Crossing a state line into or out of Minnesota

Minnesota taxes its residents on income earned anywhere, and taxes non-residents on work done inside it. Which return you file depends on which direction you commute.

Minnesota borders 5 states. They fall into 3 different situations, and which one applies decides whether you file one return or two.

Where Minnesota has a reciprocity agreement

Minnesota has wage reciprocity with Michigan and North Dakota. Work in one of these and it will not tax your wages at all: you file its exemption certificate with your employer there, which stops its withholding, and report everything to Minnesota. There is no nonresident return.

Work state	Exemption certificate	Its tax on your wages
Michigan	MI-W4	$0
North Dakota	not in the 2026 dataset, ask the state	$0

Reciprocity covers wages paid by an employer. It does not cover self-employment income, so a 1099 worker in Minnesota generally still sources income to where the work was done.

Where you file a nonresident return and claim a credit

Minnesota has no agreement with Iowa and Wisconsin. Work in one of these and you file a nonresident return there, report the same income again to Minnesota, and claim a credit for what you already paid. The credit is capped at your Minnesota liability, so you are not taxed twice, the combined bill lands at roughly the higher of the two rates.

Work state	Its tax	Minnesota after credit	Total	Rate that governs
Iowa	$2,660	$1,632	$4,292	Minnesota
Wisconsin	$3,323	$969	$4,292	Minnesota

Where the work state takes nothing

South Dakota levies no personal income tax, so there is no return to file there and no credit to claim. But Minnesota still taxes the wages as a resident. The catch is withholding: an employer in South Dakota has no state income tax to withhold, so nothing is taken out for Minnesota either. The liability is real and nothing is being set aside against it, which usually means Minnesota estimated payments.

What Minnesota itself takes across a salary range

A single filer, taking the standard deduction. This is the figure every arrangement above is measured against, the tax Minnesota charges a resident, whether the work happened inside the state or over a line:

Wages	Minnesota tax	Effective rate
$45,000	$2,592	5.76%
$70,000	$4,292	6.13%
$120,000	$7,838	6.53%

Coming the other way: living in a no-income-tax state, working in Minnesota

South Dakota border Minnesota and levy no personal income tax of their own. A resident of South Dakota who works in Minnesota has the simplest arrangement on this page and the least room to improve it: Minnesota taxes the wages earned inside it, $4,292 on $70,000, there is no home-state return, and so there is nothing to claim a credit against. Living across a border that charges nothing does not reduce the Minnesota bill by a cent.

Reciprocity cannot help either, even where Minnesota has agreements: reciprocity shifts the income to the home state's return, and a state with no income tax has no return to shift it to.

What Minnesota charges as your home state

Minnesota taxes income on 4 graduated brackets for 2026, from 5.35% up to 9.85%. Because wages stacks on top of any other income, a second source can push part of it into the next bracket.

Minnesota is one of the twelve states that still taxes Social Security benefits, which matters if you are drawing benefits alongside wages.

State income tax on wages only, 2026 rates. Not tax advice, what this does and doesn't cover.