MN · Payroll tax 2026
The true cost of hiring in Minnesota
Estimate what a W-2 employee costs in Minnesota and compare it with a 1099 contract using sourced 2026 payroll-tax defaults that you can adjust to your assigned rate.
Estimate a Minnesota hire
Pre-filled with a 1% industry planning default. Adjust SUI, salary, benefits, and the 1099 rate to fit your hire.
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A W-2 hire in Minnesota costs more than salary. Employers pay federal FICA and FUTA plus state unemployment insurance. For 2026, HiringMath uses a 1% planning default; the assigned rate varies by industry on the first $44,000 of wages, producing up to about $440 of state UI tax per worker before experience-rating or account-specific adjustments. Minnesota taxes wage income, which creates a withholding obligation but is not an employer-paid tax. New-employer rates are industry-average based; 1% is a planning default. The calculator below combines those statutory items with editable benefits, workers' compensation, and overhead, then compares the result with a 1099 contract.
Minnesota employer tax facts
| Item | MN |
|---|---|
| SUI planning default | 1% |
| SUI taxable wage base | $44,000 |
| Federal FICA (employer) | 7.65% |
| FUTA | 0.6% |
| State income tax on wages | Yes |
| Worker classification test | Common-law control test |
Extra employer taxes: New-employer rates are industry-average based; 1% is a planning default.
Example: a $75,000 hire in Minnesota
At a $75,000 base salary with typical benefits, a W-2 employee in Minnesota costs an employer $99,520 per year — $24,520 above base pay. An equivalent 1099 contract at $75,000 would cost $24,520 less; the breakeven contract rate is $99,520.
Misclassification risk in Minnesota
Test: Common-law control test
Common-law framework; tax, wage, and other civil exposure may apply.
Penalties by stateCompare nearby rates
Minnesota's 1% new-employer SUI rate sits near Alaska (1%), Delaware (1%), Idaho (1%), Iowa (1%). See the full 51-state comparison or the 2026 employer payroll tax reference.
Common questions
Minnesota hiring-cost FAQ
What SUI rate does HiringMath use for Minnesota?
The calculator starts with a 1% planning default; the assigned rate varies by industry, applied to the first $44,000 of each employee's 2026 wages. Your assigned rate can differ because of industry, surcharges, and claims history, so replace the default with the rate on your state notice when available.
Does Minnesota have a state income tax?
Yes. Minnesota taxes wage income. Employers withhold it from employee pay, but it does not directly increase the employer's payroll-tax cost.
What should employers know about worker classification in Minnesota?
Common-law framework; tax, wage, and other civil exposure may apply. This is a planning summary, not legal advice; confirm classification decisions with the relevant agency or counsel.