With New Jersey’s top corporate tax rate decreasing from 11.5% to 9% in 2024, Minnesota has become the state with the highest corporate tax rate at 9.8%.
While other states have graduated corporate income taxes with different rates, Minnesota has a single, flat-rate corporate income tax which applies to corporations throughout the state. Most states levy corporate taxes in one form or another. However, states such as Wyoming and South Dakota levy no corporate income tax.
“Minnesota lawmakers need to give Main Street a break,” said John Reynolds, the Minnesota state director for the National Federation of Independent Business. “If legislators won’t reduce Minnesota’s exorbitant top tax rates, they can at least create a fair system that makes it easier for small businesses to grow, compete, and thrive in Minnesota.”
According to the federal Small Business Administration, roughly 97% of all small businesses in Minnesota have fewer than 20 employees. Over 45% of all employees across Minnesota work for a small business.
According to the Tax Foundation’s 2024 State Business Tax Climate Index, Minnesota is amongst the 10 states with the worst business climates, ranking 44th overall. Minnesota’s corporate taxes, sales taxes, property taxes, and other metrics all contributed to the state’s poor standing.
A 2023 report from the Minnesota Chamber of Commerce found that Minnesota “consistently ranks near the bottom of Midwest states” for business expansion projects. The report found that Minnesota lost out on $1.2 billion in potential capital investment due to regulatory barriers. Furthermore, Minnesota companies have sent $4.6 billion in capital investment to other states from 2020 to 2022.
Minnesota adopted a corporate income tax in 1933.
As of November 2023, the corporate tax accounted for 6.2% of Minnesota’s total state and local tax revenue. According to Minnesota Management and Budget, the state will collect $5.4 billion of corporate income taxes through the 2024 and 2025 fiscal years.
Luke Sprinkel
Luke Sprinkel previously worked as a Legislative Assistant at the Minnesota House of Representatives. He grew up as a Missionary Kid (MK) living in England, Thailand, Tanzania, and the Middle East. Luke graduated from Regent University in 2018.
