As employers enter a new year, it is important to be aware of changes to labor & employment laws, inflationary minimum wage increases, and adjustments to individual tax brackets. Here is what small business owners need to know going into 2026:

Paid Family & Medical Leave – The MN Paid Family & Medical Leave program officially launched on January 1, 2026. Under PFML, employees can take paid, job-protected leave to care for themselves or a family member. As of January 1^st, individuals are now able to submit claims under the state-run PFML program, and employers were permitted to start deducting the employee share of the PFML payroll tax from wages. Small business owners can find more information about the PFML program here.

Under the PFML mandate, employees are entitled to certain job protections, which will be enforced by the Minnesota Department of Labor & Industry. Small business owners can find more information about the PFML job protections here.

New Minimum-Wage Rates – Effective January 1, 2026, Minnesota’s minimum-wage rate was adjusted for inflation and increased to $11.41 an hour for all employers in the state (currently $11.13/hour). The 90-day training wage for employees under age 20 also increased to $9.31 an hour (currently $9.08/hour). According to the Minnesota Department of Labor, these rates reflect a 2.5% increase. Small business owners can find more information on the minimum wage in Minnesota here.

Changes to Meal & Rest Break Laws – Changes to Minnesota’s meal and rest break laws took effect on January 1, 2026. Employers now must allow employees to take a break of at least 15 minutes in duration within each four consecutive hours worked. Employers must also allow employees to take a meal break of at least 30 minutes when working six or more consecutive hours. Small business owners can find more information, including a FAQ, here.

New Individual Income Tax Brackets – The MN Department of Revenue has adjusted the 2026 individual income tax brackets for tax year 2026. Minnesota individual income tax brackets are indexed to inflation, which aims to prevent taxpayers from paying a higher rate due solely to inflationary changes in income. These adjusted brackets apply to Tax Year 2026. Small business owners can find more information about the adjusted 2026 individual income tax brackets here.