Under a new tax bill, Minnesota would have the second-highest top marginal individual income tax rate in the country

Despite evidence showing how detrimental high taxes are to economic growth, Gov. Walz is calling for tax hikes. What’s more surprising? He is not the only one. A bill was introduced in the Minnesota House of Representatives to also raise taxes.

If passed, the bill would create a fifth-tier income bracket, with a 12.45 percent rate. Minnesota taxpayers would face the following rates:

For married individuals filing jointly:

(1) On the first $38,770 $39,810, 5.35 percent;

(2) On all over $38,770 $39,810, but not over $154,020 $158,140, 6.8 percent;

(3) On all over $154,020 $158,140, but not over $269,010 $276,200, 7.85 percent;

(4) On all over $269,010 $276,200, but not over $500,000, 9.85 percent;

(5) On all over $500,000, 12.45 percent.

For taxpayers filing individually:

(1) On the first $26,520 $27,230, 5.35 percent;

(2) On all over $26,520 $27,230, but not over $87,110 $89,440, 6.8 percent;

(3) On all over $87,110 $89,440, but not over $161,720 $166,040, 7.85 percent;

(4) On all over $161,720 $166,040, but not over $250,000, 9.85 percent;

(5) On all over $250,000, 12.45 percent.

For those filing as head of household:

(1) On the first $32,650 $33,520, 5.35 percent;

(2) On all over $32,650 $33,520, but not over $131,190 $134,700, 6.8 percent;

(3) On all over $131,190 $134,700, but not over $214,980 $220,730, 7.85 percent;

(4) On all over $214,980 $220,730, but not over $400,000, 9.85 percent;

(5) On all over $400,000, 12.45 percent

How Minnesota would compare

At 9.85 percent, Minnesota’s top marginal individual income tax rate is the fifth-highest in the nation. Raising it to 12.45 percent would give Minnesota the second-highest top marginal individual income tax rate.

Figure 1: Top Marginal Individual Income tax rate by state, 2021

Source: Tax Foundation

Additionally, while California’s top rate kicks in at $500,000 for individual filers and $1,000,000 for married filing jointly, Minnesota’s threshold would be half of California’s. has 10 income tax brackets, the top four of which apply to incomes of over $299,000 for individual filers. In California, income between $299,508 and $359,407 faces a 10.30 percent rate. Income between $359,000 and $599,000 faces a 11.30 percent rate. And income between $599,000 and $1,000,000 faces a 12.30 percent rate.

If this bill passes, Minnesota will have the highest tax rate in the country for income between $250,000 and $1,000,000 for single filers.