What the rule says
Minnesota imposes a state estate tax under Minn. Stat. § 291.005 et seq. on estates of Minnesota residents and on the Minnesota real and tangible property of non-residents at death.
Low exclusion threshold
The Minnesota estate tax exclusion is $3 million per individual — significantly lower than: - Federal estate tax: ~$13.99 million per individual (2026, indexed) - New York: $7.16 million - Illinois: $4 million - Most other state estate taxes
No portability
Like Illinois and Massachusetts, Minnesota does not recognize federal portability of unused exclusion between spouses. Each spouse's $3 million exclusion is used at that spouse's death; it cannot be transferred to the surviving spouse.
Tax rates
Minnesota applies the tax progressively above the threshold. The top rate is 16%.
What this means in practice
Minnesota's combination of low threshold and no portability produces:
- Estates of $3 million or more face Minnesota estate tax. With Twin Cities home values, retirement accounts, and other assets, many families exceed $3 million. - Bypass trust planning is essential for Minnesota married couples with $3M+ assets. Without portability, the first-deceased spouse's $3 million exclusion is wasted unless captured through bypass trust planning. - Federal estate tax does NOT apply for most Minnesota estates (federal threshold $13.99M is well above MN threshold). The Minnesota-only gap is the planning focus.
For an estate of $5 million: - No federal estate tax (well below $13.99M) - Minnesota estate tax on $2M of taxable estate at progressive rates up to 16% — approximately $300,000
How MN compares to other estate-tax states
Minnesota's framework is similar to Illinois and Massachusetts: - Low threshold + no portability: Minnesota ($3M), Massachusetts ($2M), Illinois ($4M), Oregon ($1M) - Higher threshold + no portability: New York ($7.16M) - Federal-conformed + portability: Connecticut
What you can do about it
For Minnesota residents with substantial assets:
- Calculate Minnesota estate tax exposure. $3M threshold and no-portability rule drive planning calculations. - Use bypass trust planning for married couples to preserve both spouses' exclusions. - Consider QTIP elections strategically. - Use lifetime gifting. Minnesota has no state-level gift tax. Lifetime gifts can reduce future estate tax exposure. - Consider charitable bequests. - Engage a Minnesota estate tax advisor.
For high-net-worth Minnesota residents considering relocation:
- Florida, Texas, Tennessee, South Dakota (no state estate tax) are common relocation destinations. - Minnesota real estate remains taxable even for non-resident decedents.
Who this affects most
Minnesota's estate tax framework is most consequential for:
- Married Minnesota residents with combined assets above $3M - Long-time Minnesota homeowners whose property values, retirement accounts, and other assets push them above the threshold - Estate planners coordinating Minnesota-specific exposure with federal planning - Surviving spouses who would lose the deceased spouse's $3M exclusion without bypass trust planning
Minnesota's combination of low threshold and no portability makes proactive bypass trust planning the standard response.