Key figures
Minnesota payroll
2026, with sources
- Small employer premium
- 0.66%30 or fewer employees and average wage under 150% of the statewide average.
- Paid Leave benefits
- Up to 20 weeksUp to 12 weeks medical, 12 weeks family, 20 weeks combined in a benefit year; started Jan 1, 2026.
- New-employer UI rate (2026)
- By industrySet by industry: 1.29% Information, 1.08% Professional, Scientific and Technical Services.
Paid Leave from 2026
Minnesota Paid Leave began January 1, 2026. Nearly all employers pay premiums on employees’ wages — 0.88% for 2026, or 0.66% for small employers with 30 or fewer employees and an average wage under 150% of the statewide average — and DEED pays benefits of up to 12 weeks of medical leave and 12 weeks of family leave a year, 20 weeks combined, with job protection administered alongside DLI.
The premium is reported on the same quarterly wage detail report as unemployment insurance, but UI taxes and Paid Leave premiums are paid separately and cannot be moved between programs.
UI, wages and sick time
Minnesota’s UI taxable wage base is $44,000 for 2026, set at 60% of the state’s average annual wage — one of the highest in the country. New employers get a rate by industry: 1.29% for Information and 1.08% for professional, scientific and technical services in 2026, before assessments.
The state minimum wage is $11.41 for 2026 and $11.87 from January 1, 2027, with no tip credit; Minneapolis and St. Paul set higher local rates. Earned sick and safe time accrues at one hour per 30 worked, up to 48 hours a year, for anyone expected to work 80 hours a year in Minnesota. A discharged employee is paid within 24 hours of demand; one who resigns, by the next regular payday.
A first Minnesota hire
Take a Delaware startup with four employees elsewhere that hires a product designer in St. Paul at $120,000. It registers with Revenue for withholding (Form W-4MN), opens a DEED account for UI and Paid Leave, reports the hire within 20 days, and writes an ESST policy. In 2026 it pays UI on the first $44,000 at its industry rate and a Paid Leave premium on the designer’s wages — at the 0.66% small employer rate only once its wage records qualify — and pays at least St. Paul’s minimum wage for anyone hourly.
Deadlines
- QuarterlyQuarterly wage detail report with UI taxes and Paid Leave premiums
- Jan 31W-2s and 1099s with Minnesota withholding
- Within 20 days of hireNew-hire report
The federal baseline
This page covers what Minnesota adds. The federal rules underneath it apply here too.
Common questions
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.
How does Paid Leave interact with sick and safe time?
They run side by side. ESST is earned by the employee (one hour per 30 worked, up to 48 a year) and paid by the employer for short absences. Paid Leave is insurance paid by DEED for longer absences — up to 12 weeks medical, 12 weeks family, 20 combined. Employees may choose to use ESST instead of Paid Leave.
Payroll next door
- IAIowa payrollIowa withholds a flat 3.8%, cut its 2026 unemployment wage base to $20,400 with a 1.0% new-employer rate, and requires new hires reported within 15 days.
- NDNorth Dakota payrollLow graduated withholding, UI on a $46,600 wage base at 1.00% for most new employers, the federal minimum wage, and workers’ compensation only through the state fund, WSI.
- SDSouth Dakota payrollNo state withholding and no paid leave program. A new employer pays 1.20% Reemployment Assistance tax plus a 0.55% investment fee on the first $15,000 of wages.
- WIWisconsin payrollWisconsin withholds by bracket, charges new employers 3.05% UI on the first $14,000, keeps a $7.25 minimum wage, has no paid leave program and requires workers’ comp early.
How Minnesota compares
- No tax on wagesStates with no state income tax on wagesMinnesota: withholds state income tax. 9 of 51 states are on the list.
- Paid leave payrollStates with a paid leave or disability payroll programMinnesota: state paid leave or disability program. 16 of 51 states are on the list.
- Local payroll taxStates with city, county or district payroll taxesMinnesota: state-level only. 14 of 51 states are on the list.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
More of the Minnesota guide
- AccountingAccounting and state tax in MinnesotaCorporate tax, conformity to federal rules, apportionment and what it does to your books
- 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
- 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.
- Unemployment Insurance Minnesota — Paid Leave small employer premium rate
- Minnesota DEED — Paid Leave compared with other leave programs
- Unemployment Insurance Minnesota — Tax rates (2026 factors)
- Unemployment Insurance Minnesota — 2026 New employer tax rates
- 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)
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.