Minnesota Hourly Paycheck and Payroll Calculator

Minnesota Hourly Paycheck Calculator

Does the thought of Minnesota payroll taxes make you cringe? Don’t worry! We will get you up and running ASAP with a quick rundown of payroll taxes in Minnesota. But if you’d rather have someone else take the lead, no problem. Experienced accountants and payroll software can tackle the most nerve-wracking payroll challenges with ease.

Minnesota payroll taxes

Here’s what you need to know about withholding payroll taxes in Minnesota.

• Minnesota payroll taxes start with employees filling out Form W-4MN. This information helps you determine how much you should withhold.

• If an employee does not complete this form, you will need to withhold tax as though no exemptions were claimed.

• Employees need to update Form W-4MN in case of life events (such as marriage, divorce, birth or adoption of a child, etc.) which may impact their taxes.

• The personal income tax rate in Minnesota is 5.35%–9.85%.

• Minnesota has reciprocity with the following states: Michigan and North Dakota.

Additional Minnesota forms

In addition to Form W-4MN mentioned above, Minnesota employers also need to file the following forms:

1. Minnesota Quarterly Contributions (MN MDES-1)*

2. Minnesota Quarterly Withholding Worksheet for quarterly filers*

3. Minnesota Quarterly Withholding Worksheet for annual filers*

4. Minnesota Income Tax Withheld Coupon*

5. Wage and Tax Statement (State W2)

6. MN New Hire Report

Minnesota unemployment tax rate

Minnesota requires most employers to pay unemployment insurance tax to help compensate workers who are out of work through no fault of their own.

• Employers pay Minnesota unemployment tax on the first $40,000 of an employee’s wages.

• New employers pay at a rate of 1%.

• Experienced employers pay at a rate of 0.1–9%.

• Unemployment tax in Minnesota should be paid quarterly to the Minnesota Unemployment Insurance Account.

Paying Minnesota taxes

Here’s what you need to know about paying Minnesota taxes:

• How often employers pay depends on the amount of tax you withhold in a year. Minnesota’s payment frequencies are semi-weekly or monthly

Minnesota minimum wage

In 2023, the minimum wage in Minnesota is $12.25 per hour for businesses with 100 or more employees, and $11.00 per hour for businesses with 100 or fewer employees.

Minnesota overtime pay

Because Minnesota doesn’t have any state law governing overtime pay, the federal rules under the Fair Labor Standards Act apply. Generally speaking, hourly employees are to be paid time-and-a-half for all hours worked over 40 hours in a week.

Workers’ Compensation

Requirements to obtain Workers' Compensation vary by state. This table outlines some of these requirements. If you determine that your company is required to purchase Workers' Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers' comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.

New hires

Employers in Minnesota need to report new employees.

• New hires must be reported to the Minnesota New Hire Reporting Center.

• New hires must be reported within 20 days of their first day of work.

Payroll stubs

You must provide a pay stub to every employee that includes:

1. Company’s legal name and address

2. Employee’s name and last four digits of their Social Security number

3. Pay period beginning and end dates

4. Total hours worked

5. Rate of pay

6. Gross wages

7. The amount and reason for any deduction

Final paychecks

Employers must pay final wages to employees within a certain timeframe, depending on the circumstances for leaving.

• If a worker voluntarily resigns, you're required to pay them on the company's next regular payday.

• If an employee is fired, you're required to pay them on their last day.

• If an employee is laid off, you're required to pay them within 24 hours of their last day.

Time off

Minnesota law requires employers to provide the following types of time off to employees.

• Voting leave: In some circumstances, employers are obligated to provide time necessary to allow employees to vote.

• Sick leave

• Domestic violence leave, per the earned sick and safe time ordinance

Federal payroll taxes

In addition to Minnesota-specific taxes, both you and your employees will pay a variety of federal payroll taxes. Check out the breakdown below.

Federal income tax

Unless they are exempt, your employees will pay federal income tax.

• You must withhold federal income tax from employees’ pay, unless they are exempt.

• Each employee’s Form W-4 will differ based on their filing status and dependents, among other details—so the amount of income tax to be withheld will vary.

• Form W-4 does not need to be sent to the IRS, but should be kept for your records.

Federal income tax

Unless they are exempt, your employees will pay federal income tax.

• You must withhold federal income tax from employees’ pay, unless they are exempt.

• Each employee’s Form W-4 will differ based on their filing status and dependents, among other details—so the amount of income tax to be withheld will vary.

• Form W-4 does not need to be sent to the IRS, but should be kept for your records.

FICA

Both you and your employees will pay Federal Insurance Contributions Act, or FICA tax.

• FICA is made up of the Medicare tax and the Social Security tax.

• In 2023, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $2,600.

• The Medicare tax requires employers and employees to each contribute 1.45% of all wages.

• See the IRS webpage for details, like maximum thresholds.

FUTA

Like the state, the federal government also has an unemployment tax, called FUTA, which is paid by employers.

• FUTA is an annual tax an employer pays on the first $7,000 of each employee’s wages.

• The FUTA rate for 2023 is 6.0%, but many employers are able to pay less, for instance, up to 5.4% each year due to tax credits.

• Most employers will pay this tax annually with Form 940. But larger employers with more than $500 in tax due will have to pay quarterly.

Additional Medicare tax

The Additional Medicare tax is paid by employees. Here’s what you should know:

• For employees who earn over $200,000 per year, 0.9% of earnings will need to be withheld for the Additional Medicare tax.

• Whether or not your employee owes this tax may depend on their filing status.

Paying federal taxes

How often you’ll pay federal payroll taxes depends on how much you owe.

• Semi-weekly or monthly payments are required for federal withholding, Additional Medicare, and FICA taxes. And every quarter, a summary payroll tax return is due on Form 941, Employer’s Quarterly Federal Tax Return.

• Quarterly or annual payments are required for federal unemployment tax. Most employers will pay annually, but quarterly payments are necessary if you owe more than $500. Each time you make a payment, you’ll need to file a payroll tax return on Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

We’re here to help

If you don’t love manual number crunching and payroll taxes sound overwhelming to you, take advantage of Gusto’s full-service payroll options or use an experienced accountant to help you with the process.