If you live outside Minnesota but earn money from Minnesota sources, you must file a Minnesota nonresident tax return when your Minnesota-source gross income reaches the state’s filing threshold. For the 2025 tax year (filed in 2026), that threshold is $14,950, and every nonresident measures against the single-filer amount regardless of actual filing status.1Minnesota Department of Revenue. Who Must File an Income Tax Return You file Form M1 with Schedule M1NR, and Minnesota taxes only the portion of your income tied to the state.
Who Has to File
The filing rule comes from Minnesota Statutes § 289A.08, which requires a nonresident to file when gross income from Minnesota sources equals or exceeds the filing threshold for a single full-year resident.2Minnesota Office of the Revisor of Statutes. Minnesota Code 289A.08 – Returns; Filing Requirements The Department of Revenue updates the amount each year based on the state’s standard deduction. For 2025 returns it is $14,950.1Minnesota Department of Revenue. Who Must File an Income Tax Return
The threshold applies to your Minnesota-source gross income, not your worldwide income. Earn $200,000 overall with only $8,000 from Minnesota, and you fall below the line. Earn $15,000 that traces back to Minnesota, and you have to file even if your total income is modest.
What Counts as Minnesota-Source Income
Minnesota Statutes § 290.17 defines source income broadly.3Minnesota Office of the Revisor of Statutes. Minnesota Code 290.17 – Gross Income, Allocation to State The main categories nonresidents run into are:
- Wages, salaries, bonuses, tips, and professional service fees for work physically performed in Minnesota.
- Profits from a business operating in Minnesota or selling products within the state.4Minnesota House of Representatives. Income Taxation of Residents and Nonresidents
- Rents, royalties, and other earnings from tangible property located in Minnesota.
- Capital gains from selling Minnesota real estate.
- Gambling winnings from casinos, lotteries, or other gaming in the state.
Retirement income is off the table. Federal law (Public Law 104-95) prohibits states from taxing pension and retirement distributions of nonresidents, and Minnesota follows that rule.3Minnesota Office of the Revisor of Statutes. Minnesota Code 290.17 – Gross Income, Allocation to State
Remote Work
Where you sit when you do the work matters more than where your employer is headquartered. The Department of Revenue has stated that if you work in another state for a Minnesota-based business, that income is not Minnesota-source.5Minnesota Department of Revenue. Nonresidents The reverse also holds. If you normally work remotely from your home state but travel to Minnesota for meetings, training, or on-site work, the income earned on those days is taxable. Keep a log of days worked in each state.
Reciprocity for Michigan and North Dakota Residents
Minnesota has income tax reciprocity agreements with Michigan and North Dakota covering personal service income only, meaning wages, bonuses, tips, and commissions.6Minnesota Management and Budget. Form MWR – Reciprocity Exemption/Affidavit of Residency If you live in one of those states and commute to a Minnesota job, you pay tax on those wages to your home state instead of Minnesota.
To claim the exemption, give your employer a completed Form MWR by February 28 each year, or within 30 days of starting the job.7Minnesota Department of Revenue. Reciprocity – Employee Withholding You also need to return to your home state at least monthly, and you must file a new MWR every year. Without it, your employer withholds Minnesota tax regardless of where you live.8Minnesota Office of the Revisor of Statutes. Minnesota Code 290.92 – Collection of Tax at Source
Reciprocity does not cover business income, rental income, or capital gains. A North Dakota resident collecting rent from a Minnesota property still owes Minnesota tax and still files a nonresident return.
Wisconsin Residents
Wisconsin and Minnesota ended their reciprocity agreement on January 1, 2010.9Wisconsin Department of Revenue. Withholding and Tax Filing Information Related to Wisconsin-Minnesota Reciprocity Wisconsin residents working in Minnesota have Minnesota tax withheld, file a Minnesota nonresident return, and then claim a credit on their Wisconsin return for the tax paid to Minnesota.
How to File: Form M1 and Schedule M1NR
Nonresidents file Form M1, Minnesota’s standard individual return, with Schedule M1NR attached.10Minnesota Department of Revenue. 2025 Schedule M1NR, Nonresidents/Part-Year Residents Finish your federal Form 1040 first, because Schedule M1NR pulls figures directly from it.
Schedule M1NR has two columns. Column A holds your total income from all sources, matching your federal return. Column B holds only the Minnesota portion of each category: wages, interest, business income, capital gains, and so on. The form divides Column B by Column A to produce a ratio carried to five decimal places, then multiplies that ratio by the tax calculated on your total income. The result is the tax Minnesota collects.
This mechanic matters because it means your Minnesota income is taxed at the effective rate that fits your overall income. Minnesota’s graduated rates run from 5.35% up to 9.85% for the top bracket.11Minnesota Department of Revenue. Income Tax Rates and Brackets If your total income puts you in the 7.85% bracket, your Minnesota-source dollars get taxed at that level even when the Minnesota portion alone would fall in a lower bracket on its own.
Deadline and Extensions
Minnesota nonresident returns are due April 15, the same as the federal return. When that date lands on a weekend or holiday, the deadline moves to the next business day. Electronic filing through the Department of Revenue’s website or approved tax software is the fastest route and gives you immediate confirmation.
A federal extension automatically extends your Minnesota filing deadline, but an extension to file is not an extension to pay. Interest still runs on any unpaid tax after April 15.
Estimated Tax Payments
If you expect to owe $500 or more in Minnesota tax and don’t have enough withheld, you owe quarterly estimated payments.12Minnesota Office of the Revisor of Statutes. Minnesota Code 289A.25 – Estimated Tax The installment dates track the federal schedule: April 15, June 15, September 15, and January 15 of the following year. Each payment should cover roughly 25% of your expected annual tax. You avoid underpayment penalties by paying at least 90% of the current year’s tax or 100% of your prior year’s liability (110% if your adjusted gross income exceeded $150,000). This matters most for nonresidents with Minnesota rental income or business profits, since those earnings usually have no withholding at the source.
Penalties for Filing or Paying Late
Missing the filing deadline triggers a 5% late-filing penalty on the unpaid tax. Paying late adds a separate 6% penalty, plus an additional 5% if you file after the deadline without paying in full. Interest on unpaid balances runs at 7% for 2026 and accrues from the original due date.13Minnesota Department of Revenue. Penalties and Interest
The math compounds fast. A $3,000 tax bill left unaddressed can pick up $330 in penalties on top of interest. If you cannot pay in full by April 15, file anyway. The late-filing penalty ends once the return is in, and you can arrange a payment plan with the Department of Revenue for the balance.
Avoiding Being Taxed Twice
Filing in Minnesota does not mean paying tax on the same dollar twice. Most states offer a credit for tax paid to another state. You file your Minnesota return, pay Minnesota on your Minnesota-source income, then claim a credit on your home state return for what you paid to Minnesota. The credit typically equals the lesser of the Minnesota tax or what your home state would have charged on the same income. Michigan and North Dakota residents with only wage income skip this by using reciprocity. Everyone else files in both states, so keep copies of your Minnesota return and payment records for the credit claim.