Minnesota vs Wisconsin Taxes
Compare the total tax burden between Minnesota (5.35% – 9.85%) and Wisconsin (3.5% – 7.65%). Enter your income to see which state saves you more.
Minnesota vs Wisconsin: The Upper Midwest's tax rivalry
Minnesota and Wisconsin share a border, a climate, and a football rivalry—but their tax systems diverge in ways that affect the hundreds of thousands of residents who live near the state line. Minnesota imposes one of the highest top income tax rates in the nation at 9.85% on income above $193,240 (single filers), while Wisconsin's top rate is 7.65% on income above $315,000. For upper-middle-income earners in the Twin Cities-western Wisconsin corridor, this gap drives meaningful residential decisions.
The Twin Cities metro area spans both states, with Hudson and River Falls, Wisconsin, attracting Minnesota workers who want to reduce their state tax burden. Minnesota taxes its residents on worldwide income regardless of where they work, but Wisconsin residents working in Minnesota get a credit to avoid double taxation. The net result is that a Wisconsin resident typically pays the higher of the two states' rates on Minnesota-source income—but on all other income (investment income, spouse's remote work), they pay only Wisconsin's lower rates.
Beyond income tax, the comparison is nuanced. Minnesota's property taxes average about 1.02% versus Wisconsin's 1.61%—a meaningful gap that can offset some of the income tax savings. Minnesota's sales tax is 6.875% versus Wisconsin's 5%, and Minnesota exempts clothing from sales tax entirely. For families with moderate incomes and higher-value homes, Wisconsin's lower income tax can be offset by its higher property tax. The crossover point depends on income level, home value, and spending patterns.
Key Differences Beyond Income Tax
| Category | Minnesota | Wisconsin |
|---|---|---|
| Income Tax Top Rate | 9.85% on income above $193,240 (single) / $284,810 (married); four brackets from 5.35% to 9.85% | 7.65% on income above $315,000 (single) / $420,000 (married); four brackets from 3.5% to 7.65% |
| Property Tax | Effective rate ~1.02%; market value-based with various homestead credits | Effective rate ~1.61%; fair market value assessment; higher than MN average |
| Sales Tax | State rate 6.875%, combined up to 8.875%; clothing fully exempt | State rate 5%, combined up to 5.6%; clothing taxed |
| Retirement Income | Social Security partially taxed (income-based phase-out); pensions and 401k fully taxed at state rates | Social Security exempt starting 2026 (phased in); pensions/401k taxed; $5,000 retirement exclusion for 65+ |
| Cost of Living | Twin Cities metro competitive for a major metro; housing median ~$350K | Western WI suburbs of Twin Cities offer lower housing; Madison and Milwaukee comparable to Minneapolis |
Who Benefits from Moving?
Twin Cities workers considering western Wisconsin
A household earning $200,000 with one spouse working in Minneapolis and the other working remotely saves roughly $2,500-$4,000 by living in Wisconsin—depending on how much income is MN-sourced versus remote. The savings are larger when both spouses can earn income without MN nexus.
High earners above $300K
At $300,000, Minnesota's rates climb toward 9.85% while Wisconsin stays near 7.65%. The income tax gap alone can exceed $6,000 per year. But if buying a $500,000 home, Wisconsin's higher property tax costs about $2,950 more annually, reducing the net advantage to around $3,000.
Pre-retirees planning ahead
Wisconsin is phasing in a Social Security exemption by 2026, which will give it a meaningful edge for retirees. Minnesota still partially taxes Social Security. A retiree collecting $40,000 in Social Security plus $60,000 from a 401k may save $2,000-$3,000 annually in Wisconsin.
Bottom line: At $150,000 income, Wisconsin saves roughly $2,200 in income tax over Minnesota—but Wisconsin's higher property taxes on a $400,000 home claw back about $2,360, making it essentially a wash at that income level.
Tax at Different Income Levels
| Income | Minnesota Total Tax | Wisconsin Total Tax | Annual Savings |
|---|---|---|---|
| $75,000 | $17,279 | $16,440 | Save $839 |
| $100,000 | $26,392 | $25,178 | Save $1,214 |
| $150,000 | $45,608 | $43,271 | Save $2,337 |
| $200,000 | $63,894 | $60,264 | Save $3,630 |
Based on single filer, standard deduction, 2025 tax year. Includes federal income tax, state income tax, and FICA.
Why the difference
You'd save $1,214/year ($101/month) in Wisconsin vs Minnesota.
Tax structure
Minnesota uses progressive brackets up to 9.8%, while Wisconsin uses progressive brackets up to 7.6%.
Effective rate at your income
At $100,000, Wisconsin's effective state rate is 4.1% vs 5.3% in Minnesota — a 1.2 percentage point gap.
Tip: In a progressive-bracket state, pre-tax 401(k) and HSA contributions reduce your state tax bill along with federal tax. If you are near a bracket boundary, an additional contribution can drop you into a lower state bracket.
Tip: In a progressive-bracket state, pre-tax 401(k) and HSA contributions reduce your state tax bill along with federal tax. If you are near a bracket boundary, an additional contribution can drop you into a lower state bracket.
Understanding Each State
Minnesota
This state uses a progressive income tax system with multiple brackets, similar to the federal system. Only the income within each bracket is taxed at that rate, so your effective state rate is lower than the top bracket. Tax planning strategies include maximizing pre-tax retirement contributions to reduce state-taxable income.
Tip: In a progressive-bracket state, pre-tax 401(k) and HSA contributions reduce your state tax bill along with federal tax. If you are near a bracket boundary, an additional contribution can drop you into a lower state bracket.
Wisconsin
This state uses a progressive income tax system with multiple brackets, similar to the federal system. Only the income within each bracket is taxed at that rate, so your effective state rate is lower than the top bracket. Tax planning strategies include maximizing pre-tax retirement contributions to reduce state-taxable income.
Tip: In a progressive-bracket state, pre-tax 401(k) and HSA contributions reduce your state tax bill along with federal tax. If you are near a bracket boundary, an additional contribution can drop you into a lower state bracket.
Key Comparison Points
Income tax structure: Minnesota has a progressive income tax (5.35% – 9.85%), while Wisconsin has a progressive income tax (3.5% – 7.65%).
Beyond income tax: State tax comparisons should also consider property tax rates, sales tax, and cost of living. A state with no income tax may have higher property or sales taxes that offset the savings.
SALT deduction cap: Under OBBBA (2025+), the federal SALT cap is $40,000, phasing out above $500,000 MAGI toward a $10,000 floor. This limits the federal tax benefit of living in a high-tax state, so the gross state tax difference remains close to the net difference for most earners — especially high earners inside the phaseout.
Frequently asked questions
Is it cheaper to live in Minnesota or Wisconsin?
Based on income tax alone, Wisconsin has a lower tax burden. At $100K income, you'd save $1,214 annually in Wisconsin compared to Minnesota. However, total cost of living also depends on property taxes, sales taxes, and housing costs.
How much would I save moving from Minnesota to Wisconsin?
A single filer earning $100,000 would save approximately $1,214 per year in total taxes by living in Wisconsin instead of Minnesota. At $150,000 income, the savings change to $2,337 per year.
What is the income tax rate in Minnesota?
Minnesota has a progressive income tax with rates of 5.35% – 9.85%.
What is the income tax rate in Wisconsin?
Wisconsin has a progressive income tax with rates of 3.5% – 7.65%.