Minnesota Ranks 5th on Worst State Tax Burden List

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MINNEAPOLIS- Minnesota now hits its citizens with the fifth highest total state tax burden in the country, behind just New York, Hawaii, Vermont, and Maine.

Analysis by WalletHub shows that between property taxes, individual income taxes, and sales taxes, Minnesotans fork over 10.24 percent of all personal income they earned. This is just ahead of Connecticut’s 10.23 percent rate.

Minnesotans as a whole pay 2.87 percent of their personal income to property taxes. This ranks in the middle of the pack at the 23rd highest among all states. It ranks 17th highest for sales and excise tax burdens, as Minnesotans pay 3.78 percent of their income to these taxes.

Where the state really leaps over the rest is in the income tax payments. Minnesota ranks fourth in the country, as its citizens pay a full 3.59 percent of total personal income just to the state. Minnesota is one of only eight states where its residents remit more than three percent of all income to state income tax collections.

Meanwhile, seven states do not collect any income tax from their residents. In addition, residents of New Hampshire pay just 0.13 percent of all personal income to state income taxes, and in Tennessee that number is just 0.09 percent.

“High marginal tax rates reduce productive behavior (working, investing, starting businesses) and increase unproductive behaviors (avoidance, evasion),” Chris Edwards, the Cato Institute’s director of tax policy studies told WalletHub, “Also most economists think consumption-based taxes (like sales taxes) are less economically damaging than income taxes.”

Source: WalletHub


Minnesota’s neighbors all put less of a percentage of their residents’ income into the state coffers. Wisconsin is the closest to Minnesota, ranking 11th and collecting 9.44 percent. After that Iowa clocks in at 18th collecting 8.96 percent, and then to the west Minnesota sees a really stark difference.

North Dakota and South Dakota rank 36th and 44th respectively, taking 7.93 percent and 7.12 percent of their residents income respectively. South Dakota has no income tax at all, and North Dakota collects just 1.13 percent of its residents’ income in income taxes.

In total, Republican led states had an average tax burden rank of 30th in WalletHub’s study. Democratic controlled states meanwhile had a much higher average rank of 18th.

Minnesota’s income tax burden has increased in recent years. For fiscal year 2009-2010, Minnesota collected $29.86 of every $1,000 of personal income, the eighth highest rate. By fiscal year 2013-2014 that had grown to $37.59 of every $1,000, moving the state to the fourth highest rate in the U.S.

Anders Koskinen