With a diverse economy and excellent quality of life, Minnesota is a great state to be an entrepreneur. In fact, the Land of 10,000 Lakes ranks sixth in the nation for business, according to a 2024 CNBC study. Even more impressive, Minnesota scored the number one spot as the best state for independent retailers in a 2024 B2B Reviews report. 

Minnesota has a slew of resources for business owners, including a handful of helpful business tax incentive programs. Check out the list below with tax credits and exemptions for Minnesota business owners.

Business tax incentives in Minnesota

Angel Tax Credit (funding not available for 2025)

The Angel Tax Credit gives eligible investors and investment funds a 25% tax credit for investing in high-tech startups in Minnesota. The maximum credit amount is $125,000. The Minnesota Department of Deployment and Economic Development allocated $5 million in credits for 2024, half of which they reserved for women-owned and minority-owned businesses, as well as businesses located in Greater Minnesota. 

There’s currently no funding available for the tax credit in 2025. If you already qualified for the tax credit, check out the details here. 

Film Production Tax Credit

The Minnesota Film Production Tax Credit is available to production companies that set their projects—and incur expenses—in Minnesota. The credit amount is 25%. To qualify for the tax credit, production companies have to meet the below criteria: 

  • Spend a minimum of $1 million in eligible expenses over a 12-month period in Minnesota
  • Employ Minnesota residents when possible
  • Demonstrate proof that the project is 75% funded
  • Agree to promote Minnesota by displaying a static or animated logo that promotes Minnesota in the end credits
  • Remain in good business standing with the Secretary of State of Minnesota
  • Obtain and submit a tax clearance statement from the Minnesota Department of Revenue

Eligible production projects include feature films, TV or internet pilots, programs and series, documentaries, music videos, and commercials. Learn which expenses are eligible for the credit and how to apply here. 

Minnesota Research and Development Tax Credit Program

Minnesota’s Research and Development (R&D) Tax Credit Program is available to businesses that engage in qualified R&D activities within Minnesota. 

Those include any activities that meet the four federal R&D requirements: 

  1. Technological in nature; 
  2. used to improve the functionality, performance, reliability, or quality of a new or existing business component;
  3. used to gather information that will help eliminate uncertainty around the development of a product;
  4. And involve a process of experimentation, such as testing or modeling. 

The credit amount is equal to 10% of qualifying R&D expenses up to $2 million and 4% for expenses above that. Qualifying expenses include R&D-related wages, supplies and research contracted outside your business, and contributions to qualified nonprofit organizations that give grants to early-stage technology businesses in Minnesota. 

Learn more about the state’s R&D program here, or brush up on the federal R&D program. 

Border-Cities Enterprise Zone Program

The Border-Cities Enterprise Zone Program gives Minnesota businesses in certain Enterprise Zones a range of tax advantages. Businesses that commit to investment, development, and job creation or retention in the following areas might be eligible: Breckenridge, Dilworth, East Grand Forks, Moorhead, Ortonville, and the Development Zone of Taylors Falls.

The tax benefits include: 

  • Property tax credits
  • Debt financing credit on new construction
  • Sales tax credit on construction equipment and materials
  • New or existing employee credits

Learn how to apply for the program here.

SEED Capital Investment Program

The SEED Capital Investment Program gives investors tax incentives for investing in certain businesses located in the Minnesota border cities of Breckenridge, Dilworth, East Grand Forks, Moorhead, and Ortonville.

Under the program, investors can get a 45% tax credit on their investment, up to $112,500 per year. To be eligible for the program, an investor must invest in a company that meets the following requirements: 

  • Adds value to a product, process, or service
  • Increases revenue to a Minnesota business through sales to customers outside Minnesota or through sales to new customers who previously could not purchase the product or service from a Minnesota business
  • Have its principal office and a majority of its business activity, or a significant operation, in a border city
  • Have Minnesota residents as a majority of its employees at its principal office
  • Rely on innovation, research, or the development of new products and processes for its growth and profitability
  • Use the investment for plant, equipment, research and development, marketing and sales activity, or working capital

Find out how to apply to the program here. 

Minnesota Job Creation Fund

The Minnesota Job Creation Fund gives financial incentives to businesses that meet certain job creation and capital investment criteria. To qualify for the program, a business has to:

  • Be engaged in one of these business activities: manufacturing, warehouse, distribution, information technology, finance, insurance, or professional or technical services
  • Obtain local government support for their project via council resolution
  • Invest at least $500,000 ($250,000 for Targeted Populations) in real property improvements within one year of becoming a designated Job Creation Fund business
  • Create at least 10 (five for Targeted Populations) new permanent full-time equivalent jobs within two years of becoming a Job Creation Fund business while maintaining existing employment numbers
  • Pay wages and benefits that are at least 110% of federal poverty guidelines (for 2024, that number was $15.87)
  • Have other location options outside of Minnesota
  • Cause no undue harm to Minnesota business competitors
  • Certify that the project would not occur without Job Creation Fund assistance

Businesses that meet the requirements can receive anywhere from $1,000 to $5,000 per year per job created, depending on what the job pays. Businesses can also get up to a 7.5% rebate for real property improvements, depending on where they’re located.  

Get more information on the job creation program here. 

Related: See the average salary for someone living in Minneapolis. 

Business tax exemptions in Minnesota

Greater Minnesota Job Expansion Program

The Greater Minnesota Job Expansion Program is a tax benefit program for businesses in the Greater Minnesota area that commit to creating and retaining jobs. 

If businesses meet certain job creation requirements, they can get a sales tax refund on purchases of tangible personal property and taxable services, as well as a sales tax refund on purchases of construction materials and supplies for business improvement. The maximum sales tax refund is $2 million per year and $10 million total over the seven-year certification period. 

To qualify, a business needs to meet the following criteria: 

  • Have sales and customers primarily outside Minnesota, not at local markets
  • Hire at least two full-time equivalent (FTE) employees or 10% of the current number of employees, whichever is greater, within three years
  • Pay all employees compensation, which includes wages and benefits not mandated by law, that’s at least 120% of the federal poverty guidelines for a family of four. For 2024, that amount is at least $37,440 per year or $18.00 per hour
  • Be in operation for at least one year within a city—or county for agricultural processing facilities—in Greater Minnesota, which generally excludes the seven-county metropolitan area (Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington)
  • Meet prevailing wage guidelines at the business facility if a construction or improvement project is undertaken and if the business is awarded a sales tax refund
  • Not be primarily engaged in the following industries or activities:
    • Retail sales to purchasers physically present at the business’s facility
    • Public utility
    • Lobbying
    • Gambling
    • Entertainment
    • Professional sports
    • Political consulting
    • Leisure
    • Hospitality
    • Professional services provided by attorneys, accountants, business consultants, physicians, or healthcare consultants

Learn more about the program and apply here. 

Hiring? Here are 11 vital tips for hiring employees in Minnesota.

Data Center Sales Tax Incentives

The Data Center Sales Tax Incentives are available to companies that build data or network operation centers in Minnesota that meet certain criteria. If companies build data or network operation centers of at least 25,000 square feet and invest at least $30 million within 48 months, they can receive sales tax exemption for up to 20 years on the following: 

  • Computers and servers
  • Cooling and energy equipment
  • Energy use
  • Software

They also won’t have to pay tax on personal property, utilities, inventories, internet access, information services, and custom-created software. Apply for the data center tax exemption here. 

Minnesota city and county tax credits

Tax incentives aren’t just offered at the state level—many counties and cities in Minnesota have their own business tax programs, too. Use this list to search your city’s website for business tax credits and exemptions. 

More business financing in Minnesota

Growing a business—or building an operation from scratch—takes time, strategy, and serious capital. Fortunately, Minnesota has a long list of financing resources for established business owners and aspiring entrepreneurs alike. 

For more details, read through Gusto’s guide to business grants and loans in the Land of 10,000 Lakes.

And check out these blog posts for tips on being a business owner in Minnesota: 

Paige Smith Paige is a content marketing writer specializing in business, finance, and tech. She regularly writes for a number of B2B industry leaders, including fintech companies and small business lenders. See more of her work here:

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