A Quick Guide to the Minnesota Estate Tax
Understand the Minnesota estate tax to protect your heirs and secure your legacy. Learn about exemptions and more.
If you live in the North Star State or own property there, understanding the Minnesota estate tax is essential. Unlike the federal estate tax, which only applies to very large estates, Minnesota’s version kicks in at a much lower threshold and can affect middle- and upper-middle-class households.
Minnesota is one of only a few states that still imposes its own estate tax (although no inheritance tax). The state introduced this tax in 1905, shortly after the federal estate tax was first enacted. Over the years, the rules have shifted significantly—especially in recent decades.
Originally, Minnesota followed a system known as a “pick-up tax,” collecting an amount equal to the state death tax credit allowed under federal law. But in 2001, the federal government phased out that credit. In response, Minnesota “decoupled” from the federal system in 2002 and began administering its own separate estate tax program.
Since then, the state legislature has periodically updated the exemption threshold. In 2014, for example, lawmakers passed a bill gradually increasing the exemption amount over several years. As of 2025, the exemption sits at $3 million, far lower than the federal exemption of over $13 million.
Key Facts About the Minnesota Estate Tax
The fundamentals:
- Exemption Amount: $3 million per individual estate (2025 figure).
- Tax Rates: Progressive, ranging from 13% to 16% depending on the estate’s value.
- No Portability: Unlike the federal system, Minnesota doesn’t allow spouses to combine exemptions. That means unused portions of one spouse’s exemption don’t transfer to the surviving spouse.
- Location Matters: Minnesota estate tax applies not only to residents but also to non-residents who own real estate or tangible property in the state.
Some of the property types that the Minnesota estate tax covers:
- Real estate located in Minnesota
- Bank and investment accounts
- Retirement accounts
- Business interests
- Tangible personal property, like vehicles or valuable collections
Frequently Asked Questions
Does Minnesota tax lifetime gifts?
Yes. Minnesota is one of the few states with a gift addback rule. If you give away property within three years before your passing, it may still count toward your taxable estate.
Can trusts help reduce Minnesota estate tax?
Yes. Many people use revocable or irrevocable trusts to structure their estates in a way that minimizes taxable exposure. For married couples, credit shelter trusts are especially common.
How is the estate valued for tax purposes?
Minnesota uses the fair market value of all assets on the date of passing. Certain deductions, like funeral expenses and debts, may reduce the taxable estate.
Is farmland the same?
Special rules apply to qualified small businesses and farms. If certain requirements are met, some estates can exclude up to $5 million in qualifying property under the qualified small business property or qualified farm property deduction.
Do I have to file an estate tax return?
If the gross estate exceeds $3 million, then yes—you may need to file a Minnesota estate tax return.
(Read More: Learn about revocable trusts in Minnesota versus Nevada.)