Minnesota Payroll Compliance Guide 2026: Complete Employer Reference

Minnesota Payroll Overview

Minnesota is consistently among the most active states for payroll legislation. In the last two years alone, the state has added statewide paid sick leave (January 2024), launched a paid family and medical leave program (January 2026), and maintained a high-income top rate of 9.85% that makes withholding calculations on larger paychecks consequential. The $44,000 SUI wage base means your SUI liability accumulates over more of each employee’s annual wages than in most other states.

Minneapolis and Saint Paul operate under their own local minimum wage ordinances that exceed the state rate. If your employees work in either city, verify the current local rates, which are higher than the $11.41 state rate.

The Minnesota Department of Revenue handles income tax withholding. The Department of Employment and Economic Development (DEED) administers SUI, and Minnesota Paid Leave, also part of DEED, runs the new PFML program.

Minnesota Payroll Taxes: 2026 Rates and Wage Bases

Minnesota Income Tax Withholding: Four Brackets to 9.85%

Minnesota taxes wages using four brackets. The top rate of 9.85% applies to the highest income range. Most employees fall in the 6.8% or 7.85% brackets, but executives and high-earning professionals in the Twin Cities commonly reach the 9.85% tier.

Note: Minnesota adjusts bracket thresholds annually for inflation. Confirm current thresholds at revenue.state.mn.us before the start of each calendar year.

Minnesota W-4MN Form

Minnesota employees complete a W-4MN withholding form in addition to the federal W-4. The W-4MN captures Minnesota-specific filing status and additional withholding elections. If a new employee does not provide a W-4MN before the first wage payment, withhold as if the employee is single with zero withholding allowances.

All withholding returns and deposits go through the Minnesota Department of Revenue’s e-Services portal at myminnesotaid.dor.state.mn.us. Submit W-2 information to the Department of Revenue by January 31.

Minnesota PFML: January 2026 Launch

Minnesota’s Paid Family and Medical Leave program launched January 1, 2026. Minnesota Paid Leave, part of the Department of Employment and Economic Development (DEED), administers the program. All Minnesota employers must register and begin contributions.

Contribution Rate and Wage Base

The 2026 premium rate is 0.88% of wages (0.61% medical leave plus 0.27% family leave). Employers may collect up to 0.44% from employees and must pay the rest; they can choose to cover more. Qualifying small employers pay a reduced rate of 0.66%. Premiums apply to wages up to the Social Security wage base, $184,500 per employee in 2026.

Benefit Coverage

Minnesota PFML provides qualifying employees:

• Up to 12 weeks of family leave—bonding with a new child, caring for a seriously ill family member, qualifying military exigency
• Up to 12 weeks of medical leave—the employee’s own serious health condition

An employee who qualifies for both types of leave in the same year can take up to 20 weeks in total.

Benefits are calculated as a percentage of the employee’s average weekly wage, up to a weekly cap. Minnesota Paid Leave publishes the current benefit cap. Benefits are funded through the contributions collected by employers.

Employer Registration and Filing

All Minnesota employers must register with the PFML program through Minnesota Paid Leave (DEED). Contributions are reported and remitted quarterly. If you have not yet registered, do so immediately—contributions were due beginning January 1, 2026, and retroactive liability accumulates.

Minnesota SUI: High Wage Base, Wide Band

Minnesota SUI is administered by DEED. The $44,000 taxable wage base is the highest in this guide and one of the highest in the country. New employers are assigned a rate based on their industry; most non-construction industries get 1.0%, and every employer also pays the 2026 base tax rate of 0.40%. On a $44,000 base, that puts new-employer SUI at $616 per employee per year before the 2026 additional assessment of 14% of the tax ($702.24 with it). That’s higher in absolute dollars than most states with higher percentage rates but lower wage bases.

Experience rates run from 0.00% to 8.90%, plus the 0.40% base tax rate. At the maximum combined 9.30% on the $44,000 wage base, SUI tops out at $4,092 per employee per year before the 14% additional assessment ($4,664.88 with it). That’s a significant cost for high-turnover industries like hospitality or staffing.

Your experience rate is the ratio of unemployment benefits paid to your former employees to the taxable wages you paid, measured over a four-year experience rating period. DEED sends rate notices each year. Contesting unemployment claims you believe are improperly charged pays off when your wage base is this high.

Quarterly SUI Filing

File quarterly SUI returns through DEED’s Unemployment Insurance (UI) employer portal at uimn.org/employers. Report total wages, taxable wages, and per-employee wage detail. Quarterly deadlines: April 30, July 31, October 31, January 31.

Minnesota Earned Sick and Safe Time

Minnesota’s Earned Sick and Safe Time (ESST) law took effect January 1, 2024. It applies to all employers with one or more employees. Accrual rate: 1 hour per 30 hours worked, up to 48 hours per year. Unlike most states with sick leave laws, Minnesota’s 48-hour cap is slightly higher than the common 40-hour standard.

ESST covers use for the employee’s own illness, care of a family member, closure related to a public health emergency, and matters related to domestic abuse, sexual assault, or stalking. Unused ESST carries over year to year, up to the 48-hour annual cap on use. Employers may front-load the full 48 hours at the start of the year instead of tracking per-hour accrual.

Wage Payment Laws: The 24-Hour Demand Rule

Minnesota wage payment law appears in Minnesota Statutes §181.13–181.14. The Department of Labor and Industry, Wage and Hour Division enforces it.

Pay Frequency

Minnesota employers must pay wages at least once every 31 days for salaried employees and at least semi-monthly for hourly employees. In practice, most employers pay bi-weekly or semi-monthly for all employees.

Final Paycheck Deadline and the 24-Hour Demand Rule

Minnesota’s final pay rules have an important demand-triggered component:

If a terminated employee submits a written demand for their final wages, you have 24 hours to pay. This applies regardless of where your next regular payday falls. Make sure your HR and payroll teams understand this rule and have a process to issue off-cycle final checks within 24 hours when a demand is received. The demand does not need to be formal—an email or text message requesting payment can constitute a demand.

Penalty for Late Final Payment

If an employer fails to pay final wages within the required time frame, the employee may recover the unpaid wages plus a penalty equal to an additional day’s wages for every day the payment is late, up to 15 days of additional pay. That penalty accrues quickly on higher-wage employees.

Overtime and FLSA

Minnesota has its own overtime law that mirrors FLSA for most purposes: 1.5× the regular rate for hours over 48 in a workweek—not 40. Minnesota’s state overtime threshold of 48 hours per week is higher than the federal FLSA’s 40-hour threshold. However, federal FLSA’s 40-hour rule also applies to Minnesota employers covered by FLSA. Since FLSA coverage is broad, most employers must use the lower 40-hour threshold.

If your business falls below FLSA coverage (very small employers not engaged in interstate commerce), Minnesota state law would govern at the 48-hour threshold. For most employers, use 40 hours to be safe and compliant with both laws simultaneously.

Minnesota Minimum Wage 2026: One Rate for All Employers

Minnesota has one minimum wage for all employers in the state, regardless of size:

Minnesota adjusts the minimum wage annually for inflation. The rates above reflect the 2026 figures; verify updated rates at dli.mn.gov/minwage at the start of each year.

Minneapolis and Saint Paul Local Minimums

Both Minneapolis and Saint Paul have enacted their own minimum wage ordinances that exceed the state rate. If any of your employees work within the city limits of Minneapolis or Saint Paul, apply the applicable city rate rather than the state rate. Verify current city rates on the Minneapolis and Saint Paul city websites.

Minnesota Has No Tip Credit

Minnesota does not allow a tip credit. Tipped employees must receive the full minimum wage ($11.41 in 2026) in direct wages from the employer, regardless of tips received. Employers cannot count tips toward the minimum wage obligation. This is a major distinction from federal law and most other states.

New Employer Registration

Minnesota new employers register with two state agencies: the Department of Revenue for income tax withholding, and DEED for both SUI and Paid Leave (PFML).

Federal EIN

Apply at irs.gov/ein first. Free and immediate online.

Minnesota Withholding Registration (DOR)

• Where: Minnesota Department of Revenue e-Services at www.revenue.state.mn.us
• What you get: Minnesota Tax ID Number, withholding account, assigned filing frequency
• When: Before your first Minnesota payroll

Minnesota SUI Registration (DEED)

• Where: DEED UI employer portal at uimn.org/employers
• Trigger: $1,500 in wages in any quarter, or one or more employees for 20 days in a year
• What you get: Minnesota UI Account Number and an industry-based new-employer SUI rate (1.0% for most non-construction industries)

Minnesota PFML Registration (DEED)

• Where: Minnesota Paid Leave at pl.mn.gov
• Required for: All employers with Minnesota employees effective January 1, 2026

New-Hire Reporting

Report new hires and rehires within 20 days to the Minnesota New Hire Reporting Center at newhire.mn.gov. Report employee name, address, SSN, start date, and employer FEIN.

Minnesota Payroll Compliance Calendar 2026

Frequently Asked Questions

What is Minnesota’s top income tax rate for 2026?

Minnesota’s top income tax rate is 9.85%, applying to 2026 taxable income above $203,150 for single filers and above $337,930 for married joint filers. The state uses four brackets starting at 5.35%. Most middle-income employees fall in the 6.8% or 7.85% brackets. Employers calculate withholding using the Minnesota DOR’s tables and each employee’s W-4MN.

When does Minnesota’s paid family and medical leave program start?

Minnesota PFML launched January 1, 2026. Both contributions and benefits are active. The 2026 premium rate is 0.88% of wages up to $184,500; employers may deduct up to 0.44% from employees. Benefits include up to 12 weeks of family or medical leave in a year, or up to 20 weeks combined for employees who qualify for both. Employers must be registered and contributing now.

What is the Minnesota SUI rate for new employers in 2026?

Most new non-construction employers are assigned 1.0%, plus the 2026 base tax rate of 0.40%, on the first $44,000 per employee per year: $616 per employee before the 14% additional assessment. Experience rates range from 0.00% to 8.90%, plus the base rate. The $44,000 wage base is one of the highest in the nation—at the maximum combined 9.30%, SUI tops out at $4,092 per employee before the additional assessment.

What is the minimum wage in Minnesota for 2026?

Minnesota’s minimum wage is $11.41/hr for all employers in 2026. Workers under age 20 may be paid a 90-day training wage of $9.31/hr. Minneapolis and Saint Paul have higher local minimums. Minnesota has no tip credit—tipped employees must receive the full minimum in direct wages regardless of tips.

When must Minnesota employers pay a terminated employee their final paycheck?

Minnesota requires final wages by the next regular payday. If the employee makes a written demand for payment, the employer has 24 hours to pay. The 24-hour clock starts from the time of the demand, not from the next payday. Failure to pay within 24 hours of a demand triggers a penalty of one day’s wages for each day late, up to 15 days.

Does Minnesota’s minimum wage depend on employer size?

No. Minnesota’s minimum wage is $11.41 per hour for all employers in the state in 2026, regardless of size or revenue. Minneapolis and Saint Paul impose higher city-level minimums that supersede the state rates for work performed within those cities.

Does Minnesota require employers to provide paid sick and safe leave?

Yes. Minnesota’s Earned Sick and Safe Time (ESST) law, effective January 1, 2024, requires all employers with one or more employees to provide paid sick and safe leave at 1 hour per 30 hours worked, up to 48 hours per year. It covers all employees including part-time and temporary workers. Unused time carries over year to year up to the usage cap.