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.
Overview
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.
State tax requirements at a glance
| Item | Minnesota requirement |
|---|
| Individual income tax | Progressive, with brackets adjusted annually. Withhold per Minnesota Department of Revenue rules and tables |
| UI taxable wage base (2025) | $43,000 per employee |
| UI employer rates | Minnesota sets a base tax rate that varies year to year, plus employer experience and new-employer components published annually. New-employer rates are set by industry classification, and employers receive a Tax Rate Determination each December |
| Federal UI (FUTA) | Employers remain subject to federal FUTA rules (Form 940) as applicable |
| New hire reporting | Within 20 days of hire, to Minnesota's New Hire Reporting Center |
| Local income tax | None of the county or municipal earned income taxes common in other states |
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.
Local requirements
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.
Earned Sick and Safe Time (ESST)
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.
Paid Leave (Minnesota PFML)
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.
Overtime
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.
Minimum wage and tipped employees
| 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.
Rest and meal breaks
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.
Final pay and pay frequency
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.
State-mandated retirement
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.
Wage deductions and garnishments
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.
Recordkeeping and notices
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.
Compliance updates
| 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. |
Resources and references
- Minnesota Department of Revenue - withholding and tax information, including withholding instructions and tables.
- Minnesota Department of Labor and Industry (DLI) - wages, overtime, minimum wage, tips and ESST guidance.
- Minnesota Unemployment Insurance (UI) - taxable wage base, tax rates and employer rate information.
- Minnesota New Hire Reporting Center - new-hire reporting requirements.
- Minnesota Paid Leave - program overview, employer guidance and the January 1, 2026 start date.
- Minnesota Statutes - Earned Sick and Safe Time statutory language.
- City of Minneapolis - minimum wage ordinance and employer resources.
- City of Saint Paul - minimum wage schedule and employer resources.
- IRS - tip reporting and federal withholding reference.
Frequently asked questions
What is the Minnesota unemployment insurance taxable wage base?
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.
How soon do I have to report a new hire in Minnesota?
Minnesota employers must report newly hired and rehired employees to Minnesota's New Hire Reporting Center within 20 days of hire.
How much Earned Sick and Safe Time do Minnesota employees accrue?
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.
Can Minnesota employers take a tip credit?
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.
When does Minnesota Paid Leave start, and what wages are subject to premiums?
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.
