Minnesota retirement taxes at a glance (2026)
| State income tax | Graduated, top rate 9.85%Minnesota has four brackets from 5.35% to 9.85%; the top rate starts at $203,150 single / $337,930 joint for 2026. |
|---|---|
| Social Security | TaxedBenefits are fully subtracted if AGI is below $84,490 (single) or $108,320 (joint) for 2025; the subtraction falls 10% for each $4,000 above that. |
| Pensions | TaxedPrivate pensions are taxed at regular rates. |
| 401(k) and IRA withdrawals | TaxedIRA and 401(k) withdrawals are taxed at regular rates of 5.35% to 9.85%. |
| Government pensions | Partly taxedPublic pensions are generally taxed, but retirees who did not earn Social Security credits can subtract up to $13,170 ($26,340 joint), subject to income limits. |
| Military retirement pay | Not taxedMilitary retirement pay can be subtracted from taxable income. |
| Estate tax | Yes, above $3,000,000Minnesota taxes estates above $3 million at rates from 13% to 16%. |
| Inheritance tax | No |
| Property tax help for seniors | Homeowners 65+ can defer property tax above 3% of household income; the state pays the rest as a loan. Low-income filers 65+ can also claim an elderly income exclusion. |
| Sales tax | State sales tax is 6.875%; the average combined rate is about 8.14%. |
Recent changes and good to know
- The Social Security subtraction income thresholds shown are for tax year 2025; 2026 thresholds are indexed and were not confirmed.
How to lower your retirement taxes in Minnesota
- Mix your income sources. Roth IRA withdrawals are tax-free at the federal level and generally in Minnesota too, so a Roth conversion before retirement can cut state tax later. Try the Roth conversion calculator.
- Watch federal Medicare costs. Large IRA withdrawals can raise your Medicare premiums. Check the 2026 IRMAA brackets.
- Think about your heirs. See what your IRA will really cost your family with the Family Tax Rate calculator.
- Comparing states? These have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Frequently asked questions
Does Minnesota tax retirement income?
Yes: Minnesota taxes pensions, IRAs and 401(k)s at rates up to 9.85%, and taxes Social Security for higher-income retirees.
Does Minnesota tax Social Security?
Benefits are fully subtracted if AGI is below $84,490 (single) or $108,320 (joint) for 2025; the subtraction falls 10% for each $4,000 above that.
Does Minnesota tax pensions?
Private pensions are taxed at regular rates.
Does Minnesota tax 401(k) and IRA withdrawals?
IRA and 401(k) withdrawals are taxed at regular rates of 5.35% to 9.85%.
Does Minnesota tax military retirement pay?
Military retirement pay can be subtracted from taxable income.
Does Minnesota have an estate or inheritance tax?
Minnesota taxes estates above $3 million at rates from 13% to 16%.
Sources (last verified 2026)
- Social Security Benefit Subtraction — Minnesota Department of Revenue (2026)
- Minnesota State Tax Guide — AARP (2026-03-19)
- Minnesota Retirement Tax Friendliness — SmartAsset (2025)
- State Individual Income Tax Rates and Brackets, 2026 — Tax Foundation (2026-02-17)
Educational content only, not tax, legal or investment advice. Plans and tax laws change; confirm details with your employer's plan documents or your state revenue department. Smart Financial Lifestyle is not affiliated with any employer named on this site.