2025 Tax Year

Minnesota Side Hustle Tax Calculator

Calculate your Minnesota state tax (6.80%), federal tax, and self-employment tax on 1099 income.

MN6.80%

5.7 million residents

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2025 rates

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Last updated: January 2026 · Data from IRS Rev Proc 2024-40

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State

W-2 Income (from your day job)

Side Hustle Income *

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Minnesota side hustlers face one of the higher state tax burdens in the Midwest, with progressive rates ranging from 5.35% to 9.85%. For most freelancers earning between $31,000 and $100,000 in total income, the effective rate is around 6.80%. The Land of 10,000 Lakes has a robust gig economy centered around the Twin Cities metro area.

Minnesota Tax Guide

How Side Hustle Taxes Work in Minnesota

Minnesota uses a progressive income tax system with four brackets:

**Minnesota state tax rates (2025):** - 5.35% on income up to $31,690 (single) - 6.80% on $31,691 - $104,090 - 7.85% on $104,091 - $193,240 - 9.85% on income over $193,240

**No local income taxes:** - Minneapolis, St. Paul, and all Minnesota cities do not levy local income taxes - You only pay the state progressive rate

Minnesota's rates are among the highest in the Midwest, but the state offers quality public services and infrastructure in return.

Example

What Minnesota Side Hustlers Owe

Let's say you're a single filer in Minneapolis with a $55,000 W-2 job and $18,000 in side hustle income from freelance design, with $3,000 in business expenses.

**Your estimated taxes on the side hustle:** - Net self-employment income: $15,000 - Federal SE tax (15.3% of 92.35%): ~$2,122 - Federal income tax on side income: ~$3,300 (22% bracket) - Minnesota state tax (6.80%): ~$1,020 - **Total additional tax: ~$6,442**

Your effective rate on the side hustle is approximately 43%.

Important Dates

Minnesota Tax Deadlines 2025

Minnesota estimated tax deadlines: - **Q1**: April 15, 2025 - **Q2**: June 16, 2025 - **Q3**: September 15, 2025 - **Q4**: January 15, 2026

Use Minnesota Form M1 for annual returns and Form M14 for quarterly estimated payments.

Save Money

Common Deductions for Minnesota Freelancers

Minnesota freelancers should maximize deductions given the state's higher progressive tax rates. **Home office expenses**: Claim dedicated business space using simplified ($5/sq ft) or actual expense method. **Business mileage**: 67 cents/mile for 2025; important for those serving clients across the Twin Cities metro or Greater Minnesota. **Equipment and software**: Computers, cameras, tools, and business software; Minnesota generally follows federal Section 179 treatment. **Professional services**: Accounting, legal, bookkeeping, and tax preparation fees are fully deductible. **Health insurance premiums**: Self-employed individuals can deduct 100% of health, dental, and vision insurance. **Retirement contributions**: SEP-IRAs and Solo 401(k)s reduce both federal and Minnesota taxable income—especially valuable given MN's high rates. Every dollar contributed saves you at your federal rate plus 6.80% to 9.85%. **Marketing expenses**: Website costs, advertising, and promotional materials are deductible. Minnesota generally follows federal deduction rules for business expenses, so most Schedule C deductions automatically reduce your MN taxes. Maximize deductions to stay in a lower bracket if possible.

Common Questions

Minnesota Side Hustle Tax FAQ

What is Minnesota's tax rate on side hustle income?

Minnesota has progressive rates from 5.35% to 9.85%. Most side hustlers pay 6.80% on income between $31,691 and $104,090.

Does Minneapolis have a city income tax?

No, Minneapolis and all Minnesota cities do not have local income taxes. You only pay state-level income tax on your freelance earnings.

How does Minnesota compare to neighboring states?

Minnesota has higher tax rates than Wisconsin (5.30%), Iowa (5.70%), and much higher than South Dakota (0%). However, the state provides extensive public services.

Do I need to register my side hustle in Minnesota?

Most businesses need to register with the Minnesota Secretary of State. If using a trade name (DBA), file an Assumed Name Certificate. LLCs must register with the Secretary of State. Sellers may need a Minnesota Tax ID and Sales Tax Permit.

When are Minnesota quarterly estimated taxes due?

Minnesota follows federal quarterly deadlines: April 15, June 16, September 15, and January 15. Use Form M14 for payments. Estimated payments are required if you expect to owe $500 or more.

Are retirement contributions valuable in Minnesota?

Yes, especially so. SEP-IRA and Solo 401(k) contributions reduce your federal AGI, which Minnesota uses as its starting point. Given Minnesota's high rates (up to 9.85%), retirement contributions provide significant tax savings—potentially 30-40% when combined with federal savings.

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