Are you self-employed?
This includes freelancers and business owners
Estimated Tax Breakup
For $ Annual income
Monthly
Annual
Brackets
Rates
Income
$
Deductions
$
Federal income tax
$
Minnesota state income tax
$
FICA tax
$
Self Employment tax
$
Total tax
$
Net pay
$
Marginal and average tax rate
Average tax rate is the effective tax rate that you incur on your income. If your income is $100 with 20% average tax rate and 30% marginal tax rate, you pay $20 in taxes.
Average tax rate is the effective tax rate that you incur on your income. If your income marginal tax rate is the tax rate on the last dollar that you earned. If your income is $100 with 20% average tax rate and 30% marginal tax rate and if you get 1 dollar bonus, you pay 30% tax on that bonus.
Average tax rates measure tax burden, while marginal tax rates measure the impact of taxes on incentives to earn, save, invest, or spend.
W2 employees
Freelancers
W2 employees
Freelancers
How will your net pay increase with increase in your income?
Increment percentage
Increased income
Increased net pay
10%
$
$
25%
$
$
50%
$
$
2X
$
$
3X
$
$
4X
$
$
Summary section
- If you make $ a year living in the region of Minnesota, USA, you will be taxed $. That means that your net pay will be $ per year, or $0 per month. Your average tax rate is undefined% and your marginal tax rate is undefined%.
- This marginal tax rate means that your immediate additional income will be taxed at this rate. For instance, an increase of $100 in your salary will be taxed $36.13, hence, your net pay will only increase by $63.87.
Taxes for freelancers vs W-2 employee
The tax system in the US works on a pay-as-you-go basis, so the IRS collects income taxes throughout the year via payroll. Ideally, if you are a W-2 employee, you automatically get your taxes withheld by your employer. However, as a freelancer, taxes aren’t a cakewalk. They have to pay a bit extra in “self-employment tax” to contribute to Social Security and Medicare.
CPA advice for freelancers
If you’re a W-2 employee then most likely, your taxes are already being withheld for you by your employer and you typically get a tax refund. Freelancers, self-employed individuals, and business owners have to handle their own taxes including the quarterly estimated tax payments.
Sounds complicated?
FlyFin can help ease your burden.
With FlyFin you can stay on top of your taxes by paying your quarterly estimated obligations and tracking your business expenses. The A.I. calculates your taxes based on several inputs (your profession & income) and detects all possible deductions which ensures an accurate tax amount.
Tax burden for freelancers vs w2 employees
W2 employees
Freelancers
Freelancers using FlyFin
W2 employees
Freelancers
Freelancers using FlyFin
Income Taxes in Minnesota
Taxes vary greatly by state, and each state has its own tax rules and regulations. Taxes are an important factor in determining how much money you get to pocket on the income you earn. The progressive tax rates in Minnesota range from 5.35% to 9.85%. Your tax bracket determines the rate you will pay on your taxable income.
Tax Facts
Different Types of State Taxes
Tax Rates for Minnesota
State income tax
5.35%-9.85%
Sales Tax
6.875% to 8.375%
Property tax
0.45% to 1.25%of the property’s value
Estate Tax
13%-16%
Tobacco tax
$3.20 per pack
Gasoline tax
$0.24-$0.304 per gallon
Diesel tax
$0.304-$0.324 per gallon
Who files income taxes in Minnesota?
In Minnesota, the amount of time you spend living in the state determines the type of resident category you fall into. You will need to file a Minnesota state income tax return if you meet at least one of the requirements: Full-time resident: You’re a legal resident and spent the year as a resident, even if you left for a short period of time Part-time resident: A part of the tax year was spent as a resident. Non-resident: You don’t live in the state but earn Minnesota-source income, or you won a lottery from the state. Corporate entities: Any company that is based in Minnesota or makes a significant income from the state.
Taxes in Minnesota
Income tax rates are relatively moderate in Minnesota. The tax rates do not apply to actual income, but the adjusted gross income or the income after all applicable deductions and exemptions have been subtracted. The top tax rate of 9.85% applies to any taxpayer making more than $171,220 for single filers and $227,600 for married couples filing jointly.
Tax brackets for Minnesota
Tax brackets function under a progressive tax system. The more money you make, the higher your tax bracket. Table 1: Tax Rates for Single Filer Income Range Taxes Due $0 - $28,080 5.35% of Income $28,080 - $92,230 $1,502.28 + 6.8% $92,231 - $171,220 $5,864.48 + 7.85% $171,220 or more $12,065.20 + 9.85% over $171,220 Table 2: Tax Rates for Married Filing Jointly (MFJ) Income Range Taxes Due $0 - $41,050 5.35% of Income $41,050 - $163,060 $2,196.18 + 6.8% $163,061 - $284,810 $10,492.86 + 7.85% $284,810 or more $20,050.23 + 9.85% over $284,810 Table 3: Tax Rates for Head of Household (HOH) Income Range Taxes Due $0 - $34,570 5.35% of Income $34,570 - $138,890 $1,849.50 + 6.8% $138,891 - $227,600 $8,943.26 + 7.85% $227,600 or more $15,906.99 + 9.85% over $227,600
Property taxes in Minnesota
Owning a property comes with the responsibility of paying property taxes. Property taxes cover costs related to local school districts, police, fire department, parks, sewage systems and the upkeep of roads. In Minnesota you’ll have to pay 0.45% to 1.25% of a property’s value as property tax.
Sales taxes in Minnesota
Minnesota charges a state-wise tax rate of 6.875%, which is relatively low. The district or county tax rates in Minnesota are added to this rate and the combined taxes can be higher but never exceeding 8.375%.
Other taxes in Minnesota
There are a number of other taxes that a state can charge and Minnesota is no different. The state charges taxes on inheritance, tobacco, gasoline and alcohol. The taxes and tax rates vary by state.
Estate taxes in Minnesota
The state of Minnesota has a tax rate range from 13% to 16%, depending on the value of an estate.
Tobacco taxes in Minnesota
The tobacco tax is levied in most states to discourage the number of people buying cigarettes. In Minnesota, the tax rate is $3.04 per pack of 20 cigarettes. Cigars are taxed at 95% on wholesalers’ cost, but never exceeding $0.50 per cigar. The tax rates for chewing tobacco and smoking tobacco are also 95% on the whole seller's cost.
Gasoline taxes in Minnesota
Minnesota’s gasoline and diesel taxes are $0.285 per gallon for gasoline and $0.285 per gallon for diesel.
Alcohol taxes in Minnesota
There are taxes levied on alcohol in an effort for states to raise capital and encourage individuals to lower their overall consumption. In Minnesota, alcohol tax for beer is at $0.19 per gallon, tax for wine is $1.75 per gallon and distilled spirits are taxed at $13.50 per gallon.
