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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Minnesota VS COUNTRY B Indiana

Side-by-side analysis of income tax, effective rates, and take-home pay for Minnesota and Indiana in 2026.

Daniel · CountryTaxCalc Updated June 2026 Tax Comparison 2026
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OVERVIEW
Minnesota and Indiana showcase two very different philosophies on state income tax. Minnesota's progressive system reaches 9.85% (3rd highest nationally), while Indiana has a flat 2.95% rate that is among the lowest for states with an income tax. On $100,000 income, Minnesota residents pay approximately $8,028 in state income tax versus Indiana's $2,700 — a $5,328 annual difference. Indiana also has lower property taxes than Minnesota (IN 0.85% vs MN 1.12%). The total tax advantage for Indiana is substantial. Minnesota offsets this with superior public services, world-class healthcare (Mayo Clinic), and a larger metro economy.
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

🌲
COUNTRY A
Minnesota
TAX RATE
5.35-9.85%
Progressive
9.85% top rate — 3rd-highest nationally
🏎️
COUNTRY B
Indiana
TAX RATE
2.95%
Flat
Flat 3.05% (phasing down to 2.9% by 2027)
TYPICAL ANNUAL DIFFERENCE
Moving from Indiana → Minnesota at $100,000
$5,328
That's $444/month back in your pocket
Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.
GROSS INCOME
🌲 MN TAX
🏎️ IN TAX
SAVINGS
10-YEAR
$50,000
$2,757
$1,475
$1,282 (IN saves)
$12,820
$75,000
$4,799
$2,213
$2,586 (IN saves)
$25,860
$100,000
$8,028
$2,700
$5,328 (IN saves)
$53,280
$200,000
$15,498
$5,900
$9,598 (IN saves)
$95,980
$500,000
$44,498
$14,750
$29,748 (IN saves)
$297,480
💡

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🌲

Minnesota Pros & Cons

+ PROS
  • Top-ranked schools: Minnesota consistently #1-5 nationally for K-12 education
  • Major corporate hub: 19 Fortune 500 HQs in Twin Cities (Target, UnitedHealth, 3M, Best Buy)
  • Lower property tax than Indiana: MN 1.12% vs IN 0.85% — Indiana actually slightly lower
  • World-class healthcare: Mayo Clinic, M Health Fairview, nationally ranked hospitals
  • Strong economy: Minneapolis-St. Paul GDP larger and more diversified than Indianapolis
− CONS
  • Very high income tax: $8,028 on $100K vs IN $2,700 — costs $5,328 more/year
  • 9.85% top rate: Hits single filers at $183K+ — 3rd highest nationally
  • Taxes Social Security: Partial exemption only vs Indiana's no SS tax
  • Extreme winters: Minneapolis averages -9°F January wind chill
  • High overall tax burden: One of top-10 highest total tax burden states
🏎️

Indiana Pros & Cons

+ PROS
  • Very low flat income tax: 2.95% flat saves $5,328/year vs Minnesota on $100K
  • Lower property tax: IN 0.85% effective rate — saves $1,080/year vs MN on $400K home
  • No Social Security tax: Indiana fully exempts SS from state income tax
  • Lower cost of living: Indianapolis 25-30% cheaper than Minneapolis overall
  • Affordable housing: Indianapolis median $310K vs Minneapolis $400K+
− CONS
  • Smaller metro economy: Indianapolis GDP significantly smaller than Twin Cities
  • Fewer Fortune 500 HQs: Minneapolis area has far more major corporate employers
  • Weaker public services: Indiana school rankings lower than Minnesota nationally
  • Limited geographic variety: Flat terrain without Minnesota's lakes and forests
  • County income taxes: Indiana counties add 0.5-3.38% local income tax on top of state rate
FAQ

Frequently Asked Questions

How does Indiana's county income tax affect the Minnesota comparison?

Indiana levies county income taxes on top of the state 2.95% rate. Each of Indiana's 92 counties has its own rate, ranging from 0.5% to 3.38%. For example, Marion County (Indianapolis) charges 2.02% county tax, making the combined rate 4.97% for Indianapolis residents — still well below Minnesota's 5.35-9.85% even combined. Delaware County is highest at 3.38% state+county combined 6.33%. Most Indiana residents pay effective combined rates of 4-6%, still competitive with Minnesota's lower brackets.

Is Minnesota's higher tax worth it for the services?

Minnesota's schools are consistently ranked #1-5 nationally — significantly above Indiana (ranked #20-25). For families with children in public schools, this can represent real value. Mayo Clinic (Rochester) is world-class and accessible throughout Minnesota. Public transit, parks, and infrastructure are notably better. However, the $5,328/year income tax premium on $100K income ($53,280 over 10 years) funds these services. Families who heavily use public education during 13 school years may find the trade-off worthwhile; high earners without children typically do not.

Minnesota vs Indiana: which is better for retirees?

Indiana is significantly better for retirees on tax grounds. Indiana exempts Social Security income fully from state tax and has a flat 2.95% rate vs Minnesota taxing Social Security (partial exemption) and applying progressive rates up to 9.85%. A Minnesota retiree with $80,000 in income (mix of SS, pension, withdrawals) might pay $4,000-5,000 in state income tax vs under $2,000 in Indiana. Indiana's lower property taxes (0.85% vs MN 1.12%) add further savings. Minnesota wins on healthcare access (Mayo Clinic) and summer recreation.

Minneapolis vs Indianapolis: which city is better for professionals?

Minneapolis-St. Paul has a significantly larger corporate economy with 19 Fortune 500 headquarters, offering more senior-level career opportunities. Indianapolis is growing rapidly in tech (Salesforce, Eli Lilly, Cummins) and logistics but is a smaller market. Minneapolis salaries in finance, healthcare, and tech are typically 15-25% higher than comparable Indianapolis roles. However, Minnesota's higher income taxes erode that salary advantage significantly — at $150K, Minnesota costs $7,000+ more in income tax than Indiana, wiping out a large portion of any salary premium.

What is Indiana's income tax rate trajectory?

Indiana has been on a deliberate path of income tax reduction. The rate was 3.23% in 2022, reduced to 3.15% in 2023, 3.05% in 2024-2025, and is scheduled to reach 2.9% by 2027. This makes Indiana's income tax trajectory strongly downward, contrasting with Minnesota's maintained high progressive rates. By 2027, Indiana's rate will be 6.95 percentage points below Minnesota's top rate — the largest such gap in the Midwest.
From the brief
CY0%dividends, 60-day rule
PT20%flat rate, tech workers
GB39%non-dom regime gone
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