State retirement tax · Minnesota
Retirement tax rules for Minnesota residents (2026 guide)
Minnesota's effective income-tax rate at retirement-bracket income is approximately 7.00%. Here's what it taxes, what it exempts, and how the worked numbers shake out.
Last reviewed May 3, 2026
Editorial review pending — see editorial process
Effective rate
7.00%
Taxes Social Security?
Yes
Approx. tax on $90k income
$6,300
Pension carve-outs
Yes
Minnesota is in the most-burdened bracket for retirees: a high effective income tax (about 7.00%) AND continued taxation of Social Security. If your retirement income is meaningfully above the median, the state-tax cost runs into five figures annually — enough that some retirees relocate purely for the tax differential.
What Minnesota taxes (and what it doesn’t)
Minnesota taxes most retirement income — including 401(k) and IRA withdrawals, pension payments, and Social Security benefits — at the state's standard income-tax rate. There are typically threshold-based exemptions that protect lower-income retirees from the SS tax, but middle-income households and above face the full bracket.
State-specific note
Taxes SS above $105k joint / $82k single (2025 thresholds, indexed).
A worked example
Worked example. A Minnesota retiree with $60,000 of pension and IRA withdrawals plus $30,000 of annual Social Security is taxed on the full $90,000 of income. At the approximate 7.00% effective rate, that's about $6,300/year — roughly $525/month — owed to the state.
Should you relocate?
Minnesota's high effective rate is the most-cited reason retirees consider relocating. Before moving, model both your before-tax cost of living and the tax-bracket arbitrage carefully — a $15K/year tax saving can be eaten by a $1.5M home purchase in the destination market.
See how Minnesota state tax shapes your retirement plan
The calculator’s Taxes tab uses the 7.00% effective rate above and the SS-exemption flag automatically. Run your specific numbers and see the year-by-year tax forecast.
Run my numbersFrequently asked
Does Minnesota tax my Social Security?
Yes. Minnesota is one of seven states that still tax Social Security benefits in 2026 — though most have income-threshold exemptions that protect lower-income retirees. Taxes SS above $105k joint / $82k single (2025 thresholds, indexed).
What's the effective state tax rate on my retirement income?
Minnesota's approximate effective rate for retirement-bracket income is 7.00%. For a $90k retirement income with $30k of Social Security, you'd owe roughly $6,300/year in state tax. Real liability varies with bracket structure, age-based exclusions, and pension carve-outs.
Should I relocate to Minnesota for retirement?
It depends on the size of your retirement income, the destination state's effective rate, and your moving costs. The state-tax differential alone is rarely the decisive factor for normal-income retirees. For households with $1M+ retirement income, multi-year tax-arbitrage savings can exceed $20k/year — enough to drive the decision.
Are pension benefits taxed differently in Minnesota?
Many states have specific carve-outs for pension income — particularly for public-sector pensions (teachers, firefighters, police, military). Taxes SS above $105k joint / $82k single (2025 thresholds, indexed). Yearfold's calculator uses an effective-rate approximation; real liability may be lower if you qualify for a pension exclusion.
Does this apply to property tax too?
No. This page covers state INCOME tax only. Property tax in Minnesota is set by local jurisdictions (county / city / school district) and varies dramatically within the state. For a complete retirement-cost picture, consult your specific county's tax assessor.
Primary sources
Effective-rate and SS-taxation flags above are derived from these sources. We re-verify each annually.
Related reading
Dist. of Columbia retirement tax rules
Comparable effective rate (6.50% vs 7.00%).
Arkansas retirement tax rules
For perspective from a different tax tier.
Dist. of Columbia retirement tax rules
An example of a state that does NOT tax Social Security.
Run my numbers
The calculator's Taxes tab uses the same per-state effective rate.
How the Monte Carlo actually works
2,000-word methodology page — covers state tax modelling.