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Article

3 min read

Your Ultimate Guide to Minnesota Payroll

PEO

Author

Shannon Hodgen

Published

August 07, 2023

Last Update

June 28, 2024

Table of Contents

Paying unemployment insurance

Withholding personal income tax from your Minnesota employee

Paying your Minnesota workers’ compensation

Simplify US payroll tax compliance with Deel

Key takeaways
  1. Employers hiring in Minnesota must pay unemployment insurance for those who are unemployed due to no fault of their own.
  2. Employers must also withhold Personal Income Tax on the wages of Minnesota residents.
  3. If hiring Minnesota residents, you must also provide coverage for Workers' Compensation.

Employers in Minnesota are tasked with various responsibilities that keep their organization running smoothly and according to state rules and regulations.

Our state-by-state guide serves as an introduction to payroll tax obligations you'll have if hiring from Minnesota.

Paying unemployment insurance

In addition to federal taxes, employers in Minnesota are responsible for paying Unemployment Insurance (UI) on behalf of their employees.

UI is a national program administered by the U.S. Department of Labor, providing temporary payments to individuals who are unemployed through no fault of their own. To conveniently manage your Minnesota unemployment insurance, you can use the state's online portal.

For detailed information on paying unemployment insurance and meeting your obligations, refer to the Minnesota Department of Employment and Economic Development's resources for employers.

Withholding personal income tax from your Minnesota employee

When hiring in Minnesota, you will also have to withhold Personal Income Tax (PIT) from your Minnesota employee's salary.

After deducting PIT (also known as individual income tax or state income tax), you are required to pay the withheld amount to the state. To facilitate this process, Minnesota provides an online portal for employers to file and pay the withheld amount.

For comprehensive guidance on paying the withholding amount, consult the Minnesota Department of Revenue's resources on withholding tax.

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Paying your Minnesota workers’ compensation

Apart from PIT, employers who hire in Minnesota must also provide Workers' Compensation (WC) coverage for their employees.

Whether you have one or hundreds of employees in this state, workers' compensation insurance is crucial, as it offers protection to employees in the event of job-related injuries or illnesses.

To find a qualified commercial carrier that meets the state's requirements, refer to the information provided by the Minnesota Department of Labor and Industry.

Simplify US payroll tax compliance with Deel

While this guide provides essential information on Minnesota payroll taxes, payroll compliance, and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel. 

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

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