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Minnesota Paid Leave began collecting premiums and paying benefits in January 2026, making it one of the newest programmes of its kind in the country. The total premium for 2026 and 2027 is 0.88% of wages, split between medical leave and family leave.

Employers may deduct up to half of that — 0.44% — from employee wages, on earnings up to $185,000 a year. Employers can choose to absorb more than their required share, so the exact figure on your payslip may be lower than the maximum. Small employers qualify for a reduced overall rate but may still deduct the full 0.44% employee portion.

The programme covers bonding with a new child, caring for a seriously ill family member, and an employee's own serious medical condition, with wage replacement weighted toward lower earners. Because it launched mid-cycle for most payroll systems, it is worth checking your own payslip against the published rate rather than assuming.

Minnesota's four brackets — 5.35%, 6.8%, 7.85% and 9.85% — are steep by national standards, and the entry rate of 5.35% exceeds the top rate in states like Arizona, Indiana and Pennsylvania.

What softens the picture is a standard deduction of $15,300 for single filers and $30,600 for married couples, close to the federal figure and much larger than most high-rate states offer. Minnesota also indexes its brackets and deduction annually, so thresholds keep pace with inflation rather than quietly dragging people upward.

Minnesota fully conforms to federal treatment of pre-tax retirement contributions, so a traditional 401(k) reduces state as well as federal tax — and given a 6.8% or 7.85% marginal rate, that state saving is substantial. For higher earners in Minnesota, maximising pre-tax contributions is worth noticeably more than in a low-rate state.

Minnesota was for many years one of a small group of states taxing Social Security benefits. Legislation passed in 2023 created a substantial subtraction, fully exempting benefits for taxpayers below an income threshold and phasing out above it. Most retirees of modest means now pay no Minnesota tax on Social Security; higher-income retirees may still pay some.

No Minnesota city or county levies an income tax. Minneapolis and St. Paul withhold only the state rate and the Paid Leave premium, so your payslip does not depend on which side of the river you live.

Minnesota has no separate state disability insurance programme — the new Paid Leave scheme covers medical leave, which is why there is a single premium rather than the two separate deductions seen in states like New York or Washington.