We’d like to put some perspective on how our taxes in Minnesota compare/contrast to nearby states. First, we need to go back to 2013, when a one-party control of the state legislative process enacted a number of anti-business, anti-jobs taxes, and added a new personal income tax bracket that went up 25% from the previous high to 9.85%. We called it the Edina Tax since it appeared to be aimed at mid-level executives.

Couple that with estate taxes and you have the formula to drive the so-called “rich” out of the state. Never mind that they spend money here that employs people, pays taxes on, and can provide capital funding for businesses. A good business climate means a good job climate. Let’s move back to the individual income tax and give you a personal example, yours truly. To make easier your tax payments, we recommend you to check out this new guide on how to create w2.

Individual Income Taxes for the Year 2020
(As a percentage compared to Minnesota)

Minnesota       100
North Dakota    15
South Dakota      0
Iowa                  58
Nebraska          79
Wisconsin         57

North Dakota’s taxes are an economist’s dream—very low rates (2% ish) and very long ranges. Hence, very low taxes for most of their people. South Dakota has no personal income tax. Nebraska has no lucrative natural resources to tax off, leaving their income taxes relatively high for this region. Iowa surprisingly is a bit above half Minnesota’s taxes as is Wisconsin.

Hopefully, that gives us a little perspective of our area’s income tax climate. We do also need to take a look at the area’s estate/inheritance taxes. We’ll do that in our next installment as we feel it’s probably too much to cover right now. Once we do that we’ll end it with a challenge to the Minnesota legislature and governor. Please stay tuned.
Thank you.

Bob Smith III
Founder
Gopher State Politics Institute

November 2021