At a glance
- Corporate tax
- 9.8% + minimum fee
- Tax on wages
- 5.35% to 9.85%
- Sales tax
- 6.875% + local
- Economic nexus
- $100,000 or 200 sales
- Minimum wage
- $11.41/hr
- UI wage base
- $44,000
- New-employer UI rate
- By industry (1.08%–1.29% tech)
- Paid leave program
- Paid Leave 0.88% (0.66% small employers)
- Annual report
- Annual renewal; $115 (foreign corporation)
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
Qualify the corporation
Before hiring or opening an office in MinnesotaApply to the Secretary of State for a certificate of authority ($150 initial license fee plus a $50 filing fee).
Register with Revenue
Before the first Minnesota payrollRegister with the Department of Revenue for withholding (and sales and use tax if you have nexus).
Open a UI and Paid Leave account
When you first pay Minnesota wagesOpen a DEED employer account covering unemployment insurance and Paid Leave; both are reported on the quarterly wage detail report.
Report new hires
Within 20 days of hireReport each new hire to the Minnesota New Hire Reporting Center.
Write an ESST policy
From the first Minnesota employeeAdopt an earned sick and safe time policy: one hour per 30 worked, up to 48 hours a year.
Set up Paid Leave payroll
From the first Minnesota payrollGive employees the Paid Leave notice and decide whether to deduct part of the premium from wages.
Get workers’ compensation
Before the first employee startsBuy workers’ compensation coverage for Minnesota employees.
Retirement: Secure Choice or a plan
At five covered employeesOnce you have five or more covered employees and no retirement plan, Minnesota Secure Choice applies; offer a plan or register.
The six areas
- AccountingAccounting and state tax in MinnesotaMinnesota taxes corporations at 9.8% on a single sales factor, charges a minimum fee based on Minnesota property, payroll and sales, adds back 80% of bonus depreciation and caps NOL use at 70%.Corporate franchise tax9.8%
- ReceivablesReceivables and sales tax in MinnesotaMinnesota charges 6.875% plus local taxes, still counts 200 sales toward nexus, and taxes prewritten software however it is delivered, which puts many SaaS products in scope.State sales tax rate6.875%
- PayablesPayables and contractors in MinnesotaMinnesota wants 1099s that show Minnesota withholding filed directly by January 31, and it taxes prewritten software however delivered, so untaxed software purchases carry use tax.1099s to MinnesotaWith MN withholding
- PayrollPayroll taxes and employer rules in MinnesotaMinnesota added a 0.88% Paid Leave premium in 2026 (0.66% for small employers), charges UI on the first $44,000, requires earned sick and safe time and sets a $11.41 minimum wage.Paid Leave premium (2026)0.88%
- ComplianceCompliance and filings in MinnesotaMinnesota asks for a certificate of authority ($150 plus a $50 filing fee), a $115 annual renewal, the M4 with its minimum fee, and an unclaimed property report before November 1.Certificate of authority$150 + $50
- AdvisoryAdvisory: credits and decisions in MinnesotaMinnesota’s R&D credit is 10% on the first $2 million of research and, since 2025, partly refundable — 25% for 2026 — even for companies with no receipts.R&D credit10% / 4%
Who you register with
- Minnesota Department of RevenueCorporation franchise tax, withholding, sales and use tax, via e-Services
- Department of Employment and Economic Development (DEED) — Unemployment Insurance and Paid LeaveOne account for UI taxes and Paid Leave premiums, with joint quarterly wage detail reports
- Minnesota Secretary of State — Business ServicesCertificate of authority and annual renewal
- Department of Labor and Industry (DLI)Minimum wage, earned sick and safe time, Paid Leave job protections
- Minnesota Department of Commerce — Unclaimed PropertyAnnual unclaimed property report
- Minnesota New Hire Reporting CenterNew-hire reporting
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are Minnesota’s neighbors.
- IAIowaFlat 3.8% wage tax, SaaS exempt for business buyers, and a 15-day new-hire clock
- NDNorth DakotaLow rates, a state-only workers’ comp fund and a sellable research credit
- SDSouth DakotaNo income tax at all, but sales tax on SaaS and services — the Wayfair state
- WIWisconsin7.9% franchise tax on combined income, but no tax on SaaS and a refundable R&D credit
Common questions
What is Minnesota’s minimum fee?
It is a separate, flat amount on top of the tax, based on the total of your Minnesota property, payroll and sales or receipts. For 2026 it is zero below $1,280,000 and then steps up through five brackets — $260, $770, $2,560, $5,140 and $12,830. A company with an office and a few employees in Minnesota can owe it while it still has losses.
Is our SaaS taxable in Minnesota?
It depends on what the customer is buying. Minnesota taxes prewritten software however it is delivered and however it is billed — monthly, yearly or per use — and taxes digital products broadly. Charges for access to data in a remote database are not taxable. A subscription that is, in substance, a license to use prewritten software is the case to treat as taxable; one that is access to data or a service may not be. Revenue’s Fact Sheet 134 is the starting point.
Do we send 1099s to Minnesota?
Only those that report Minnesota withholding, by January 31, and those must be filed directly even if you participate in the Combined Federal/State program. A startup paying contractors without Minnesota withholding files those 1099s federally.
Does Minnesota Paid Leave apply to a five-person startup?
Yes. Minnesota Paid Leave started January 1, 2026 and covers nearly every Minnesota employer regardless of size. Premiums are 0.88% of wages, or 0.66% for small employers — 30 or fewer employees with an average wage under 150% of the statewide average — calculated on the same quarterly wage detail report as UI. Employers can deduct part of the premium from employees’ pay.
What does it cost to keep a Delaware corporation registered in Minnesota?
A foreign corporation applies for a certificate of authority, paying a $150 initial license fee and a $50 filing fee, and then files an annual renewal with a $115 fee every calendar year after the year authority is granted. Failing to renew leads to revocation of the certificate.
Will Minnesota pay us for our research before we have revenue?
Yes, partly, from 2025. Minnesota’s credit is 10% of Minnesota qualified research expenses up to a $2 million base amount and 4% above. For tax years beginning after December 31, 2024, a share of the current-year credit left after tax is reduced to zero is refundable — 19.2% for 2025 and 25% for 2026 and 2027 — if you elect it on a timely filed return. Companies with research expenses but no receipts can still claim it.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Minn. Stat. 290.06 — Rates of tax (corporate franchise tax)
- Minn. Stat. 290.191 — Apportionment of net income
- Minnesota Revenue — Nexus and Business Income Tax
- Minnesota Revenue — Minimum Fee
- Minnesota Revenue — Inflation-adjusted amounts for tax year 2026 (minimum fee brackets)
- Minnesota Revenue — Net Operating Losses for Corporations
- Minnesota Revenue — Bonus Depreciation
- Minnesota Revenue — Estimated Tax Payments for C Corporations
- Minnesota Revenue — Filing Extensions (Corporation Franchise Tax)
- Minnesota Revenue — Corporation Franchise Tax Due Date
- Minnesota Revenue — Credit for Increasing Research Activities (R&D Credit)
- Minnesota Revenue — Minnesota Income Tax Rates and Brackets
- Minnesota Revenue — Sales and Use Tax Business Guide: Taxes and Rates
- Minnesota Revenue — Sales Tax FAQs for Remote Sellers
- Minnesota Revenue — Sales Tax Fact Sheet 134, Computer Software
- Minnesota Revenue — Digital Products
- Minnesota Revenue — Forms W-2 and 1099
- Unemployment Insurance Minnesota — Tax rates (2026 factors)
- Unemployment Insurance Minnesota — 2026 New employer tax rates
- Unemployment Insurance Minnesota — Paid Leave small employer premium rate
- Minnesota DEED — Paid Leave compared with other leave programs
- Minnesota Paid Leave (DEED)
- Minnesota DLI — Minimum wage in Minnesota
- Minnesota DLI — Earned sick and safe time
- Minn. Stat. 181.13 — Penalty for failure to pay wages promptly (discharged employees)
- Minn. Stat. 181.14 — Prompt payment on resignation
- Minn. Stat. 187.03 — Minnesota Secure Choice retirement program (covered employer)
- Minn. Stat. 303.07 — Foreign corporation initial license fee
- Minn. Stat. 303.21 — Fees
- Minn. Stat. 303.14 — Annual renewal (foreign corporations)
- Minn. Stat. 345.41 — Report of abandoned property
- Minnesota New Hire Reporting Center
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.