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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Minnesota VS COUNTRY B Tennessee

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

Daniel · CountryTaxCalc Updated August 2026 Income tax verified October 2026 Tax Comparison 2026
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OVERVIEW
Minnesota and Tennessee sit at opposite ends of the state income tax spectrum. Minnesota uses a 4-bracket progressive income tax system topping out at 9.85% — among the highest state rates in the country, applying to single filers with taxable income above $203,150, per the Minnesota Department of Revenue. Minnesota also levies a state estate tax on estates above $3 million, at rates of 13%–16%, one of the lowest exemption thresholds in the nation. Tennessee charges 0% state income tax — a constitutional prohibition on taxing wages since a 2014 amendment, with the state's old Hall Tax on interest and dividend income fully repealed in 2021 — funded instead by one of the highest combined sales tax rates in the country, averaging about 9.61%, versus Minnesota's roughly 8.14% average. At $100,000 in taxable income, Minnesota's brackets produce about $5,277 in state income tax; Tennessee charges $0 — a savings of roughly $5,277/year, or over $50,000 across a decade. High earners save far more: at $500,000, Minnesota's tax is about $43,254 versus zero in Tennessee.
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
9.85%
Top Rate (Over $203,150)

One of the highest top marginal income tax rates in the Midwest, plus a state estate tax above $3 million

🎸
COUNTRY B
Tennessee
TAX RATE
0%
No Income Tax

Constitutionally banned on wages since 2014; the Hall Tax on investment income was fully repealed in 2021

TYPICAL ANNUAL DIFFERENCE
Moving from Tennessee → Minnesota at $100,000
$5,277

That's $440/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
🎸 TN TAX
SAVINGS
10-YEAR
$50,000
$1,877 (3.8% eff.)
$0 (0%)
Tennessee saves $1,877
$18,770
$100,000
$5,277 (5.3% eff.)
$0 (0%)
Tennessee saves $5,277
$52,770
$200,000
$12,867 (6.4% eff.)
$0 (0%)
Tennessee saves $12,867
$128,670
$500,000
$43,254 (8.7% eff.)
$0 (0%)
Tennessee saves $43,254
$432,540
💡

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🛶

Minnesota Pros & Cons

+ PROS
  • Twin Cities job market: Minneapolis-St. Paul hosts numerous Fortune 500 headquarters across healthcare, retail, and finance
  • Strong public schools and healthcare: Minnesota consistently ranks among the top states for K-12 education and healthcare outcomes
  • Standard deduction: Minnesota's $15,300 single standard deduction (reduced for AGI above $244,400) applies before the graduated brackets; there is no personal exemption for the taxpayer
  • No local income tax: Minnesota cities and counties cannot levy their own income tax on top of the state rate
  • Partial Social Security exemption: Social Security income is fully exempt below $86,410 AGI (single) / $110,780 (MFJ)
− CONS
  • Highest income tax burden in the Midwest: The 9.85% top rate applies above $203,150 (single) — far above Wisconsin's 7.65% top rate and Iowa's flat 3.8%
  • State estate tax with a low threshold: Estates above just $3 million face rates of 13%-16%, catching many families who wouldn't owe federal estate tax at all
  • Cold winters: Minnesota's climate is a genuine trade-off for residents who prioritize warm weather
  • Social Security taxed above certain thresholds: Higher earners still pay Minnesota tax on Social Security benefits, unlike Tennessee where retirement income isn't taxed at all
  • Combined sales tax above the national average: Minnesota's ~8.14% average combined rate (with the Twin Cities metro reaching close to 7.875% locally) adds to the overall burden
🎸

Tennessee Pros & Cons

+ PROS
  • Zero state income tax: Constitutionally banned on wages since a 2014 amendment, and the Hall Tax on investment income was fully repealed in 2021 — Tennessee doesn't tax any form of individual income
  • Nashville's booming economy: Healthcare, music, tourism, and a growing tech and finance sector have driven strong population and job growth
  • No state estate or inheritance tax: A major advantage over Minnesota's $3 million estate tax threshold
  • Lower cost of living: Housing and everyday costs in most Tennessee metros remain below the national average
  • Central US location with strong logistics access: Memphis and Nashville are both major transportation and distribution hubs
− CONS
  • One of the highest sales tax burdens in the country: Tennessee's average combined rate of about 9.61% is among the top five nationally, and groceries are taxed (at a reduced rate)
  • No state income tax means less revenue for public services: Tennessee ranks lower than Minnesota on several education and healthcare quality metrics
  • Hot, humid summers: A different climate trade-off than Minnesota's cold winters
  • Property tax varies significantly by county: While the state average (~0.52%) is low, some fast-growing counties near Nashville have seen rising assessments
  • Tornado risk in parts of the state: Middle and West Tennessee see regular severe weather in spring
FAQ

Frequently Asked Questions

How much will I save moving from Minnesota to Tennessee?

At $100,000 in taxable income, Minnesota's graduated brackets produce about $5,277 in state income tax versus $0 in Tennessee — a savings of roughly $5,277/year, or $440/month. At $500,000, the gap widens dramatically to about $43,254/year, since Minnesota's 9.85% top rate is among the highest in the country. Add in Minnesota's estate tax exposure above $3 million, and total lifetime tax savings from a move can be substantial for higher-net-worth households.

What are Minnesota's income tax brackets for 2026?

Minnesota has 4 progressive brackets for single filers in 2026: 5.35% on the first $33,310 of taxable income; 6.80% from $33,310 to $109,430; 7.85% from $109,430 to $203,150; and 9.85% above $203,150, per the Minnesota Department of Revenue. Minnesota also allows a $15,300 standard deduction (reduced for AGI above $244,400) before these rates apply; there is no personal exemption for the taxpayer.

How do property taxes compare between Minnesota and Tennessee?

Minnesota's average effective property tax rate is about 1.00% of home value, compared to roughly 0.52% in Tennessee — less than half of Minnesota's rate. On a $400,000 home, that's a difference of about $1,920/year in Tennessee's favor. This is a smaller gap than in comparisons involving states like New Jersey or Connecticut, but still meaningful for homeowners.

Does Tennessee really have no income tax at all?

Correct — Tennessee added a constitutional amendment in 2014 permanently banning any tax on wages and salaries, and repealed its remaining Hall Tax on interest and dividend income entirely by 2021. Tennessee is one of only nine states with no individual income tax on any type of income, funded instead by one of the highest sales tax burdens in the country (averaging about 9.61% combined).

What is Minnesota's estate tax and does it matter for this comparison?

Minnesota levies a state estate tax on estates above $3 million, at rates ranging from 13% to 16% — one of the lowest exemption thresholds among the roughly dozen states with an estate tax. This is separate from the federal estate tax exemption of $15 million for 2026, meaning many Minnesota estates that owe no federal tax still owe Minnesota tax. Tennessee has no state estate or inheritance tax at all, which can matter significantly for retirees and high-net-worth households planning a move.

Should I move from Minnesota to Tennessee to save on taxes?

High earners — especially those above $200,000, retirees with significant investment income, and families with estates approaching $3 million — see the largest savings from a move to Tennessee. Minnesota's strong public schools, healthcare system, and Twin Cities job market are real offsetting factors for families who value those services. But for income-focused relocators, particularly business owners and investors, Tennessee's combination of 0% income tax, no estate tax, and Nashville's growing economy makes it one of the more compelling moves available to a Minnesota resident.
From the brief
NL27%new 2027 rate, down from 30%
DK65.4kkr/mo threshold, cut from 78k
MT1940snon-dom regime unchanged since
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