Minnesota Payroll Taxes 2026: Complete Employer Guide

Running payroll in Minnesota for the first time in 2026? There's one thing most guides don't mention: a brand-new mandatory paid leave program — live since January 1st — that applies to every employer in the state. Even if you have two employees. Minnesota payroll taxes now come in four distinct obligations, and missing any one of them means penalties. Here's exactly what you owe, when you owe it, and what you can't skip.

MN Income Tax Withholding — The 4 Brackets You Need to Know

Minnesota taxes income progressively across four brackets. You withhold based on each employee's MW-4 — Minnesota's equivalent of the federal W-4 — and the rate climbs as earnings rise. The math is straightforward. The setup is not optional.

Rate	Single Filer (approx. 2026)	Married Filing Jointly (approx. 2026)
5.35%	Up to ~$31,690	Up to ~$46,330
6.80%	~$31,691 – $104,090	~$46,331 – $184,040
7.85%	~$104,091 – $193,240	~$184,041 – $304,970
9.85%	Over ~$193,240	Over ~$304,970

Thresholds are approximate and adjusted annually by MN DOR — always confirm at revenue.state.mn.us before your first payroll of the year.

That top bracket matters for highly compensated employees. For most hourly workers at small businesses, you'll be withholding primarily at 5.35%–6.80%. But the 9.85% ceiling is a real number — and it's a talking point for any employee considering relocating across state lines.

SUTA — Unemployment Insurance Through MN DEED

Minnesota unemployment insurance runs through the Department of Employment and Economic Development (DEED). If you're a new employer registering in Minnesota, you'll pay a standard SUTA rate of roughly 1.0% on taxable wages. The taxable wage base resets every January — pull the current figure from uimn.org before your first payroll of the year, because older guides carry stale numbers and the penalties for underpayment aren't small.

Once you've built an experience rating, your rate adjusts based on claims history. Clean records pay less. Layoffs cost you.

On the federal side, FICA and FUTA obligations run alongside your MN state taxes with no special Minnesota twist — standard 7.65% employer FICA match and FUTA at 6.0% on the first $7,000 of wages (reduced to 0.6% with the federal credit for timely state UI payments).

NEW in 2026: The Minnesota Paid Leave Act

What it is: A state-administered program that funds paid family and medical leave. Contributions come from both employer and employee payroll — similar in structure to how Social Security works, but purpose-built for leave.

The contribution rate: The combined employer + employee rate for 2026 is set by MN DEED at roughly 0.7% of covered wages. Verify the exact current-year rate and employer/employee split at paidleave.mn.gov before your first remittance.

What employees get: Up to 12 weeks of paid family leave and up to 12 weeks of paid medical leave per year, capped at 20 combined weeks. The state administers benefits directly — you're no longer funding leave out of pocket, but you are funding the pool.

The critical detail for small businesses: There is no small-employer exemption. One employee means full compliance.

Take Marcus, a plumbing contractor in Duluth with a crew of four. He assumed Paid Leave was a "big company thing." It isn't. Every MN employer had to register, start withholding, and remit by Q1 2026 — or face penalties. Marcus's size didn't protect him. Yours won't either.

1. 1 Register your business with MN DEED through the Paid Leave portal at paidleave.mn.gov — do this before your first payroll contribution is due.
2. 2 Withhold the employee's share from each paycheck and track the employer's share as a separate payroll expense line item.
3. 3 File quarterly — remit combined contributions alongside your other quarterly payroll reports. A missed quarter means penalties, and MN DEED won't assume you forgot.

Quarterly Filing: Form MW-1 and the Deadlines That Bite

Minnesota income tax withholding is reported on Form MW-1, filed with the MN Department of Revenue. Quarterly by default. The deadlines are fixed and the penalties start fast.

• Q1 (Jan–Mar): Due April 30
• Q2 (Apr–Jun): Due July 31
• Q3 (Jul–Sep): Due October 31
• Q4 (Oct–Dec): Due January 31

"Missing a MW-1 deadline triggers penalties starting at 5% of tax owed — set calendar reminders the moment you run your first MN payroll."

One exception: if you withhold less than $500 per quarter, you may qualify for annual filing instead. But quarterly is the default, and MN DOR won't assume you qualify — confirm eligibility before switching.

Frequently Asked Questions

Does Minnesota have local payroll taxes in 2026?

No. Minnesota does not impose local or city payroll taxes — unlike states such as Pennsylvania or New York where cities levy their own wage taxes. MN employers file only at the state level. No city or county payroll tax filings are required anywhere in Minnesota.

Do small businesses with fewer than 10 employees have to participate in the Minnesota Paid Leave Act?

Yes, every Minnesota employer must comply. The MN Paid Leave Act that took effect January 1, 2026 has no small-employer exemption — even a single employee triggers the full registration, withholding, and quarterly remittance requirement.

What is the Minnesota SUTA wage base for 2026?

The MN SUTA taxable wage base is set by MN DEED and adjusted annually. New employers pay approximately 1.0% on taxable wages — check uimn.org each January for the current-year figure before running your first payroll.

When do I need to register with MN DOR for payroll withholding?

Before you run your first payroll. Register through the MN Department of Revenue's e-Services portal — waiting until your first MW-1 due date is too late, because you need an account number to file and setup takes time.

MN payroll isn't complicated once you know the four pieces. Get registered with MN DOR and MN DEED before your first paycheck, put MW-1 deadlines in your calendar today, and don't skip Paid Leave registration just because your team is small. The program doesn't care about your headcount — and neither do the penalties.

This guide reflects MN DOR and MN DEED rules in effect for the 2026 tax year. Tax rates and wage bases adjust annually — verify current figures at revenue.state.mn.us and uimn.org before each new payroll year.