Let's run the numbers.
You’ve come to the right page to find the basics about Minnesota taxes. In addition to this high-level information, visit the Incentives page to read more about how GREATER MSP can help you navigate the details.
Looking for more help with taxes and incentives in Greater MSP? Contact us anytime for help and consultation.
Corporate Income Tax
Minnesota’s corporate income tax rate is 9.8%. In 2014, the state moved to a single sales apportionment, which makes Minnesota a top location for headquarters, plants and equipment that propel sales. Additionally, Minnesota does not have a throwback rule, which can reduce net taxable income. The business tax can be reduced several other ways as well, including:
- Credit for Increasing Research Activities, otherwise known as R&D Credit. Tax credit for R&D expenditures is 10% up to the first $2 million in eligible expenses, and 2.5% for subsequent expenditures.
- Small Business Investment Credit, otherwise known as Angel Investment Credit. Qualified investors in certified small businesses can receive a refundable income tax credit equal to 25% of their investments, up to a maximum of $125,000 ($250,000 for married joint filers).
- Historic Structure Rehabilitation Credit for improvement of historic structures.
Sales & Use Tax
Minnesota’s general sales tax rate is 6.875%. Local sales taxes are not imposed in most jurisdictions. The maximum in the metro is 0.9%. For more detailed information, view our list of local sales and use taxes.
There is also no sales tax on clothing, pharmaceuticals, or food used for home consumption.
Business Sales Tax Exemptions
- Capital equipment (before September 1, 2014, the tax is refunded for non-manufacturers), raw materials and utilities/fuels used in the industrial production process.
- Equipment, software and electricity for qualified data center operations for 20 years.
Non-Taxed Business Services
- Advertising services
- Custom software
- Construction labor
- Installation labor for exempt capital equipment
- Repair of furniture and fixtures
Commercial & Industrial Property Tax
Minnesota exempts personal property, including machinery and inventory, from the property tax, which lowers the effective tax rate for real and personal property. Businesses with high equipment and inventory values relative to their real estate value pay a lower effective tax rate in Minnesota than in many other states.
To estimate the property tax for a business property located in a specific city in the Greater MSP region, use the Property Tax Lookup Tool.