state income tax, four brackets running from **5.35%** to **9.85%**, so you withhold state tax on every employee using [Form W-4MN](https://www.revenue.state.mn.us/withholding-tax). This page is the tax-and-UI child of the [United States hiring guide](/country-hiring-guides/united-states).

Three more boxes sit on top. Unemployment insurance runs on a **$44,000 wage base** with a new-employer rate set by industry, **1.00% to 4.06%** outside construction, and a **14.00%** additional assessment on the tax due. The new state **Paid Leave** programme adds a **0.88%** premium on wages up to **$185,000** from January 2026, which we cover in the [Minnesota leave guide](/country-hiring-guides/united-states/minnesota/paid-family-and-sick-leave). And the minimum wage is **$11.41** an hour statewide, detailed in the [wage and overtime guide](/country-hiring-guides/united-states/minnesota/wage-overtime-and-meal-break-law).

## Does Minnesota have a state income tax in 2026?

Yes. Minnesota taxes wages on four graduated brackets in 2026: **5.35%** up to $33,310 for a single filer, then **6.80%**, **7.85%**, and a top rate of **9.85%** above $203,151.

You withhold state income tax on every Minnesota employee, on a state form, Form W-4MN, that sits alongside the federal W-4. Minnesota sits well above its neighbours here: [Wisconsin](/country-hiring-guides/united-states/wisconsin/state-income-tax-and-unemployment-insurance) tops out lower, and [Iowa](/country-hiring-guides/united-states/iowa/state-income-tax-and-unemployment-insurance) moved to a flat rate.

You withhold 5.35% on a single filer's first $33,310, 6.80% from $33,311 to $109,430, 7.85% from $109,431 to $203,150, and 9.85% above that. For a married-filing-jointly employee the bands are wider: the 5.35% band runs to $48,700, and the top rate starts above $337,931. The [Minnesota Department of Revenue](https://www.revenue.state.mn.us/minnesota-income-tax-rates-and-brackets) publishes the schedule each year.

The brackets adjust for inflation, so your 2026 thresholds sit higher than 2025. You follow the employee's W-4MN and remit to the state on the same schedule as your federal deposits. Pay a bonus or commission separately from regular wages and you withhold it at a flat 6.25%.

## How does Minnesota withholding and supplemental pay work?

You register with the Minnesota Department of Revenue for a withholding account, collect a Form W-4MN from each employee, and remit state income tax with your federal deposits. Supplemental wages paid separately are withheld at a flat **6.25%**.

Minnesota does not stop at withholding. You also report every new hire to the state within 20 days of their start date.

Minnesota Dept of Revenue · Withholding

You withhold on 2026 single-filer brackets of **5.35%** to $33,310, then 6.80%, 7.85%, and **9.85%** above $203,151. Pay a bonus separately and you withhold a flat **6.25%**.

Source: [Minnesota Department of Revenue, income tax rates and brackets](https://www.revenue.state.mn.us/minnesota-income-tax-rates-and-brackets)

Keep the W-4MN on file: an employee can claim different allowances for state than for federal, and the form is yours to hold. Get the registration wrong and the state charges you late-deposit penalties on top of the federal ones. The cadence is the trap for a first-time Minnesota employer, because your state deposit frequency tracks your federal one, so a semi-weekly federal filer files state withholding semi-weekly too.

New-hire reporting is a separate obligation you owe the state. You report each new employee to the [Minnesota New Hire Reporting Center](https://www.mn-newhire.com/) within 20 days of their start date, which feeds child-support enforcement. It is easy to miss when you are heads-down on tax, and the penalties stack per employee.

## What is Minnesota's unemployment insurance wage base and rate for 2026?

Minnesota's UI taxable wage base is **$44,000 per employee** for 2026. New-employer rates are set by industry: **1.00% to 4.06%** outside construction, where most sectors sit at 1.00%, and **1.48% to 8.90%** for construction.

A base tax rate of **0.40%** is added to every employer's rate, then a **14.00%** additional assessment is applied to the UI tax due. Experience-rated employers can reach up to **8.90%**.

Minnesota Unemployment Insurance · 2026 rates

Taxable wage base **$44,000** per employee. New-employer rate by industry: **1.00% to 4.06%** outside construction, **1.48% to 8.90%** for construction. Base tax rate **0.40%** added to every rate, then a **14.00%** additional assessment on the tax due. Experience-rated ceiling **8.90%**.

Source: [Minnesota Unemployment Insurance, employer tax rates](https://www.uimn.org/employers/wages-taxes/tax-rates/index.jsp) and [new employer rates](https://www.uimn.org/employers/wages-taxes/tax-rates/new-employer-rates.jsp)

You pay UI on the first $44,000 of each employee's wages in 2026 and nothing on the rest of their calendar-year pay. Minnesota sets a different new-employer rate for each industry, assigned on your NAICS code, so the rate is a band rather than a single number. Most non-construction sectors land at 1.00%, but Information sits at 1.29%, Professional, Scientific, and Technical Services at 1.08%, Administrative and Support and Waste Management at 2.04%, and Mining at 4.06%. Construction employers are classified on all five NAICS digits and run from 1.48% to 8.90%. The state then adds its 0.40% base tax rate to whatever rate applies to you. Source: [Minnesota Unemployment Insurance, new employer rates](https://www.uimn.org/employers/wages-taxes/tax-rates/new-employer-rates.jsp).

One layer is easy to miss on a first Minnesota budget. The state applies a **14.00% additional assessment** for 2026 as a multiplier on the UI tax due, not as percentage points on your rate. So a new employer on the modal 1.00% adds the 0.40% base rate to reach 1.40%, then multiplies by 1.14, which is an effective **1.596%** on the first $44,000. The separate special assessment for federal loan interest is 0.00% for 2026.

You hold the industry rate until you have enough claims history to be experience-rated, after which your own layoffs drive the number, up to 8.90%. The federal layer sits on top: [FUTA](https://www.irs.gov/businesses/small-businesses-self-employed/futa-credit-reduction) runs at an effective 0.6% once you take the full credit for paying your Minnesota state unemployment tax on time. The wage base sits higher than most states: [Iowa](/country-hiring-guides/united-states/iowa/state-income-tax-and-unemployment-insurance) and [North Dakota](/country-hiring-guides/united-states/north-dakota/state-income-tax-and-unemployment-insurance) both run different UI bases, so multi-state payrolls need a table, not a rule of thumb.

## What other payroll rules apply to Minnesota employees?

You run the full federal stack: [Social Security](https://www.ssa.gov/employer/) at **6.2%**, Medicare at 1.45%, and [FUTA](https://www.irs.gov/businesses/small-businesses-self-employed/futa-credit-reduction). The new Minnesota Paid Leave premium of **0.88%** started on 1 January 2026, and the minimum wage is **$11.41** an hour.

Minnesota Paid Leave splits its **0.88%** premium into a 0.61% medical-leave part and a 0.27% family-leave part, charged on wages up to **$185,000**. You may deduct up to 0.44% from the employee and fund the rest. Designated small employers pay a reduced total of **0.66%**.

[Minnesota Paid Leave](https://paidleave.mn.gov/employers/index.jsp) is the big 2026 change. You fund a state-run paid family and medical leave programme through a 0.88% payroll premium on wages up to $185,000, the Social Security withholding limit rounded to the nearest thousand, and your eligible workers can take job-protected paid leave of up to 20 weeks combined per year. For most employers you cover at least 0.44% of the premium and may deduct up to 0.44% from the employee. Designated [small employers](https://mn.gov/deed/assets/paid-leave-small-employer-premium-rate-designation-acc_tcm1045-716947.pdf) pay a reduced total premium of 0.66% and may still deduct up to 0.44%, so their employer share falls to 0.22%: reduced, never zero. Designation is not headcount alone. You need 30 or fewer employees in every quarter of the basis period and an average employee wage at or below $27,745.88 a quarter, which is 150% of the statewide average wage. Premiums began accruing on 1 January 2026, so it is a live cost on your Minnesota register today. Federal [FMLA](https://www.dol.gov/agencies/whd/fmla) still applies alongside the state programme if you have 50 or more employees. The full mechanics of both sit in our [Minnesota paid leave and sick leave guide](/country-hiring-guides/united-states/minnesota/paid-family-and-sick-leave).

Two more rules catch you if you hire from out of state. [Earned Sick and Safe Time](https://www.dli.mn.gov/sick-leave) makes you accrue paid sick leave at one hour for every 30 hours worked, up to 48 hours a year. And you pay a statewide minimum wage of $11.41 an hour, with a $9.31 training rate for workers under 20 in their first 90 days. Minneapolis and St. Paul set higher local floors, so where your worker physically sits decides the rate. The full overtime and break rules sit in our [Minnesota wage and overtime guide](/country-hiring-guides/united-states/minnesota/wage-overtime-and-meal-break-law). If you ever have to let that worker go, the rules sit in our [Minnesota termination and at-will guide](/country-hiring-guides/united-states/minnesota/termination-law-and-at-will-exceptions).

## How Teamed runs Minnesota payroll end to end

Teamed becomes your legal employer of record in Minnesota for [**from $599 per employee per month flat**](/pricing). **Zero FX** mark-up. Statutory employer cost passes through itemised on every invoice.

You hire the person. Teamed registers with the Minnesota Department of Revenue and Unemployment Insurance, withholds state income tax on the 9.85% bracket schedule, runs the new 0.88% Paid Leave premium, and tracks sick-time accrual. Everything runs on **one platform**.

**Real HR and legal experts** handle your Minnesota hires and know the four-bracket withholding, the $44,000 UI wage base, and the 0.88% Paid Leave premium by heart. **An actual person**, not a chatbot or a pooled queue. You see every cost: state income tax withheld, UI contributions, the Paid Leave premium, and federal employer taxes **pass through at cost, itemised** and auditable on every invoice. **No setup fee, no exit fee.** Teamed becomes your [employer of record](/employer-of-record) at [from $599 per employee per month with zero FX mark-up](/pricing).

Contractor onboarding, EOR payroll, and entity graduation all live on **one platform**: a Minnesota contractor who converts to W-2 keeps their record, and that same employee can **graduate** from EOR to your own US entity without switching systems. Because Minnesota carries real withholding, a new Paid Leave programme with a 30-employee small-employer rate reduction rather than an exemption, and a 14.00% assessment on top of the UI tax, the load per head runs higher than in a no-tax state, which moves the month your own entity pays off. Run the [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator) or the [Employer Cost calculator](https://www.teamed.global/tools/employer-cost) to see the month the model flips and the point you **graduate** to your own entity. EOR is the right model for Minnesota, **until it isn't**.

Teamed Client Operations

The mistake we see on Minnesota is budgeting for income-tax withholding and stopping there. In 2026 you also fund a new Paid Leave premium, the unemployment wage base, and Earned Sick and Safe Time accrual, and you report every new hire to the state. Four obligations, four ways to miss a deadline. We run all four on one register.

A note from Tom Price-Daniel

Minnesota is not a no-tax state, and 2026 made that heavier.  
Four income-tax brackets up to 9.85%, a $44,000 unemployment wage base, and a brand-new Paid Leave premium your finance team has to fund from January.  
Real tax is not the same as hard payroll. The gap between those two is the part we run for you.

Tom Price-Daniel · Co-founder, Teamed

## Related United States guides

- [Hiring in the United States, overview](/country-hiring-guides/united-states)country parent
- [Minnesota paid leave & sick leave](/country-hiring-guides/united-states/minnesota/paid-family-and-sick-leave)sibling
- [Minnesota wages & overtime](/country-hiring-guides/united-states/minnesota/wage-overtime-and-meal-break-law)sibling
- [Minnesota termination & at-will](/country-hiring-guides/united-states/minnesota/termination-law-and-at-will-exceptions)sibling
- [Wisconsin state tax & UI](/country-hiring-guides/united-states/wisconsin/state-income-tax-and-unemployment-insurance)neighbour
- [Iowa state tax & UI](/country-hiring-guides/united-states/iowa/state-income-tax-and-unemployment-insurance)neighbour
- [Employer of Record overview](/employer-of-record)core
- [Pricing, Zero FX Fixed](/pricing)core
- [EOR vs Entity Crossover Calculator](https://www.teamed.global/tools/crossover-calculator)tool
- [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal advice. Minnesota's income tax brackets, UI wage base and rate schedule, Paid Leave premium, Earned Sick and Safe Time rules, and minimum wage update when the legislature acts or the Department of Revenue, Unemployment Insurance, and Paid Leave divisions issue new figures. Confirm specific numbers with the Minnesota Department of Revenue, the Minnesota Unemployment Insurance Program, Minnesota Paid Leave, or your Teamed US specialist before relying on any figure here.