Updated October 16, 2026. Quick answer: Minnesota’s documents read do not mention inherited IRAs or exclude IRA withdrawals: net income starts from federal adjusted gross income, the statute says it “means federal adjusted gross income”, and the only retirement-related relief read is a Schedule M1R subtraction tested on the filer’s own age and income.
Minnesota at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income, starting from federal adjusted gross income |
| Do the state’s documents address beneficiaries? | Not addressed: the documents read do not mention inherited accounts |
| Retirement exclusion or credit | Schedule M1R age 65 or older/disabled subtraction, starting from $9,600 single and $12,000 married joint, then reduced on the schedule |
| Rate in the documents read | Brackets of 5.35%, 6.80%, 7.85% and 9.85%; the 9.85% bracket for a single filer begins at $203,151 |
| State inheritance or estate tax | Not mentioned in the documents read |
| Changed for 2026? | The Department’s rates page prints inflation-adjusted brackets for tax year 2026 |
What the Minnesota documents say
Minn. Stat. 290.01 defines an individual’s net income as federal adjusted gross income with listed modifications: the term “means federal adjusted gross income”. A distribution included in federal adjusted gross income is therefore the starting point for Minnesota.
The Schedule M1R subtraction is tested on the filer: the filer “must either be aged 65 or older (born before January 2, 1961)” or meet the disability requirements. On line 1, “If you are single, enter $9,600”. A married joint filer enters $12,000.
The Department’s rates page prints brackets of 5.35%, 6.80%, 7.85% and 9.85% for tax year 2026, and the single 9.85% bracket begins at $203,151.
The federal 10-year rule and your Minnesota tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For Minnesota’s own death taxes, see Minnesota inheritance tax.
What the documents do not say
- The documents read do not mention inherited accounts or beneficiaries of retirement accounts.
- They name no IRA-specific exclusion and do not say whether a beneficiary can use the age 65 subtraction, which turns on the filer’s own age.
- They say nothing about a deduction or credit for estate tax or income in respect of a decedent.
Common mistakes
- Assuming Minnesota’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a Minnesota preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether Minnesota taxes 401(k) and IRA withdrawals, Minnesota retirement taxes, Minnesota inheritance tax, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- Minnesota Statutes 290.01 Definitions: https://www.revisor.mn.gov/statutes/cite/290.01
- 2025 Schedule M1R, Age 65 or Older/Disabled Subtraction: https://www.revenue.state.mn.us/sites/default/files/2026-07/m1r-25.pdf
- Income Tax Rates and Brackets: https://www.revenue.state.mn.us/minnesota-income-tax-rates-and-brackets
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.