Minnesota Payroll Compliance
Every rate, wage base, and local override Minnesota employers need for 2026 — sourced from DLI, the Dept. of Revenue, and DEED — including the brand-new statewide Paid Leave program that began collecting premiums this January.
Minimum Wage & Hours
Minnesota’s statewide minimum wage rose to $11.41/hour on January 1, 2026 — a 2.5% inflation adjustment. The state eliminated its old large/small employer distinction in recent years, so this single rate now applies to every employer regardless of size. Minnesota bans tip credits outright.
| Item | 2026 Value | Notes |
|---|---|---|
| Statewide minimum wage | $11.41/hr | All employers, regardless of size; +2.5% from $11.13 in 2025 |
| 90-day training wage | $9.31/hr | Workers under age 20, first 90 consecutive days only |
| Tip credit | Not permitted | Full minimum wage owed regardless of tips earned |
| State overtime threshold | 48 hrs/week | Minn. Stat. § 177.25; federal 40-hr threshold controls for FLSA-covered employers |
| Meal break | 30 min, unpaid | Required when working 6+ consecutive hours (effective Jan 2026) |
| Rest break | 15 min, paid | Required for every 4 consecutive hours worked (effective Jan 2026) |
| Statute | Minn. Stat. § 177.24 | Administered by the Dept. of Labor and Industry (DLI) |
Minneapolis & St. Paul Wage Ordinances
Minneapolis pays every employer the same flat rate. St. Paul runs a genuine four-tier system by employer size, with the small-employer tier jumping mid-year on July 1, 2026 to finally match the macro/large rate.
| Jurisdiction / Tier | 2026 Rate | Notes |
|---|---|---|
| Minneapolis (all employers) | $16.37/hr | No size distinction; no training wage, youth wage, or tip credit |
| St. Paul macro/large (101+) | $16.37/hr | Effective Jan 1, 2026 |
| St. Paul small (6–100), Jan–Jun | $15.00/hr | Rises to $16.37/hr on July 1, 2026 |
| St. Paul micro (≤5), Jan–Jun | $13.25/hr | Rises to $14.25/hr on July 1, 2026; $15.00 by July 2027 |
| Rest of Minnesota | $11.41/hr | Statewide rate applies |
State Income Tax Withholding
Minnesota uses four graduated brackets from 5.35% to 9.85%, indexed annually for inflation. Minnesota still calculates withholding using an allowance-based system, and certain employees must file Form W-4MN directly with the state.
| Item | 2026 Value | Notes |
|---|---|---|
| Bracket 1 | 5.35% | Lowest bracket; exact 2026 thresholds indexed for inflation |
| Bracket 2 | 6.80% | Second bracket |
| Bracket 3 | 7.85% | Third bracket |
| Bracket 4 (top) | 9.85% | Applies to the highest tier of taxable income |
| Required certificate | Form W-4MN | Required in certain circumstances; some employees must file directly with DOR |
| Local income tax | None | No Minnesota city imposes its own income tax |
Minnesota Paid Leave
Minnesota Paid Leave launched January 1, 2026 — the newest statewide PFML program in the country at time of writing. It funds up to 12 weeks of medical leave and 12 weeks of family leave, capped at a combined 20 weeks per benefit year, through a payroll premium that started deducting on day one.
| Item | 2026 Value | Notes |
|---|---|---|
| Standard total premium | 0.88% | Split up to 50/50: 0.44% employer + 0.44% employee |
| Small employer total premium | 0.66% | 0.44% employee + 0.22% employer — confirm size threshold via DEED |
| Wage replacement | ~55% – 90% | Sliding scale; lower earners replaced at a higher percentage |
| Max weekly benefit | ~$1,423 | Confirm current figure via paidleave.mn.gov |
| Medical leave | Up to 12 weeks | Employee’s own serious health condition |
| Family leave | Up to 12 weeks | Bonding, caregiving, military exigency, safety leave |
| Combined annual cap | 20 weeks | Medical + family leave combined, per benefit year |
| Administering agency | DEED | Dept. of Employment and Economic Development, Paid Leave Division |
Unemployment Insurance (SUI)
Minnesota unemployment insurance is administered by DEED’s Unemployment Insurance division, separate from the Paid Leave Division despite sharing the same parent agency. The 2026 taxable wage base is $42,000 per employee.
| Item | 2026 Value | Notes |
|---|---|---|
| SUI taxable wage base | $42,000 | Per employee, per year |
| New employer rate | Varies | Assigned at registration by industry — confirm via uimn.org |
| Interstate wage transfer | No credit carryover | Wages already taxed in another state don't count toward MN's wage base |
| Administering agency | DEED (UI Division) | Filed through the uimn.org employer portal |
Official Minnesota .gov Resources
Verify every figure and register for accounts at the source. Minnesota employers coordinate across state, DEED, and city agencies for a single payroll run.