Minnesota LLC Taxes Explained: 5.35%–9.85% Graduated (2026)
Minnesota's graduated income tax runs up to 9.85% — one of the higher top rates in the Midwest — but most LLC owners never pay that top rate. Here's every layer your LLC touches, including the minimum fee that catches larger multi-member LLCs, with an estimator that models your real bracket.
Default LLC income generally passes to owners under Minnesota’s 5.35%–9.85% individual schedule. Classification and eligible PTE elections change the entity-level analysis. The free annual renewal is separate from income, sales/payroll taxes and any applicable minimum fee. Minnesota’s PTE election is available for qualifying tax years beginning before January 1, 2028, including 2026 and 2027. Eligible partnerships and S corporations, including LLCs taxed that way, apply qualifying-owner and majority-election rules. The election is due by the entity’s extended return deadline for that tax period; Revenue’s 2026 filing-season notice lists September 15, 2026 for calendar-year filers and says late elections are not accepted. That displayed date must not be relabeled as the return deadline for every 2026 tax year. For 2026 estimated PTE tax, four equal timely payments are required; Q1 is timely if paid by the Q2 due date. Apply the actual tax period and current instructions.
- State income tax
- 5.35%–9.85% graduated
- Top bracket threshold
- ~$203,150 single (2026)
- Entity-level tax (default)
- None
- Minimum fee (multi-member, large)
- $0–$10,210 graduated
- Sales tax
- 6.875% + current local rates
- S-Corp threshold
- Individual wage/cost analysis
The 5 Layers of Minnesota LLC Taxation
Federal: income + self-employment tax
Pass-through profits hit your 1040 at your federal bracket, plus 15.3% SE tax on 92.35% of net profit — usually the biggest line.
Minnesota state income tax: graduated 5.35%–9.85%
Four brackets, indexed annually — most LLC owners land in the 5.35% or 6.8% brackets; the 9.85% top rate applies only above roughly $203,150 (single, 2026).
Entity level: usually just the free renewal
Default owner taxation differs from corporate classification and eligible PTE elections. Partnerships and other applicable entities must also check the current minimum-fee instructions; the free SOS annual renewal does not settle tax obligations.
Sales tax: 6.875% + local (if applicable)
State rate plus city/county add-ons up to roughly 9% in some areas. See Step 7.
PTE Election Available Through Tax Year 2027
Minnesota’s PTE election is available for qualifying tax years beginning before January 1, 2028, including 2026 and 2027. Eligible partnerships and S corporations, including LLCs taxed that way, apply qualifying-owner and majority-election rules. The election is due by the entity’s extended return deadline for that tax period; Revenue’s 2026 filing-season notice lists September 15, 2026 for calendar-year filers and says late elections are not accepted. That displayed date must not be relabeled as the return deadline for every 2026 tax year. For 2026 estimated PTE tax, four equal timely payments are required; Q1 is timely if paid by the Q2 due date. Apply the actual tax period and current instructions.
Limited 2026 Base-Rate Illustration
Minnesota LLC Tax Estimator
Limited 2026 single-owner illustration using single-filer Minnesota thresholds $33,310/$109,430/$203,150; 5.35%/6.8%/7.85%/9.85%; Social Security wage base $184,500 and illustrative single-filer $200,000 additional Medicare threshold. Assumes no other earned income and subtracts the employer-half SE deduction excluding additional Medicare. Omits Minnesota standard/itemized deductions, exemptions, modifications/phaseouts, federal income tax, QBI, credits, PTE election and minimum fee. It is not a complete tax return.
The Graduated Brackets, Concretely
| 2026 Taxable Income (Single) | Rate |
|---|---|
| $0 – $33,310 | 5.35% |
| $33,311 – $109,430 | 6.80% |
| $109,431 – $203,150 | 7.85% |
| Above $203,150 | 9.85% |
The 9.85% figure gets most of the headlines, but it's a marginal rate on income above roughly $203,150 (single filer, 2026) — not your rate on every dollar. A single filer with $100,000 of Minnesota taxable income pays an effective rate closer to 5–6%, not 9.85%. Thresholds are indexed annually and roughly double for married filing jointly.
The Minimum Fee (Multi-Member LLCs Only)
Most Minnesota LLC owners never encounter this: it applies only to LLCs taxed as partnerships with two or more members whose combined Minnesota property, payroll, and sales/receipts exceed a threshold (roughly $1.02M, inflation-adjusted). Below that, the fee is $0. Above it, the fee is graduated — up to roughly $10,210 at the highest tier (combined totals of $40.82M+). Single-member LLCs and smaller multi-member LLCs virtually never owe this. If your Minnesota LLC has substantial multi-state or multi-member operations, ask your CPA to check Form M8's minimum fee calculation.
The S-Corp Question: Wages, Costs and Eligibility
An S election requires eligible ownership, actual reasonable wages, payroll and compliance costs. Distributions remain subject to Minnesota income tax; no universal profit threshold establishes savings. Review the eligible PTE election separately.
Your Minnesota Tax Calendar
| Date | What's Due |
|---|---|
| Jan 15 / Apr 15 / Jun 15 / Sep 15 | Quarterly estimated taxes — federal and Minnesota, on pass-through profit |
| Mar 15 | Form 1065 (multi-member LLCs) + K-1s; Form M8 if the minimum fee may apply |
| Apr 15 | Form 1040 + Minnesota M1 — federal and state individual returns |
| Dec 31 | Annual renewal to the Secretary of State ($0) — Minnesota's only mandatory annual state filing |
| Monthly/Quarterly | Sales & use tax returns via the MN Department of Revenue per your schedule |
Budget from actual classification, taxable income, deductions and filing obligations. A universal percentage set-aside or profit threshold cannot establish the amount due. Minnesota’s PTE election is available for qualifying tax years beginning before January 1, 2028, including 2026 and 2027. Eligible partnerships and S corporations, including LLCs taxed that way, apply qualifying-owner and majority-election rules. The election is due by the entity’s extended return deadline for that tax period; Revenue’s 2026 filing-season notice lists September 15, 2026 for calendar-year filers and says late elections are not accepted. That displayed date must not be relabeled as the return deadline for every 2026 tax year. For 2026 estimated PTE tax, four equal timely payments are required; Q1 is timely if paid by the Q2 due date. Apply the actual tax period and current instructions.
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PTE Election, Tax Period and 2026 Estimates
Minnesota’s PTE election is available for qualifying tax years beginning before January 1, 2028, including 2026 and 2027. Eligible partnerships and S corporations, including LLCs taxed that way, apply qualifying-owner and majority-election rules. The election is due by the entity’s extended return deadline for that tax period; Revenue’s 2026 filing-season notice lists September 15, 2026 for calendar-year filers and says late elections are not accepted. That displayed date must not be relabeled as the return deadline for every 2026 tax year. For 2026 estimated PTE tax, four equal timely payments are required; Q1 is timely if paid by the Q2 due date. Apply the actual tax period and current instructions.
Minnesota Revenue current PTE guidance.
Minnesota LLC — FAQ
Ahmad Adil is the founder and CEO of LLC School. For filing and ongoing compliance, confirm the requirements with the responsible state agency. This is educational information, not legal or tax advice.
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