Skip to content
Independent money guidance
Clear Money Guide
Start here
Menu

Minnesota Retirement Taxes (2026): The Social Security Phase-Out, Fully-Taxed Withdrawals, and the Frozen $3M Estate Exclusion

Clear Money Guide

What this state guide covers

A quick view of the questions, practical details and source notes below.

How Minnesota taxes retirement income (statute-cited)
The estate tax: frozen exclusion, no portability
Probate costs
Is Minnesota a good state to retire in for taxes?

Comparison tables scroll horizontally on smaller screens.

2026 edition · statute-cited · part of Clear Money Guide’s 51-state retirement tax series. This guide covers state taxes on retirement income and estate transfers; property and sales taxes vary by county and are outside its scope.

Updated July 24, 2026. Quick answer: Minnesota is one of the few states that still taxes Social Security — but only above income thresholds: the subtraction is full when AGI is at or below roughly $86,410 single / $110,780 married (TY2026, indexed), then phases out 10% for each $4,000 of additional income or fraction of $4,000, disappearing above roughly $122,410 / $146,780. Pension, 401(k) and IRA income is fully taxable at graduated rates of 5.35%–9.85%. And at death, Minnesota’s estate tax starts at a $3,000,000 exclusion frozen since 2020, with rates of 13–16% and no spousal portability — despite what some aggregator sites claim.

State retirement-income forms, line by line: Minnesota Schedule M1R.

Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Minnesota tax on inherited IRA withdrawals.

Drawing a pension? Whether the state withholds tax from it, from its own documents: Minnesota tax withholding on pension payments.

Before the tax question, the Minnesota PERA Police and Fire Plan options, refund and annual increase rules, from PERA’s own documents: Minnesota PERA Police and Fire retirement decisions.

Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Minnesota a community property state?.

Selling your home? How the state taxes the profit, from its own tax documents: Does Minnesota tax the profit from selling your home?.

Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Minnesota tax withholding on IRA and 401(k) withdrawals.

For a pension earned elsewhere or paid after you move: does Minnesota tax out-of-state pensions.

Looking ahead to 2027? The state’s estate tax exemption for deaths in 2027, from its own tax documents: Minnesota estate tax exemption 2027.

For trust income specifically: does Minnesota tax trust income.

Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Minnesota have an inheritance tax?.

For dividends and interest specifically: does Minnesota tax dividends and interest.

Making a gift or planning an estate? The state’s gift tax answer, from its own tax documents: Does Minnesota have a gift tax?.

For annuity payments specifically: does Minnesota tax annuity income.

For military retired pay: does Minnesota tax military retirement.

Saving for a child’s college? The state’s 529 break has its own page: Minnesota 529 plan tax deduction.

For the sale of stocks, funds or real estate: does Minnesota tax capital gains.

For 401(k) and IRA withdrawals specifically: does Minnesota tax 401(k) and IRA withdrawals.

The state’s income tax schedule: the Minnesota tax brackets for 2026.

Before the tax question, the MSRS payment options and refund rules: Minnesota MSRS retirement decisions.

The Social Security subtraction in full: does Minnesota tax Social Security.

How Minnesota taxes retirement income (statute-cited)

Income taxGraduated 5.35%–9.85% (4 brackets)
Social SecurityPartially taxed: full subtraction at AGI ≤ ~$86,410 single / ~$110,780 MFJ (TY2026, indexed); phases out 10% for each $4,000 or fraction above; fully taxable above ~$122,410 / ~$146,780 (Minn. Stat. §290.0132). Watch for guides quoting 2024’s lower thresholds as current
Pension / 401(k) / IRAFully taxable; the only carve-out is the qualified public pension subtraction — up to $13,850 single / $27,690 MFJ for tax year 2026 (indexed from the $12,500 / $25,000 statutory base; income-tested, phasing out above $86,410 single / $110,780 MFJ) for public pensions from non-Social-Security-covered government employment
Military retirementFull subtraction (or an elective credit instead) — Minn. Stat. §290.0132
Inheritance taxNone

The estate tax: frozen exclusion, no portability

Minnesota’s exclusion has sat at $3,000,000 since 2020 with no inflation indexing, while rates run 13%–16%; a qualified small-business/farm property deduction can add up to $2,000,000 (combined maximum $5,000,000). The official 2025 Form M706 instructions (published January 2026) confirm all of this — and contain no spousal portability provision: the portability bills (SF 30 / SF 1271) were not enacted, despite aggregator sites claiming otherwise. Married couples here still need credit-shelter planning that federal portability made obsolete elsewhere. Full table: estate tax by state.

Probate costs

Minnesota is a UPC reasonable-compensation state (Minn. Stat. §524.3-719) — no percentage schedule. Small estates: $75,000 (net of liens) of personal property by notarized affidavit with a certified death record, after a 30-day wait (Minn. Stat. §524.3-1201). Opening probate runs $310 in the statewide base district court filing fee, plus a county law library fee of up to $15 depending on the county, so $310 to $325 in total. Context: probate cost by state · small-estate limits by state · will vs. trust calculator.

Is Minnesota a good state to retire in for taxes?

Candidly: one of the harder states on this series’ measures. Moderate-income retirees do fine — Social Security fully subtracted under the thresholds and rates that start at 5.35%. But higher-income retirees face taxed Social Security, fully-taxed withdrawals at up to 9.85%, and an estate tax that reaches $3M estates — frozen, unported, and increasingly easy to hit with a paid-off home plus retirement accounts. Minnesotans who stay do so for reasons beyond taxes; the planning that matters here is estate-side.

Does Minnesota tax Social Security? All 51 jurisdictions, 202643 do not tax Social Security at any income level. 8 tax it only above an income or age limit. Minnesota is in the second group.Does Minnesota tax Social Security? All51 jurisdictions, 202643 do not tax Social Security at any incomelevel. 8 tax it only above an income or agelimit.Minnesota is in the second group.Not taxed at any income (43)Taxed only above a limit (8)ALAKAZARCACOCTDEDCFLGAHIIDILINIAKSKYLAMEMDMAMIMNMSMOMTNENVNHNJNMNYNCNDOHOKORPARISCSDTNTXUTVTVAWAWVWIWYPostal abbreviations, alphabetical. TheDistrict of Columbia is counted as ajurisdiction, which is why the total is 51 andnot 50.Being in the second group does not mean thebenefits are taxed – it means the exemptionstops at an income or age line. This guide’sown table gives the exact figures.Counted from Clear Money Guide’s 2026 51-jurisdictionretirement-tax table, where every row carries its statutecitation. Table read 2026-08-17.
Minnesota is one of 8 jurisdictions that exempt Social Security only up to an income or age limit; the other 43 do not tax benefits at any income level in 2026. Minnesota’s exact limits are in the table on this page; all 51 rules: the 51-state table.

Minnesota vs. common alternatives

StateSocial SecurityPension / 401(k) / IRAEstate taxInheritance tax
MinnesotaPartially taxed (income-tested subtraction)Fully taxable; public-pension subtraction onlyYes — $3M exclusion, frozenNone
WisconsinNot taxedExclude up to $24,000/person at 67+ (2025 Act 15)NoneNone
MichiganNot taxedDeductible up to ~$67,610/person (2026)NoneNone
FloridaNot taxedNot taxed (no income tax)NoneNone

Comparison rows summarize general rules; see our 51-state retirement tax table for statute-cited detail.

Considering a Roth conversion? The converted amount is taxed as ordinary income in the year you convert, and Minnesota may treat it differently from the retirement income above — see how all 51 jurisdictions tax Roth conversions.

Finding a financial advisor in Minnesota

Per the SEC’s July 2026 Investment Adviser roster, Minnesota has 274 SEC-registered advisory firms (#16 nationally) managing $2.43 trillion (#13 by AUM). Full breakdown: Minnesota advisor statistics. Reviewing fee structures before or after a move: fee-drag calculator.

Thinking about moving?

Four taxes change when you move state in retirement, not one: income tax on withdrawals, state estate tax, state inheritance tax, and what probate costs your heirs. Corridor comparisons involving Minnesota:

Leaving Minnesota? See leaving Minnesota in retirement.

Compare any two states with the retirement tax comparison tool, or browse all corridors at the relocation hub.

What probate costs in Minnesota

Minnesota sets probate compensation by a “reasonable fee” standard with no percentage schedule, so anyone quoting a firm figure is estimating. And the small-estate shortcut of $75,000 does not clear a solely owned house on its own, which is the detail most guidance omits. Full detail with the governing statute, the court filing fee and the threshold: Minnesota probate cost. To price a specific estate, use the probate cost calculator.

Cite or share this guide

Suggested citation: Clear Money Guide, “Minnesota Retirement Taxes (2026 edition),” statute-cited; clearmoneyguide.com/minnesota-retirement-taxes/. Free to cite with attribution and a link. Data verified July 23–24, 2026 against state statutes, session laws, and revenue-department guidance.

Figures verified against the Minnesota Department of Revenue pages, Minn. Stat. 290.0132, 290.06, 291.03, 524.3-719 and 524.3-1201, and the 2025 Form M706 instructions on September 30, 2026; the probate court fee range, the comparison-state rows and the SEC roster figures were not re-checked.

Primary sources