How Your Minnesota Paycheck is Calculated
Calculating payroll withholdings in Minnesota requires balancing multiple state progressive tiers, state standard deductions, and a brand new payroll tax implemented for 2026. Minnesota is famous for having some of the most progressive tax brackets in the United States, meaning high-income earners are taxed at progressively higher rates to support public services.
Effective for the tax year 2026, Minnesota individual income tax brackets standard deductions have been adjusted by 2.369% to prevent "bracket creep" caused by inflation. More importantly, employees will notice brand new rows on their paystubs related to **Minnesota Paid Family and Medical Leave**.
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Understanding 2026 MN Paid Family & Medical Leave
Starting January 1, 2026, Minnesota established a state-mandated Paid Family and Medical Leave program. This is funded by a payroll premium split between employers and employees:
- MN PFL / EE (Family Leave): Taxed at 0.135% directly on employee gross wages.
- MN PML / EE (Medical Leave): Taxed at 0.305% directly on employee gross wages.
- Combined Impact: A total of 0.44% is withheld directly from employee wages to cover the state leave pool.
- Wage Limit: Similar to Social Security, this deduction caps once gross wages exceed the Social Security wage limit ($184,500 in 2026).
Minnesota Standard Deductions and Exemptions
Unlike states that mirror the Federal standard deduction, Minnesota uses its own distinct standard deduction and allowance values:
Standard Deduction Limitations (2026):
Single, Married Filing Separate: $15,300
Head of Household: $23,000
Married Filing Jointly: $30,600
Personal Allowances & Exemption:
Each exemption provides a **$5,300 deduction** against Minnesota state taxable income. This deduction helps lower the progressive tax footprint for households with children or dependents.