Yes. Minnesota treats bonuses as taxable wages and requires Minnesota income tax withholding on bonus and other supplemental wage payments. Unlike flat-tax states, Minnesota uses a progressive income tax system, which means withholding may vary based on income level and how the payment is processed.
When a bonus is paid, Minnesota withholding may be handled differently depending on how the bonus is processed. For supplemental wages paid separately from regular wages, Minnesota typically allows employers to apply a flat withholding rate. You can use the calculator above, powered by Beyond HCM, to estimate Minnesota withholding and take-home pay for bonus payments. The calculator uses a 2026 estimate based on Minnesota withholding guidance and current payroll assumptions.
How to Calculate Bonus Tax in Minnesota
Supplemental wages—including bonuses, commissions, overtime pay, back pay, and certain additional wage payments—are generally treated as wages for withholding purposes.
For Minnesota withholding:
– Paid separately from regular wages: withholding is generally estimated at 6.25% for supplemental wage payments in 2026
– Paid together with regular wages: withholding may be calculated on the total combined wages for the payroll period using Minnesota withholding tables and the employee’s Form W-4 elections
– Actual withholding may vary depending on payroll setup, employee elections, and Form W-4 details
For federal withholding:
– 22% applies to most supplemental wages
– 37% applies to supplemental wages above $1 million in a calendar year
Key Information on Minnesota Bonuses
How Are Bonuses Paid in Minnesota?
Employers may issue bonuses through:
– Check
– Direct deposit
– Pay card
How Do Bonuses Work?
Bonuses are treated as taxable compensation. They are generally subject to:
– Federal income tax withholding
– Minnesota income tax withholding
– Social Security tax
– Medicare tax
They are typically reported on the employee’s Form W-2 at year-end.
What Is the Minnesota Bonus Tax Rate?
Minnesota does not use a single flat tax rate for all wages. Instead, it has a progressive income tax system with multiple brackets. However, for supplemental wages paid separately, employers may apply a flat withholding rate for simplicity. In 2026, this rate is commonly estimated at 6.25% for bonus calculations.
Because Minnesota’s overall tax system is progressive, the effective tax rate on a bonus may vary depending on the employee’s total income, filing status, and how the payment is processed.
Are Bonuses Taxed Differently Than Standard Pay?
At the Minnesota level, bonuses are treated as taxable wages, but withholding may be calculated differently depending on how the bonus is processed.
For supplemental payments paid separately, Minnesota typically allows a flat withholding percentage (such as 6.25%) rather than applying the full progressive tax calculation for that specific payment.
At the federal level, bonuses may be taxed using the supplemental wage method, typically 22% when paid separately, subject to the higher $1 million rule.
How Much Tax Is Taken Out of a Bonus?
For most bonus payments in Minnesota, estimated withholding may include:
– Minnesota income tax withholding (often estimated at 6.25% for separate payments)
– 22% federal supplemental withholding in most cases
– FICA taxes, including Social Security and Medicare
Because Minnesota uses a progressive tax system, the actual amount withheld from a bonus may vary depending on the employee’s total earnings and payroll setup.
Important
This calculator is provided for informational and estimation purposes only. Actual payroll tax withholdings may vary based on an employee’s tax elections, Form W-4 details, payroll setup, and how the bonus is processed. Employers should consult a qualified tax, legal, or payroll professional for official calculations.
If you need help with payroll processing, withholding setup, or tax compliance in Minnesota, the Beyond HCM team is available to help.
Estimate only — not legal or tax advice. Need help managing Minnesota payroll more confidently? Contact Beyond HCM for support.
