Minnesota LLC structure and cost: a high-tax state with an entity-level fee that grows with your company

Minnesota is a high-tax state, and its LLC tax picture has a feature most states lack: an entity-level fee that scales with the size of the business, and it turns on how many members the LLC has. A single-member Minnesota LLC is a pure pass-through, taxed only on the member’s return. A multi-member LLC taxed as a partnership picks up a minimum fee based on its Minnesota property, payroll, and sales, which starts at nothing for a small company and climbs into five figures for a large one. Add one of the highest income tax rates in the country and 9.85% withholding on out-of-state members, and Minnesota is a state where the tax structure, not just the rate, is worth planning around. Take the minimum fee first, because it is the part that surprises people.

The minimum fee that grows with the company

Minnesota charges most multi-member pass-throughs a fee that has no equivalent in many states.

A multi-member Minnesota LLC owes a minimum fee based on its property, payroll, and sales, from nothing for a small company to about $10,210 for a large one.

Under Minn. Stat. § 290.0922, every partnership, S corporation, and C corporation filing a Minnesota return owes a minimum fee calculated on the sum of the entity’s Minnesota property, payroll, and sales or receipts. A multi-member LLC taxed as a partnership is subject to it. The fee is zero for an entity whose combined total is under about $1,020,000 and rises in steps to roughly $10,210 for one at about $40,820,000 or more; confirm the current bracket figures. The point that catches owners is that a single-member LLC, which files on the member’s individual return as a disregarded entity, does not owe the minimum fee at all. So the same business owes nothing as a single-member LLC and picks up the minimum fee once it has two or more members and files as a partnership, and the fee grows as the company grows. It is not large relative to a substantial company’s income, but it is a real, size-scaling cost that many states do not impose.

The income tax, among the highest anywhere

The rate itself is steep, and it reaches members directly.

Minnesota taxes pass-through income at graduated rates up to 9.85%, among the highest state rates in the country.

A pass-through Minnesota LLC’s income lands on the members at Minnesota’s graduated individual rates, which run from 5.35% to 9.85%, with the top rate reaching income above roughly $193,000. That 9.85% top rate is among the highest of any state, a sharp contrast to Arizona’s flat 2.5% or the no-income-tax states. Minnesota offers an elective pass-through entity tax that lets the LLC pay the members’ Minnesota tax at the entity level, computed at the 9.85% rate, and take the federal deduction. The election matters for another reason.

An out-of-state member’s Minnesota income is withheld at 9.85% unless the LLC makes the pass-through entity election.

A Minnesota LLC with nonresident members generally must withhold 9.85% on each nonresident member’s Minnesota-source income over $1,000 and remit it with the entity’s return, unless the LLC makes the pass-through entity election, which changes how the members are taxed and can relieve the withholding. For an LLC that brings in out-of-state investors, that withholding is a real cash-flow item, and the PTE election is the lever that manages it. The nexus and foreign qualification guide covers where an entity is taxed; the Minnesota point is that the member roster, resident or not, single or multiple, drives the entity’s tax obligations more than in most states.

The series LLC Minnesota does not have, and the transfer tax

Two more structure points round out the picture.

Minnesota does not authorize a series LLC, and its deed tax on a sale is a modest 0.33%.

Minnesota’s LLC act has no series provision, so a multiple-property owner uses a separate LLC for each asset rather than internal series, and given the free annual renewal covered on the filing page, that pattern is at least cheap to maintain. On real estate transfers, Minnesota imposes a deed tax of 0.33%, about $3.30 per $1,000 of price, typically paid by the seller, with a small additional environmental fee in Hennepin and Ramsey counties, plus a mortgage registry tax of 0.23% on financed purchases. There is no statewide controlling-interest transfer tax reaching entity sales. The series LLC guide covers the form’s trade-offs, and on privacy Minnesota is moderate, requiring an organizer and registered office but not a full member roster on the public record.

The bottom line

A multi-member Minnesota LLC owes a minimum fee under § 290.0922 based on its property, payroll, and sales, from $0 to about $10,210, while a single-member LLC owes none.

Minnesota taxes pass-through income at graduated rates up to 9.85%, among the highest in the country.

An out-of-state member’s Minnesota income is withheld at 9.85% unless the LLC makes the pass-through entity election.

Minnesota does not authorize a series LLC, so multiple-property owners use separate LLCs, which the free annual renewal makes cheap to hold.

The deed tax on a sale is a modest 0.33%, with no controlling-interest transfer tax on entity sales.

What this page does not cover

This page is about where the entity lives and what it costs to hold and move. How creditors reach a member’s interest, the foreclosable charging order, and the homestead are on the protection page. The default governance rules and the board-of-governors structure are on the governance page. The free annual renewal, the optional registered agent, and the December 31 trap are on the filing page.

Last verified August 2026.