Minnesota estate tax rates run from 13% to 16% on the portion of an estate that exceeds the state’s $3 million exclusion. The rates are progressive, but the brackets are wide: most taxable estates stay entirely within the 13% bracket, and the top 16% rate only applies to taxable value above $10.1 million. Minnesota is one of a shrinking number of states with its own estate tax, so the state bill is a separate calculation from anything owed to the IRS.
The Minnesota Estate Tax Brackets
Under Minnesota Statutes Section 291.03, the following rates apply to the Minnesota taxable estate for deaths in 2018 and later:1Minnesota Office of the Revisor of Statutes. Minnesota Code 291.03 – Rates
- $0 to $7,100,000: 13% of the taxable estate
- $7,100,001 to $8,100,000: $923,000 plus 13.6% of the amount over $7,100,000
- $8,100,001 to $9,100,000: $1,059,000 plus 14.4% of the amount over $8,100,000
- $9,100,001 to $10,100,000: $1,203,000 plus 15.2% of the amount over $9,100,000
- Over $10,100,000: $1,355,000 plus 16% of the amount over $10,100,000
These rates apply to the “Minnesota taxable estate,” meaning the value left after subtracting the $3 million exclusion and any other qualifying deductions. The first bracket covers $7.1 million of taxable value, which corresponds to a total estate of roughly $10.1 million before the exclusion. In practical terms, that means almost every Minnesota estate that owes tax owes it at the flat 13% rate.
If the estate includes property in other states, the tax is prorated. The statute multiplies the calculated tax by a fraction: Minnesota property divided by the total federal gross estate. For a resident whose assets are all in Minnesota, that fraction is one and nothing changes.
How the $3 Million Exclusion Works
The exclusion is a subtraction, not a cliff. The calculation starts with the federal taxable estate (which already reflects deductions for debts, funeral costs, and charitable bequests), then subtracts $3 million. Whatever remains runs through the rate table.2Minnesota Office of the Revisor of Statutes. Minnesota Code 291.016 – Minnesota Taxable Estate
Two quick examples. A Minnesota resident dies with a federal taxable estate of $4 million. Subtract the $3 million exclusion and the Minnesota taxable estate is $1 million. At 13%, the tax is about $130,000. Change the federal taxable estate to $6 million and the Minnesota taxable estate becomes $3 million, producing roughly $390,000 in tax. The tax climbs quickly because every dollar above the exclusion is taxed starting at 13%, with no gradual phase-in.
When You Have to File a Return
The filing threshold is separate from the tax threshold, and it catches more estates than people expect. A Minnesota return is required if the federal gross estate (before any deductions) plus certain adjusted taxable gifts made within three years of death exceeds $3 million.3Minnesota Department of Revenue. 2025 Estate Tax Form M706 Instructions An estate can be required to file even when no tax ends up owed, because deductions for debts, mortgages, and expenses may bring the taxable estate back below the exclusion.
Deadline to File and Pay
Form M706, the Minnesota Estate Tax Return, is due nine months after the date of death. Any tax owed is due by the same date.4Minnesota Department of Revenue. Estate Tax Due Dates and Extensions The executor or personal representative files; if there is no probate, anyone who received assets included in the federal gross estate shares the filing responsibility.5Minnesota Department of Revenue. 2024 Estate Tax Form M706 Instructions
Minnesota grants an automatic six-month extension to file under Section 289A.19, subdivision 4, or the time allowed under the federal extension rules, whichever is longer.6Minnesota Office of the Revisor of Statutes. Minnesota Code 289A – Administration and Compliance The extension covers filing only. Payment is still due at the nine-month mark, and late payments trigger penalties and interest from the original due date. Treating the filing extension as a payment extension is a common and expensive mistake.
Married Couples and the Portability Gap
Assets passing to a surviving spouse are generally not taxed at the first death because Minnesota’s calculation starts with the federal taxable estate, which already reflects the unlimited federal marital deduction.2Minnesota Office of the Revisor of Statutes. Minnesota Code 291.016 – Minnesota Taxable Estate The tax question moves to the surviving spouse’s estate.
That is where Minnesota differs sharply from federal law. At the federal level, a surviving spouse can claim the deceased spouse’s unused exemption through a portability election. Minnesota does not offer portability. Each spouse gets one $3 million exclusion, and if the first spouse’s exclusion isn’t used, it’s gone. A couple with $6 million in combined assets who leave everything to each other outright could end up with a surviving-spouse estate of $6 million, a $3 million exclusion, and roughly $390,000 in Minnesota tax that planning could have avoided.
Credit shelter trusts (also called bypass or AB trusts) are the common fix. The first spouse’s estate funds a trust up to the exclusion amount, keeping those assets out of the survivor’s taxable estate while still providing the survivor with income or access during their lifetime.
The Deduction for Farm and Small Business Property
Estates holding qualifying farm or small business property can claim an additional subtraction of up to $2 million, effectively raising the tax-free threshold to $5 million.7Minnesota Department of Revenue. Qualified Small Business and Farm Property Deduction
The requirements are strict. For small business property under Section 291.03, subdivision 9, the decedent or spouse must have materially participated in the business during the last taxable year before death; the business cannot have been a passive investment; gross annual sales must have been $10 million or less; and the decedent must have owned the property continuously for at least three years before death. Publicly traded stock does not qualify. Farm property has parallel requirements under subdivision 10. In both cases, the property must continue to be used in the trade or business for three years after death, or the deduction can be clawed back.1Minnesota Office of the Revisor of Statutes. Minnesota Code 291.03 – Rates
Nonresidents Who Own Minnesota Property
Minnesota also taxes nonresidents who own property in the state, provided the total federal gross estate exceeds the $3 million filing threshold.3Minnesota Department of Revenue. 2025 Estate Tax Form M706 Instructions Only the Minnesota-situs property is taxed, but the rate is determined by the full estate value. A nonresident with a $500,000 Minnesota lake cabin and a $12 million total estate pays Minnesota tax on the cabin at the rate applicable to a $12 million estate. A credit under Section 291.031 may be available if another state taxes the same property.8Minnesota Office of the Revisor of Statutes. Minnesota Code 291.031 – Credit for Taxes Paid to Other States
How This Compares to the Federal Estate Tax
The 2026 federal estate tax exemption is $15 million per person under the One Big Beautiful Bill Act signed in July 2025.9Internal Revenue Service. What’s New — Estate and Gift Tax A Minnesota estate worth $10 million owes Minnesota tax but nothing to the IRS. Only estates over $15 million face both. For the vast majority of estates caught by Minnesota’s $3 million threshold, the federal estate tax is simply not in play.
Estates large enough to owe both get some relief. Under 26 U.S.C. § 2058, state estate tax actually paid is deductible against the federal taxable estate.10Office of the Law Revision Counsel. 26 USC 2058 – State Death Taxes This is a deduction, not a credit, so it offsets the federal bill at the estate’s marginal federal rate rather than dollar for dollar.