Minnesota’s Tax System Scores Poorly

January 5, 2022

Minnesota continues to rank poorly: we’re 45th in the United States.

Minnesota’s Tax System Scores Poorly

In December, the independent, nonpartisan Tax Foundation published its State Business Tax Climate Index for 2022. The Tax Climate Index measures 120 taxes across five major tax areas ( state corporate, individual, sales, property and unemployment insurance). It may not be surprising to many small businesses that Minnesota continues to rank poorly: we’re 45th in the United States. This matches Minnesota’s ranking for 2021 and is in line with the state’s position for most of the last decade. The only states which rank worse for 2022 are notoriously high tax bastions: Maryland, Connecticut, California, New York, and New Jersey. Despite constant political rhetoric about whether businesses and certain individuals pay their “fair share,” Minnesota regularly ranks among the most progressive tax systems in the country. Our state consistently ranks among the highest in several significant tax rates: corporate (tied 3rd highest), top individual marginal rate (6th highest), state sales (6th highest). With a $7.7 billion budget surplus and over $1 billion in unspent federal relief funds, NFIB will work hard during Minnesota’s 2022 Legislative Session to reduce the tax burden on small businesses and make Minnesota a better place to do business.

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