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Covers Minnesota employer payroll requirements, including progressive income tax withholding, unemployment insurance on a state wage base and Earned Sick and Safe Time. Also explains the new state Paid Leave program and where local ordinances add rules.
Minnesota employers withhold progressive state income tax, pay unemployment insurance on the first $43,000 of each employee's wages (2025), must provide Earned Sick and Safe Time, and face a new state Paid Leave program starting January 1, 2026.
Source last updated: 12/23/2025.
Minnesota has a progressive individual income tax with brackets adjusted annually, state unemployment insurance paid by employers on a state-established taxable wage base, a statewide Earned Sick and Safe Time (ESST) law effective January 1, 2024, and a new state Paid Leave (paid family and medical leave) program launching January 1, 2026. Cities such as Minneapolis and Saint Paul maintain their own higher minimum-wage ordinances and related labor rules that employers must follow when work is performed inside those cities.
Follow Minnesota Department of Revenue withholding guidance and use the forms and tables published by the department for deposit frequencies and withholding calculations, including the 2025 Withholding Instructions for employer withholding methods and supplemental withholding guidance.
Minneapolis and Saint Paul have higher local minimum-wage ordinances and other local employer rules, with coverage depending on the physical work location. Employers must comply with the city ordinance when employees perform work in that city, including notice and posting requirements and rate differences by employer size. Effective January 1, 2025, the Minneapolis and Saint Paul minimum-wage schedules set $15.97 for many categories.
Minnesota does not have the county or municipal earned income taxes common in other states, but employers must watch for city-level labor standards, local taxes and fees, and local ordinances covering wages, scheduling and paid-leave equivalents. Check city websites for the most recent local requirements.
Effective January 1, 2024, employers must provide Earned Sick and Safe Time. Employees accrue 1 hour for every 30 hours worked, with a typical accrual cap of 48 hours per year; carryover rules and an 80-hour cap are detailed in the statute. Sick time must be paid at the employee's base rate, and employers must follow Department of Labor and Industry (DLI) posting and recordkeeping requirements.
Minnesota's Paid Leave program starts January 1, 2026. Benefits, premium mechanics, employer and employee premium splits and administrative rules are published by MN DEED and the Paid Leave site. Employers should determine whether they must remit premiums or may obtain an exemption through an equivalent employer plan, and prepare payroll systems for premium withholding and reporting.
The taxable wage base ceiling for Minnesota PFML contributions is equal to the Social Security (OASDI) wage base ceiling, rounded to the nearest thousand: $185,000 in 2026.
Employers should monitor Minnesota Paid Leave at mn.gov/paidleave for employer registration and premium remittance details.
Under Minnesota law, state overtime requires 1.5 times pay for hours over 48 in a seven-day workweek. However, most employers are covered by the federal FLSA, which requires overtime after 40 hours in a workweek, and employers must follow the more protective standard. Always confirm an employee's FLSA exemption status using the duties and salary tests.
| Effective date | Minnesota statewide minimum wage |
|---|---|
| January 1, 2025 | $11.13 |
| January 1, 2026 | $11.41 (scheduled inflation adjustment) |
Minneapolis and Saint Paul may require higher rates for work performed inside those cities, and employers must pay the higher applicable rate.
Important: Minnesota does not allow a tip credit. Employers must pay the applicable state or local minimum wage plus any tips employees receive, may not use tips to meet minimum wage obligations, and may not take tips. Recordkeeping and tip reporting rules, including IRS tip-reporting deadlines, apply. Separately, certain service charges added by a seller are taxable for sales tax purposes; see the Department of Revenue guidance on sales, tips and service charges.
Minnesota does not require specific paid meal breaks for private-sector workers beyond FLSA-related guidance. Short breaks, generally under 20 minutes, are compensable if provided. Employers must follow city ordinance requirements where they exist and document policies.
Minnesota has requirements for payment of wages, including timely payment on regular paydays, and rules for final pay that vary by separation reason. Employers should consult MN DLI for the exact timing and notice obligations for final wages.
Minnesota enacted a Secure Choice retirement program framework. Employers should monitor implementation and any employer automatic-IRA requirements or exemptions. Public retirement systems exist for public employees, and private employers should review federal SECURE 2.0 incentives and state program notices for mandatory and voluntary options.
Employers must follow Minnesota wage deduction rules and federal garnishment limits. Voluntary deductions require signed employee authorization. For child-support or court-ordered garnishments, follow state court forms and DLI guidance.
Maintain payroll, time and tax records per federal FLSA and Minnesota DLI rules. Post required workplace notices, including minimum wage and ESST/paid-leave notices, plus city labor posters where applicable. Check city posting rules for Minneapolis and Saint Paul if you have employees working there.
| Date | What changed |
|---|---|
| 01/01/2024 | Earned Sick and Safe Time (ESST) statewide effective date: accrual of 1 hour per 30 hours worked, a 48-hour annual accrual floor, and carryover and 80-hour details in the statute. |
| 01/01/2025 | State and city minimum-wage updates: Minnesota statewide $11.13, with Minneapolis and Saint Paul local rates increased to $15.97 for many employer categories. |
| 2025 | UI taxable wage base set at $43,000. Employers should confirm their account's assigned rate components each December. |
| 01/01/2026 | Minnesota Paid Leave benefits begin. Premium and reporting rules apply leading up to and during 2026. |
For 2025, the Minnesota UI taxable wage base is $43,000 per employee, so employers pay state unemployment insurance on the first $43,000 of each employee's wages. Minnesota publishes base tax, experience and new-employer rate components annually, and employers receive a Tax Rate Determination each December.
Minnesota employers must report newly hired and rehired employees to Minnesota's New Hire Reporting Center within 20 days of hire.
Under Minnesota's Earned Sick and Safe Time law, effective January 1, 2024, employees accrue 1 hour for every 30 hours worked, with a typical accrual cap of 48 hours per year. ESST must be paid at the employee's base rate, and carryover rules and an 80-hour cap are detailed in the statute.
No. Minnesota does not allow a tip credit, so employers must pay the applicable state or local minimum wage plus any tips the employee receives. Employers may not use tips to meet minimum wage obligations and may not take tips.
Minnesota's Paid Leave program starts January 1, 2026. The taxable wage base ceiling for Minnesota PFML contributions equals the Social Security (OASDI) wage base ceiling rounded to the nearest thousand, which is $185,000 in 2026.