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Updated: August 21, 2023
There are a lot of big things in the state of Minnesota, including the Mall of America and a 52-block skyway system. That being said, running a successful small business is probably the biggest one for you, so let’s help with a task you want to get right — calculating payroll taxes.
Simply grab each employee’s W-4 and wage information and enter them into our handy payroll withholding calculator at the top of this page. We’ll do the math so you can write paychecks and take care of taxes. And below, we’ve compiled information that employers can use to stay ahead of their obligations.
First things first, we have to give Uncle Sam his due. Federal taxes are the biggest part of payroll taxes. We’ll quickly go over what you need to know when it comes to federal income taxes. If you would like to see a detailed rundown, we invite you to check out our step-by-step guide for more information.
Now that we’re done with federal income taxes, let’s tackle Minnesota state taxes. The State of Minnesota has a progressive income tax, meaning the more money your employees make, the higher the income tax. The income tax rate ranges from 5.35% to 9.85%.
The state tax is pretty high compared to other states, but at least Minnesota doesn’t impose any local taxes.
One of the items to add to your to-do list is reporting all newly hired, re-hired and any returning to work employees to the Minnesota Department of Human Services. You’ll want to do this within 20 days of the date they are hired, rehired, or return to work.
According to Minnesota’s new hire checklist, employers who submit reports electronically must do so in two monthly transmissions and not more than 16 days apart.
To take care of this task, you can share information a few ways.
Or many companies that offer payroll software can handle new hire reporting for employers in most states, including Minnesota.
Employers are required to pay state unemployment insurance. Unfortunately, Minnesota’s is quite complex. The tax rate changes on a yearly basis and is dependent on many things, including wages and industry, but is generally between 0.1 to 9%. Unemployment taxes are especially complicated in the construction business, and can range as high as 8.9%.
Minnesota’s new employer tax rates range from 1.1% to 9%, including the 0.1% base tax rate and also vary by industry. Minnesota’s Unemployment Insurance Program provides a 2023 table that includes an industry overview.
The one constant for all employers is that the wage base is $40,000 for each employee, in 2023. For reference, in 2022 it was $38,000.
Click here to see more details about Minnesota SUI and all the rates.
Now that you’ve mastered both federal and state taxes, you’re on your way to becoming a big thing in Minnesota! Once you’ve withheld taxes and calculated each employee’s net pay, you’ll be ready to spread the wealth.
Don’t forget to set aside the employer taxes your business is responsible for paying, or else you will have a big tax surprise when year-end rolls around.
Federal tax filings are due quarterly by filing Form 941 and annually by filing Form 940. You can pay taxes on an ongoing basis via the EFTPS payment system. Employment tax due dates can be found here.
If you want to learn more about Minnesota payroll taxes, we suggest you start with these websites:
Minnesota Department of Revenue: (651) 282-9999 | Withholding Taxes | Make a Payment
Minnesota Unemployment Insurance: (651) 296-6141 | Unemployment Insurance Program | Register As An Employer
Minnesota employers are welcome to use the calculator at the top of this page to quickly calculate their employees’ gross pay, net pay, and deductions (and feel confident when cutting paychecks). But every once in a while, businesses have situations that require a bit more number crunching. For example, do you reward your top-performing employees with bonuses? Keep in mind that Uncle Sam considers this type of payment to be supplemental wages and requires taxes to be withheld. Also, if you have workers who come and go, there may be times when you need to figure out what their final paycheck will be. So, if you can use a little more help managing the math, check out some of the calculators listed below.
Try OnPay out yourself to see how easy payroll and HR can be. To get started, just share a few basic details about your business. Our team of pros will set everything up and import your employees’ information for you.