Selling a business in Minnesota: what the state takes (2026)
Minnesota’s top individual income tax rate is 9.85%. Here is what an owner selling company stock pays, with 2026 rules from official sources and worked examples at $10 million, $25 million and $50 million.
- 9.85%
- Top Minnesota income tax rate (2026)
- $2,702,500
- State tax on a $25M long-term gain
- 34.6%
- Combined federal and state rate on $25M
- 2 of 51
- Rank by total tax on $25M (1 = highest)
How Minnesota taxes a business sale
- Income tax
- Top rate 9.85%: Over $203,150 (single).
- Long-term capital gains
- Capital gains are taxed as ordinary income (top 9.85%) with no exclusion, plus a 1% tax on net investment income over $1 million, so most of a large C-corp stock gain is taxed at 10.85%.
- Capital-gains-specific taxes
- 1% net investment income tax on NII over $1,000,000 (Minn. Stat. 290.033, from 2024).
- Relief that applies only in some sales
- Gain on S-corporation stock held by an active (non-passive) owner is largely outside the 1% net investment income tax, because Minnesota uses the federal §1411(c)(4) look-through. The top rate is then 9.85%.
- Entity-level taxes
- Pass-throughs can elect Minnesota's PTE tax. There is no entity-level tax specific to a shareholder's stock sale.
- Local taxes
- Minnesota has no local income taxes.
Three worked examples
| Long-term gain | $10,000,000 | $25,000,000 | $50,000,000 |
|---|---|---|---|
| Federal capital gains tax (20%) | $2,000,000 | $5,000,000 | $10,000,000 |
| Net investment income tax (3.8%) | $380,000 | $950,000 | $1,900,000 |
| Minnesota tax | $1,075,000 | $2,702,500 | $5,415,000 |
| Total tax | $3,455,000 | $8,652,500 | $17,315,000 |
| Effective combined rate | 34.55% | 34.61% | 34.63% |
| Net proceeds after tax | $6,545,000 | $16,347,500 | $32,685,000 |
| Extra tax versus Texas | $1,075,000 | $2,702,500 | $5,415,000 |
Seller’s tax calculator
Estimate federal and state tax on a stock sale and what is left before fees and debt.
- Long-term capital gain
- $25,000,000
- Federal capital gains tax (20%)
- $5,000,000
- Net investment income tax (3.8%)
- $950,000
- Minnesota tax
- $2,702,500
- Taxable gain at 9.85%
- $2,462,500
- Minnesota 1% net investment income tax
- $240,000
- Total tax
- $8,652,500
- Effective rate on the gain
- 34.61%
- Net proceeds after tax
- $16,347,500
Illustration, not tax advice. Assumes a resident individual, the whole gain long-term, top marginal rates, no state credits, installment terms, QSBS exclusion or other planning, and no local taxes. Net proceeds are before transaction fees, debt repayment, escrows and earn-outs. Rates are for tax year 2026 where published; see the methodology.
Compare with other states
Neighboring states
- Iowa27.6% combined, $18.10M net
- North Dakota25.3% combined, $18.68M net
- South Dakota23.8% combined, $19.05M net
- Wisconsin29.2% combined, $17.71M net
Common comparisons
- California37.1% combined, $15.72M net
- New York34.1% combined, $16.48M net
- Texas23.8% combined, $19.05M net
- Florida23.8% combined, $19.05M net
- Nevada23.8% combined, $19.05M net
- Washington33.5% combined, $16.63M net
- Tennessee23.8% combined, $19.05M net
Methodology and sources
Minnesota figures are for tax year 2026. 2026 brackets published by the MN Department of Revenue (press release Dec 16, 2025; 2026 tax professional desk reference). The examples assume a resident individual selling privately held stock for a long-term gain equal to the sale price (zero basis), with every dollar taxed at the top marginal rates, the federal 20% capital gains rate and the 3.8% net investment income tax, and no planning, credits or local taxes. Full assumptions are in the report methodology.
All 50 states and DC with source URLs.
- 1MN DOR, 2026 income tax brackets, standard deduction and dependent exemption
- 2MN DOR, Tax year 2026 tax professional desk reference chart
- 3Minn. Stat. 290.033 (net investment income tax)
- 4Minn. Laws 2026, ch. 128, art. 1, sec. 21
- 526 U.S.C. 1411(c)(1)(A)(iii), (c)(4)
- 6Tax Foundation, State Individual Income Tax Rates and Brackets, 2026. Secondary source
Data last updated October 26, 2026.
Cite this research
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Citation
Laurent Capital Research, “The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Minnesota,” 2026, https://laurent.capital/research/seller-tax-map/minnesotaLink (HTML)
<a href="https://laurent.capital/research/seller-tax-map/minnesota">The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Minnesota</a> (Laurent Capital)Planning a sale and weighing the tax cost?
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