The estate tax rate in Minnesota ranges from 13% to 16%. In 2022, it applies to estates worth more than $3 million. This guide gives a full explanation of the estate tax in Minnesota, so you know what to expect when estate planning. If you think you’ll need help, you might consider working with a financial advisor. SmartAsset’s financial advisor matching tool can match you with an advisor who meets your needs.
Minnesota Estate Tax Exemption
The threshold for the estate tax in Minnesota is $3 million in 2022. Any wealth below the exemption is not taxed by the state. Wealth above that mark is taxed in a series of progressive brackets.
Minnesota Estate Tax Rate
Minnesota’s estate tax is graduated, with a series of increasing rates applying as the size of the estate goes up.
Once you know your taxable estate, find your bracket in the table below. The base taxes shows what’s owed on wealth that falls below your bracket. Next, subtract the bottom limit of your bracket from your taxable estate. Multiply that by the marginal rate. Finally, add that amount to the base taxes owed, and you’ll know the total tax burden.
Let’s go over an example. Say your total estate is worth $15.1 million, with the $3 million exemption, the taxable estate totals $12.1 million. See where that total falls on the chart below. The base tax is $1.355 million. The bottom of the threshold is $10.1 million. We subtract that from $8.5 million to get $2 million. That amount multiplied by the marginal rate of 16% is $320,000. That sum ($320,000) plus the base taxes ($1.355 million) equals $1.675 million, and that is the total Minnesota estate tax burden.
MINNESOTA ESTATE TAX RATES
| Taxable Estate* | Base Taxes Paid | Marginal Rate | Rate Threshold** |
| $1 – $7.1 million | $0 | 13% | $0 |
| $7.1 million – $8.1 million | $923,000 | 13.6% | $7.1 million |
| $8.1 million – $9.1 million | $1.059 million | 14.4% | $8.1 million |
| $9.1 million – $10.1 million | $1.203 million | 15.2% | $9.1 million |
| $10.1 million and above | $1.355 million | 16.0% | $10.1 million |
*The taxable estate is the total above the exemption of $3 million.
**The rate threshold is the point at which the marginal estate tax rate goes into effect.
What Is the Estate Tax?
Estate taxes are levied on the estate of a recently deceased person before the money or other property is passed on to heirs. It is sometimes called the “death tax,” and applies to estates worth a particular amount, which varies by jurisdiction.
Don’t confuse the estate tax with inheritance taxes, which are taken from a person’s heirs after the money has passed on to them.
Minnesota Inheritance Tax
There is no inheritance tax in Minnesota. Inheritance taxes from other states could apply to you, though. In Kentucky, for instance, all in-state property that is passed down is subject to the inheritance tax, even if the inheritor lives elsewhere.
Minnesota Gift Tax
Minnesota also has no gift tax, so you’ll only be subject to the federal gift tax. The federal gift tax exemption is $16,000 per year for each recipient in 2022, and goes up to $17,000 per year for each recipient in 2023. Any amount to a single person over that limit in a year will count against your lifetime exemption of $12.92 million.
Minnesota Estate Tax for Married Couples
The Minnesota estate tax is not portable for married couples. When both spouses die, only one exemption of $3 million can be applied.
Federal Estate Tax
On top of the Minnesota estate tax, there is the federal estate tax – but it has a much higher exemption. In 2022, the exemption is $12.06 million. That goes up to $12.92 million for deaths in 2022. This means that with the correct legal maneuvering, a couple can protect up to $25.84 million from the federal estate tax after both spouses have died.
The top tax rate is 40%. Use the method described in the Minnesota Estate Tax Rates section and the chart below to figure out your federal estate tax burden.
FEDERAL ESTATE TAX RATES
| Taxable Estate* | Base Taxes Paid | Marginal Rate | Rate Threshold** |
| $1 – $10,000 | $0 | 18% | $1 |
| $10,000 – $20,000 | $1,800 | 20% | $10,000 |
| $20,000 – $40,000 | $3,800 | 22% | $20,000 |
| $40,000 – $60,000 | $8,200 | 24% | $40,000 |
| $60,000 – $80,000 | $13,000 | 26% | $60,000 |
| $80,000 – $100,000 | $18,200 | 28% | $80,000 |
| $100,000 – $150,000 | $23,800 | 30% | $100,000 |
| $150,000 – $250,000 | $38,800 | 32% | $150,000 |
| $250,000 – $500,000 | $70,800 | 34% | $250,000 |
| $500,000 – $750,000 | $155,800 | 37% | $500,000 |
| $750,000 – $1 million | $248,300 | 39% | $750,000 |
| Over $1 million | $345,800 | 40% | $1 million |
*The taxable estate is the total above the exemption of $12.92 million.
**The rate threshold is the point at which the marginal estate tax rate kicks in.
Overall Minnesota Tax Picture
Minnesota is not a particularly tax-friendly state for retirees. Social Security income is partially taxed and income from retirement accounts and pensions is fully taxed. Minnesota’s income tax rate is progressive, with rates ranging from 5.35% to 9.85%. These are among the highest in the country. On the other hand, Minnesota property tax rates average 1.02%, just above to the national average.
You can use this Minnesota paycheck calculator to estimate your take home pay in the North Star State.
The statewide sales tax is 6.88%, and local sales taxes can be up to 2%.
Estate Planning Tips
- If you think you need help with estate planning or any other financial planning questions, a financial advisor can help you make sure you’re on the right track. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Make sure to think about and account for all of your financial assets when you are planning your estate. This includes any retirement plans you have, like a 401(k) plan through your employer.
- One major part of planning your estate is writing a will. Make sure you work with a lawyer to avoid common will mistakes like not following all the rules, not naming an executor for your estate or not naming a guardian for any minor children.
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