Updated October 5, 2026. Quick answer: Yes. Minnesota’s M1 instructions have you report “Taxable IRA Distributions, Pensions, and Annuities” from the federal return, and the Department of Revenue prints no general annuity exclusion. Rates run from 5.35% to 9.85%, and its net investment income tax lists “interest, dividends, capital gains, rental and royalty income, and non-qualified annuities” but applies only above $1,000,000.
State retirement-income forms, line by line: Minnesota Schedule M1R.
How Minnesota treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Taxed on the graduated schedule; no general annuity exclusion |
| Rates | 5.35%, 6.80%, 7.85% and 9.85%; for 2026 a single filer pays 5.35% on income up to $33,310 |
| Public pensions | A subtraction for payments from a qualified public pension plan, limited to income of $103,489 (single) or $127,319 (married filing jointly) |
| Net investment income tax | Applies only to net investment income above $1,000,000; non-qualified annuities are listed as net investment income |
A $24,000 example
A single filer whose 2026 taxable income is only $24,000 of annuity payments is inside the 5.35% bracket, which runs to $33,310. The tax is computed as $24,000 x 5.35% = $1,284, before the standard deduction or any subtraction.
What changes in 2026
The Department prints new bracket amounts for 2026 (a single filer’s 5.35% bracket now runs to $33,310); the four rates are unchanged.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether Minnesota taxes pensions, how Minnesota taxes retirement income, annuity income tax by state, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- 2025 Form M1 Individual Income Tax Instructions (Minnesota Department of Revenue): https://www.revenue.state.mn.us/sites/default/files/2026-10/m1-inst-25.pdf
- Income Tax Rates and Brackets (Minnesota Department of Revenue): https://www.revenue.state.mn.us/minnesota-income-tax-rates-and-brackets
- Public Pension Subtraction (Minnesota Department of Revenue): https://www.revenue.state.mn.us/public-pension-subtraction
- Age 65 or Older or Disabled Subtraction (Minnesota Department of Revenue): https://www.revenue.state.mn.us/age-65-or-older-or-disabled-subtraction
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.