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Capital Gains Tax in Minnesota
By Priya Raman
One of the steepest combined rates in the Midwest.
One of the steepest combined rates in the Midwest.
Minnesota's top income tax bracket, 9.85%, applies to capital gains the same as wages, and it's among the highest state rates in the country. Add federal and NIIT and a property sale can reach a combined 33.6% (20% federal + 3.8% NIIT + 9.85% state).
That 33.6% is the sum of three separate taxes: the federal 20% long-term rate, the 3.8% net investment income tax, and Minnesota's 9.85% state rate. Each applies independently; there's no state credit that offsets the federal bill.
Say, purely as an example, a seller nets a $250,000 gain on an investment property, no real transaction implied. At the combined 33.6% rate, that comes out to roughly $84,000 owed. Get the exact figure for a real sale, depreciation recapture and all, from the capital gains tax calculator.
A 1031 exchange defers that $84,000 by keeping the money in real estate instead of converting it to cash. Model the exchange in the 1031 exchange calculator and track your 45- and 180-day deadlines with the timeline calculator.