Minnesota: The North Star State

Minnesota is located in the north of the United States on the border with Canada. The North Star State is 225,000 kmĀ². More than half of the 5.5 million residents live in the Minneapolis-Saint Paul metropolitan area. There is also the largest shopping center in the USA, the Mall of America. According to ehuacom, the capital of Minnesota is Saint Paul.

Minnesota is home to 18 Fortune 500 companies, ranking ninth nationally. The Twin Cities, Minnesota and Saint Paul, are among the nation’s 30 largest metro areas and rank first in the United States in terms of Fortune 500 companies per million people.

Six of the largest private companies on the Forbes list are based in Minnesota, which ranks the state 11th nationally. In the Standard & Poor index, Minnesota also achieved a good twelfth place in terms of the total number of companies. The state ranks sixth in the S&P companies per million population category. Minnesota-based Cargill ranks second among private companies in the nation with sales of nearly $114.6 billion.

The state’s strong economy is supported by a modern transportation network. The state offers excellent opportunities by water, land (road and rail) and air. The digital infrastructure is in no way inferior. Overall, Minnesota ranks ninth nationwide for infrastructure (CNBC, 2019).

Minnesota Location Map

STARTUPS THRIVE IN MINNESOTA

Minnesota ranks first nationwide in five-year business survival rate (2015-2020), according to data from the Bureau of Labor Statistics. The 2019 Kauffman Report on Early State Entrepreneurship ranks Minnesota third nationwide in early startup survival and tenth in the Early State Entrepreneurship Index (KESE).

According to US News and World Report’s 2019 ranking, Minnesota is the third best performing state in the country. The factors considered were the state’s economy, transportation infrastructure, the Internet, public safety and the state government’s fiscal stability. The state also ranks seventh in CNBC America’s Top States for Business (2019).

Minnesota’s Total Effective Tax Rate (TEBTR) for state and local taxes is 4.4 percent, ranking 15th nationally. The national average is 4.7 percent. When considering corporate taxes as a percentage of private sector gross domestic product, Minnesota ranks mid-table, according to a 2019 report by Ernst & Young and the Council on State Taxation.

  • COUNTRYAAH: offers list of all counties in the state of Minnesota. Also includes cities and towns within each county.

INDUSTRIOUS POPULATION

North Star State was voted Best State for Women in 2019 by WalletHub. 24 indicators were taken into account, including the median income. That same year, Minnesota was ranked seventh for working mothers.

There was a second-best state award in the jobs category (Zippia, 2019) for excellent labor income, low unemployment and relatively low cost of living.

At just over 70 percent, Minnesota has the fourth-highest employment rate of any US state. The rate reflects the diligence of the local population. The national average is 63 percent (Bureau of Labor Statistics, 2019).

MINNESOTA INCOME TAX

Minnesota charges an income tax of 5.35 – 9.85% depending on income. In addition, federal income taxes are payable.

CORPORATE INCOME TAX IN MINNESOTA

Minnesota charges a 9.8% corporate income tax. In addition, federal corporation tax is payable.

SALES TAX IN MINNESOTA

There is no sales tax or Value Added Tax (VAT) in the USA based on the European model. Instead, in the United States, states, counties, and municipalities levy a local sales tax on the sale of products (but not services).

Sales tax rate in Minnesota

The sales tax in Minnesota is 6.875% at the state level. Municipalities or districts charge an average of 0.58% sales tax. Combined, an average of 7.46% is due.

Minnesota Nexus Laws & Sales Tax

Learn more about the Economic Nexus Laws in the context of Sales Tax here.

Effective Date

October 1, 2018, changed from October 1, 2019

Transactions included:

Applies to retail sales made into the state from outside the US state. Taxable services (other than resale) are included in the threshold.

Treatment of tax-exempt transactions:

Exempt sales and sales to exempt entities are included in the threshold, but sales for resale are not. Exempted services are also not included in the threshold value.

Reason:

turnover or transaction volume

Sales/Transactions Threshold:

Before October 1, 2019: 10 or more sales totaling $100,000 or 100 retail sales

Beginning October 1, 2019: $100,000 or 200 or more retail sales

Evaluation period:

The threshold applies to the previous 12-month period

Extra information:

  • Registration Requirements: Minnesota requires that a remote business register to collect and remit Minnesota sales tax on the first taxable retail sale in Minnesota made no later than 60 days after the threshold is exceeded. See the Remote Seller FAQ formore information.
  • HF5

Minnesota Marketplace Sellers & Sales Tax

Learn more about Marketplace seller registration requirements

Effective date by the marketplace broker:

October 1, 2018; amended effective October 1, 2019

Economic Nexus Threshold:

More than $100,000 in sales or 200 transactions of retail sales in the US state for any consecutive 12 month period. When calculating the threshold:

  • Remote sellers should include sales through a bulk marketplace
  • Marketplace moderators include all sales made through the marketplace

Registration requirements:

  • Remote Multichannel Sellers: You must register with the Minnesota Department of Revenue (DOR) and collect your Minnesota sales tax on sales that are not taxed by a Marketplace Agent once you have crossed the Economic Nexus Threshold.
  • Remote Marketplace Sellers: You don’t have to register and collect Minnesota sales tax even if you cross the Economic Nexus threshold.
  • In-State Multichannel Sellers: You must register with the Minnesota DOR and collect taxes on sales that are not taxed by a marketplace facilitator.
  • State Marketplace Sellers: You must register. Contact the Minnesota DOR for more information.