Key figures
Minnesota accounting
2026, with sources
A 9.8% franchise tax, plus a minimum fee
Minnesota calls its corporate income tax a franchise tax, and its rate — 9.8% of taxable income — is among the highest in the country. Income is apportioned by sales alone, and Minnesota’s Department of Revenue treats any service received in Minnesota as a source of nexus, even if performed remotely; it offers activity questionnaires (Forms C101 and C102) for a nexus determination.
On top of the tax sits the minimum fee, based not on income but on the total of Minnesota property, payroll and sales. For 2026 it starts at $260 once that total reaches $1,280,000 and rises in brackets to $12,830, adjusted each year for inflation.
Where Minnesota parts from the federal return
Minnesota adds back 80% of federal bonus depreciation and lets it be subtracted over the following years, so a company that expenses equipment federally has a Minnesota-only timing difference. Its NOL deduction is capped at 70% of taxable income for tax years beginning after 2023 (it was 80% from 2018 through 2023), with a 15-year carryforward.
Minnesota adopts federal law as of a date set by the Legislature, so each federal change has to be checked for Minnesota conformity before it is assumed on the Form M4.
What this means for the books
Consider a Minneapolis SaaS company with $2 million of revenue, $1.2 million of it from Minnesota customers, $600,000 of Minnesota payroll and a small leased office. Its Minnesota factors exceed $1,280,000, so it owes at least the $260 minimum fee even in a loss year. When it turns profitable, its Minnesota NOLs offset only 70% of Minnesota income, so the provision shows current Minnesota tax earlier than the federal one would suggest — at 9.8%.
Deadlines
- Apr 15 (calendar year)Corporation franchise tax return — same due date as the federal return; automatic seven-month extension to fileForm M4
- QuarterlyQuarterly estimated payments when the year’s franchise tax exceeds $500
The federal baseline
This page covers what Minnesota adds. The federal rules underneath it apply here too.
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.
Can we use all our losses against Minnesota income?
Not fully. Since 2024 the Minnesota NOL deduction is limited to 70% of taxable income, tighter than the federal 80%, and losses carry forward up to 15 years. A company using old losses in its first profitable year still pays Minnesota tax on at least 30% of its income.
Accounting next door
- IAIowa accountingIowa taxes corporations at 5.5% on the first $100,000 and 7.1% above for 2026, apportions by a single sales factor, and follows the federal code on a rolling basis.
- NDNorth Dakota accountingNorth Dakota taxes corporate income at 1.41% to 4.31% on three brackets, with no minimum tax. The default is worldwide combined reporting; water’s edge costs a 3.5% surtax.
- SDSouth Dakota accountingSouth Dakota has no corporate income tax, no personal income tax and no gross receipts tax for an ordinary business. Its claim on a startup is sales tax, payroll and the annual report.
- WIWisconsin accountingWisconsin taxes corporations at 7.9% on a single sales factor, requires combined reporting for unitary groups, disallows bonus depreciation and adds a 3% surcharge once receipts reach $4 million.
Founder guides on this
- US GAAPUS GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
- FundraisingAudit-ready books before your Series AInvestors, lenders and auditors ask for the same things: accrual statements, reconciled accounts and support for every balance. How to be ready first.
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
More of the Minnesota guide
- ReceivablesReceivables and sales tax in MinnesotaSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in MinnesotaPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in MinnesotaWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in MinnesotaRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in MinnesotaCredits, incentives and the decisions that are cheaper to get right the first time
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)
- Minnesota Revenue — Inflation-adjusted amounts for tax year 2026 (minimum fee brackets)
- Minn. Stat. 290.191 — Apportionment of net income
- Minnesota Revenue — Net Operating Losses for Corporations
- Minnesota Revenue — Bonus Depreciation
- Minnesota Revenue — Estimated Tax Payments for C Corporations
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.