What if?
The same sale under different choices, each computed by the engine rather than estimated. Figures are the tax on the gain, so the rows stay comparable when a variant spans two tax years. Select one to load it into the calculator and read its full derivation.
Estimates only — this is not tax advice. Consult a CPA or enrolled agent before acting on these figures. The calculator does not model the alternative minimum tax, wash sales, like-kind exchanges, QSBS, installment sales, or state additions and subtractions. See what is out of scope.
Show your work — 0 steps, each with its rule and citation
How Minnesota taxes a capital gain
Statutory authority: Minn. Stat. 290.06 subd. 2c (retrieved 30 August 2026)
A high top rate, reached quickly
Minnesota runs four brackets — 5.35%, 6.8%, 7.85% and 9.85% — and the top of them is among the highest state rates in the country, behind only California, Hawaii, New York and New Jersey among the states this site covers.
The opening rate is also high. Minnesota starts at 5.35%, which is above the TOP rate in several states: a Minnesota filer’s first taxable dollar is charged more than an Indiana, Ohio, North Dakota or Pennsylvania filer’s last one. The result is that Minnesota is expensive across the whole range rather than only at the top.
For a capital gain the consequence is straightforward. A gain stacked on an ordinary salary will typically sit in the 7.85% or 9.85% band, and the state layer on a large sale can approach a tenth of the gain on its own.
Minnesota indexes, and that is the opposite of most of this site
Bracket thresholds are adjusted annually under Minn. Stat. 290.06 subd. 2d and 270C.22, from a 2019 base year. Every threshold rises with inflation without the legislature acting.
That is worth contrasting explicitly with the states whose ladders are frozen. Delaware’s brackets have not moved since 2014 and Virginia’s since 1990, so in both places a filer whose income merely keeps pace with inflation climbs into higher brackets year after year. In Minnesota they do not: the thresholds move with them.
The honest comparison therefore runs in Minnesota’s favour on structure even while it runs heavily against on rate. A 9.85% indexed ladder and a 5.75% ladder frozen since 1990 are doing different things over time, and comparing only the top rates misses it.
The 2026 thresholds are not published yet, and this page says so
Indexing has a cost in currency. Because the figures are recomputed annually and published late in the year, the 2026 Minnesota thresholds were not available when this data was last checked.
Rather than guess or silently carry last year’s numbers, the calculator computes on the most recent published figures and attaches a warning to every Minnesota result naming the year they came from. The rates themselves are statutory and do not move; it is only the transitions that shift, and on a large gain sitting well inside the top band the difference the shift makes is small.
One further limitation is specific to Minnesota on this site: the bracket figures recorded cover single and married-filing-jointly filers. A head of household or a married filer filing separately will find Minnesota listed as not yet available in the calculator, rather than being given an answer derived from the wrong schedule.
Where the high rate changes a decision
At 9.85%, the state layer is large enough that it can change what is worth doing, in a way that a 3% state layer cannot.
Realising a gain in a low-income year is worth more in Minnesota than almost anywhere, because the ladder is steep and the bands are wide enough that a genuine drop in ordinary income moves a gain down through them. Loss harvesting is worth roughly a tenth more than it would be in a state with no income tax. And the combined federal-plus-state figure on a large sale — 20% federal, 3.8% net investment income tax, 9.85% Minnesota — is a third of the gain before any consideration of basis.
None of that is a reason to sell or not sell. It is a reason to compute the number before deciding, which is what this page is for.
How much the Minnesota layer actually costs against its neighbours
The top rate is worth putting next to the states a Minnesotan is most likely to compare against, because the spread is large enough to be a real number rather than a rounding difference.
Iowa is a flat 3.8%, Michigan a flat 4.25%, Illinois a flat 4.95%. Minnesota reaches 9.85%. On a $250,000 gain sitting in the top band, the difference between Minnesota and Iowa is roughly $15,000 — more than the entire state bill in several states on this site.
The counterweight, and it is a genuine one, is that Minnesota indexes. Iowa, Michigan and Illinois are flat, so their thresholds cannot creep, but Delaware and Virginia show what happens to a graduated ladder that is left alone: the top rate quietly becomes the only rate. Minnesota’s bands move each year, so its lower rates keep meaning something.
For a large gain none of that helps, because a large gain lands in the top band wherever the bands happen to sit. Indexing protects modest incomes; it does not protect a sale.
What Minnesota does not change
Minnesota gives capital gains no preferential rate and no exclusion for long-held assets, so the holding period is worth nothing at the state level.
Federal treatment does not vary by residence, so the long-term rate ladder, the surtax on net investment income and the reliefs on a main home and on depreciated property all behave as they would anywhere. What differs in Minnesota is only how much is added afterwards, and the answer is a great deal.
The state figure stacks your gain on federal ordinary taxable income. Minnesota computes its own taxable income with its own additions, subtractions and standard deduction, none of which are modelled here.
A worked Minnesota example
Every figure below is computed by the same engine that powers the calculator above, at the moment this page was built — not typed in by hand. When the tax-year data is updated, this example updates with it.
A $250,000 gain on a $120,000 salary
A single filer in Minnesota earning $120,000 sells long-held shares for a $250,000 gain. The gain climbs into the top band.
- Taxable income after deduction
- $353,900
- Taxable gain
- $250,000
- Tax owed without the sale
- $17,570
- Tax the sale added
- $43,960
- of which net investment income tax
- $6,460
- Total federal tax
- $61,530
- Minnesota state tax
- $23,468.60
- Effective rate on the gain
- 17.58%
The effective state rate approaches the 9.85% top figure, because most of the gain sits in the final band. Note the warning attached to the result: the thresholds used are the most recently published, not 2026 figures, and the calculator says so rather than implying a precision it does not have.
Caveats on this example (3)
- Net investment income was derived from capital gains and qualified dividends only. Interest, non-qualified dividends, rents, royalties and passive business income inside ordinaryIncome are also net investment income under IRC 1411(c) and are not counted here.
- Minnesota bracket thresholds are the 2025 figures; the 2026 amounts were not published when checked, so the Minnesota figure will change once they are. The rate ladder itself is verified from Minn. Stat. 290.06 subd. 2c.
- Minnesota: the state taxable income base is approximated by federal ordinary taxable income. State additions, subtractions and deductions are not modelled.
Show the working — 13 steps, each with its citation
- Net short-term capital gain or loss for the year$0
Assets held one year or less. Taxed at ordinary rates if a net gain.
- Net long-term capital gain or loss for the year$250,000
Assets held more than one year. Eligible for the 0/15/20% rates.
- Standard deduction-$16,100
Adjusted gross income of $370,000 less $16,100.
- Taxable income$353,900
The figure the rate tables and the capital gain ceilings are both measured against.
- Ordinary income taxed at 10%$1,240
$12,400 of taxable income between $0 and $12,400.
- Ordinary income taxed at 12%$4,560
$38,000 of taxable income between $12,400 and $50,400.
- Ordinary income taxed at 22%$11,770
$53,500 of taxable income between $50,400 and $103,900.
- Ordinary income stacked below the long-term gain$103,900
Long-term gain is taxed by reference to where it sits ON TOP of $103,900 of other taxable income, not from the bottom of the rate table.
- Long-term gain taxed at 15%$37,500
Gain between the $49,450 zero-rate ceiling and the $545,500 15% ceiling.
- Net investment income tax threshold$200,000
Modified AGI of $370,000 against the $200,000 threshold for a single filer. This threshold is statutory and is not adjusted for inflation.
- Net investment income tax at 3.8%$6,460
3.8% of $170,000, the lesser of net investment income ($250,000) and the amount by which modified AGI exceeds the threshold ($170,000). Here the binding figure is the excess of modified AGI over the threshold.
- Minnesota income tax on the gain$23,468.60
$250,000 stacked on $103,900 of other taxable income across a 4-bracket ladder topping out at 9.85%. Federal ordinary taxable income is used as the base; the state's own taxable income differs, so treat this as an approximation.
- Total tax$84,998.60
$84,998.60 on $370,000 of total income, an effective rate of 22.97%.
What this calculator does not cover for Minnesota
The Minnesota figure stacks your gain on your federal ordinary taxable income. Minnesota computes its own taxable income with its own additions and subtractions, which are not modelled here — so treat the state number as a close approximation for a straightforward wage-and-sale situation, and as a rough one if your return carries significant state adjustments.
Full-year residency is assumed throughout. Part-year residents, non-residents, and gains sourced to property in another state all turn on rules this calculator does not model. The complete list of what is in and out of scope is on the methodology page.
Other states
- IowaFlat 3.8%, with narrow farm and ESOP gain deductions not modelled.
- IllinoisFlat 4.95% on everything. No preferential rate, no exclusion.
- MichiganFlat 4.25%, but the statute sets a trigger rather than a rate.
See the full 2026 capital gains guide for the federal rules that apply wherever you live — the rate ladder, the net investment income tax, the home-sale exclusion and depreciation recapture — plus every state we currently cover.