The History of Inheritance Tax in Minnesota
Discover how inheritance tax in Minnesota has evolved over time and why the state eventually eliminated it in favor of estate tax.
At one point in time, inheritance tax in Minnesota was a key part of the state’s approach to taxing the transfer of wealth. But today, the state no longer imposes one. So what changed and why did it change? Here’s an overview for residents and property owners in the state.
Inheritance tax is different from estate tax. The estate pays estate tax before distributing assets, while a recipient pays inheritance tax after they inherit. Historically, Minnesota used both.
Minnesota’s inheritance tax dated back to the early 20th century. The state introduced it as a way to generate revenue by taxing wealth transfers, especially large ones. The tax applied to people who received property or assets from someone who had passed, with rates based on the value of the inheritance and the relationship to the deceased.
Close family members, like children or spouses, often paid lower rates or were fully exempt. More distant relatives or unrelated heirs paid higher rates.
When Did Minnesota Repeal Its Inheritance Tax?
Minnesota officially repealed its inheritance tax in 1985. The move aligned with a broader national trend. By the 1980s, many states were shifting away from inheritance taxes because they were complex, unfair, or difficult to administer.
It‘s no longer in effect. But the state does still have an estate tax, and it applies to estates worth over $3 million as of 2025. That means that while heirs don’t pay tax on what they receive, large estates may still pay tax before distributions take place.
Knowing the difference between inheritance tax and estate tax is key for estate planning. While inheritance tax is a thing of the past in the state, the estate tax is still very real—and worth preparing for.
(Read More: Learn about revocable trusts in Minnesota versus Nevada.)