Capital Gains Tax in Minnesota (2026)
Minnesota has no special capital gains rate — the state taxes your gain as ordinary income across four brackets from 5.35% to 9.85%, stacked on top of the federal 0/15/20% tax and the 3.8% NIIT. Run the combined number below.
Reviewed & updated · 2026 tax-year figures · Federal + Minnesota state
Minnesota does not have a preferential long-term capital gains rate. Under Minn. Stat. §290.06, both short- and long-term gains are taxed as ordinary income across four brackets — 5.35%, 6.80%, 7.85% and 9.85%. The top 9.85% rate begins at $203,150 of taxable income for a single filer (2026). That state tax is added on top of the federal capital gains tax (0/15/20% long-term under IRC §1(h)) and the 3.8% NIIT (§1411). A top-bracket Minnesotan can face a combined rate near 33.7% on a long-term gain.
Net proceeds $174,800$26,200
Show our work federal + MN, step by step
Estimates only, for the 2026 tax year. Not tax advice. Minnesota bracket thresholds and standard deductions are inflation-indexed each year; the 2026 figures used here were published by the Minnesota Department of Revenue (December 2025) and are owner-verifiable against its rate schedule.
How does Minnesota tax capital gains?
Minnesota gives capital gains no break at all. Under Minn. Stat. §290.06, a capital gain is simply part of your Minnesota taxable income and is taxed at the same graduated rates as wages — four brackets running 5.35%, 6.80%, 7.85% and 9.85%. There is no equivalent of the federal 0/15/20% long-term schedule and no distinction between short-term and long-term at the state level. Whether you held the asset a week or a decade, Minnesota taxes the whole gain as ordinary income.
Minnesota's top 9.85% rate is among the highest state rates in the country, and it reaches a single filer once taxable income tops $203,150 (2026). Because a large one-time gain — selling a business, a lake property, or a block of RSUs — stacks on top of your other income, it often lands wholly or partly in that 9.85% band. Minnesota indexes its bracket thresholds to inflation each year and levies no local or city income tax on the gain.
How does Minnesota stack on top of federal?
The two systems run in parallel and the amounts are added — Minnesota does not replace or absorb the federal tax. For a long-term gain, you owe:
- Federal: 0%, 15%, or 20% depending on where the gain stacks on your taxable income, under IRC §1(h);
- Federal NIIT: an extra 3.8% on net investment income once MAGI passes $200,000 (single) / $250,000 (joint), under IRC §1411; and
- Minnesota: your marginal state rate, 5.35%–9.85%, on the full gain under Minn. Stat. §290.06.
Add those together and a top-bracket Minnesotan with a long-term gain can pay roughly 20% + 3.8% + 9.85% ≈ 33.7%. A short-term gain is worse, because the federal side jumps to ordinary rates (up to 37%) instead of 20%. The calculator above computes each layer separately and shows you the exact bands.
What are the 2026 Minnesota income-tax brackets?
These are the marginal brackets Minnesota applies to your gain, shown for a single filer (2026). Married-filing-jointly, head-of-household and married-filing-separately have their own thresholds — the calculator uses the correct schedule for your status. All figures are the official 2026 amounts, owner-verifiable against the Minnesota Department of Revenue rate schedule.
| Minnesota taxable income (single, 2026) | Marginal rate |
|---|---|
| $0 – $33,310 | 5.35% |
| $33,310 – $109,430 | 6.80% |
| $109,430 – $203,150 | 7.85% |
| Over $203,150 | 9.85% |
| Local / municipal income tax on gains | None |
How this calculator works & where the numbers come from
No black box. The federal side uses the same unit-tested engine as our main calculator: net gain = proceeds − basis; classify by holding period; for long-term gains, subtract the standard deduction and stack the gain across the 0/15/20% bands per IRC §1(h); add 3.8% NIIT where modified AGI crosses the §1411 threshold; short-term gains are computed as the true marginal difference in ordinary tax. The Minnesota side takes the same taxable gain (after any §121 exclusion, since Minnesota begins from federal taxable income), subtracts the Minnesota standard deduction from your ordinary income, and stacks the gain across the Minnesota marginal brackets (5.35%/6.80%/7.85%/9.85%) under Minn. Stat. §290.06 using the schedule for your filing status. The two results are summed.
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Primary sources (linked, not just named)
- Minn. Stat. §290.06 — rates of tax
- Minnesota Department of Revenue — individuals
- Minnesota DOR — income tax rates & brackets
- 26 U.S.C. §1(h) — federal capital gains rates
- 26 U.S.C. §1411 — 3.8% NIIT
- 26 U.S.C. §121 — home-sale exclusion
- IRS Topic No. 409 — Capital Gains and Losses
- IRS Publication 550 — Investment Income
Minnesota capital gains tax, answered
Does Minnesota have a separate capital gains tax rate?
No. Minnesota has no preferential capital gains rate. Under Minn. Stat. §290.06, a capital gain — short-term or long-term — is taxed as ordinary income across four brackets: 5.35%, 6.80%, 7.85% and 9.85%. The federal short/long distinction does not exist at the Minnesota level.
How much is capital gains tax in Minnesota for 2026?
Your Minnesota tax equals the gain taxed at your marginal state rate (5.35%–9.85%), added to the federal capital gains tax. Federally, a long-term gain is taxed at 0/15/20% (IRC §1(h)) plus 3.8% NIIT for high earners. A top earner can pay near 20% + 3.8% + 9.85% ≈ 33.7% combined. Use the calculator above for your exact figure.
How does Minnesota capital gains tax stack on top of federal?
They are computed separately and summed. The federal side taxes long-term gains at 0/15/20% and adds 3.8% NIIT for high earners; short-term gains are ordinary income. Minnesota ignores the holding period and taxes the entire gain as ordinary income at 5.35%–9.85%. Your total tax is federal + NIIT + Minnesota.
Does Minnesota tax long-term and short-term gains the same?
Yes. Minnesota makes no distinction between long-term and short-term capital gains — both are ordinary income under Minn. Stat. §290.06, taxed across the same 5.35%–9.85% brackets. The holding period only changes your federal tax (0/15/20% for long-term). Minnesota levies no local income tax on the gain.
Does the 3.8% federal NIIT apply to Minnesotans?
Yes — the NIIT is federal and applies in every state. Once modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly), the 3.8% surtax under IRC §1411 hits the lesser of your net investment income or the amount over the threshold. It is added to your federal capital gains tax and is entirely separate from Minnesota state tax.
Does Minnesota conform to the $250k/$500k home-sale exclusion?
Yes. Minnesota begins from federal taxable income, so the IRC §121 exclusion of up to $250,000 ($500,000 married filing jointly) on a primary residence is already removed before Minnesota applies its rates. Only gain above the exclusion is taxed, as ordinary income. See our home-sale hub for the mechanics.
Compare Minnesota with other state hubs
Minnesota’s 9.85% top rate is one of the highest in the nation — heavier than Virginia (5.75%) and flat-tax Illinois (4.95%), roughly level with New York (over 10%), and below only California (up to 13.3%). It is far above the no-income-tax states like Texas and Florida. Every state page combines the same unit-tested federal engine with that state’s own rules, so you always see the full combined number. The main Capital Gains Tax Calculator lets you fold any state’s rate into your federal receipt.