Minnesota Corporate Franchise Tax: 9.8% and the Minimum Fee Ladder for 2026

If you are forming a corporation in Minnesota, or electing corporate tax treatment for an LLC, the first number to know is 9.8 percent. That is the Minnesota corporate income tax rate for C corporations, and the state also calls it the corporation franchise tax. The second number is the minimum fee, a sliding scale based on how much property, payroll and sales your business has in Minnesota. This guide explains both, shows who pays which, and lists where to confirm the figures.

This is informational content, not legal or tax advice. Entity choice and tax treatment depend on your facts. Talk with a qualified CPA or business attorney before you form the entity or file a return.

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The Minnesota corporate tax rate: 9.8 percent on C corporations

The Minnesota corporate income tax is a flat 9.8 percent of taxable income for C corporations under Minn. Stat. 290.06. Corporations do not move through a graduated schedule. Individuals are different. Minnesota's individual income tax has four brackets: 5.35 percent, 6.80 percent, 7.85 percent and 9.85 percent. That difference is why the entity you choose changes what you pay.

Taxable income is the base for the 9.8 percent, and working out that base, including how much of the income Minnesota taxes if the business operates in more than one state, is a return-preparation question for your CPA. For illustration only, a C corporation with $100,000 of Minnesota taxable income owes 9.8 percent of that amount, or $9,800, before any credits or adjustments. The minimum fee is figured separately, and it is covered below.

What "franchise tax" means in Minnesota

The phrase "Minnesota franchise tax" causes most of the confusion, because it shows up in several places. Only one of them is the 9.8 percent tax.

Corporation franchise tax: the 9.8 percent income tax on C corporations described above.
Minimum fee: a graduated fee under Minn. Stat. 290.0922 that applies to C corporations, S corporations and partnerships, based on total Minnesota property, payroll and sales.
Annual Renewal: a filing with the Secretary of State, not a tax. It costs $0 and is due December 31 each year.

Minnesota has no separate LLC franchise tax. An LLC taxed as a partnership or disregarded entity passes its income through to its owners, who pay individual income tax. An LLC that files federally as a C corporation pays the 9.8 percent corporation franchise tax. Minnesota also has no general gross receipts tax. The one exception is the cannabis gross receipts tax, which does not affect most businesses.

Keep the sales tax separate from all of this. The state sales tax rate is 6.875 percent, and local taxes are added on top of it.

The 2026 minimum fee ladder

The minimum fee under Minn. Stat. 290.0922 depends on your total Minnesota property, payroll and sales, not on your profit. A business with little income but a large Minnesota footprint can owe more than a profitable business with a small one. For tax year 2026, the ladder is:

Total Minnesota property, payroll and sales	Minimum fee for 2026
Under $1,280,000	$0
$1,280,000 to under $2,560,000	$260
$2,560,000 to under $12,830,000	$770
$12,830,000 to under $25,640,000	$2,560
$25,640,000 to under $51,280,000	$5,140
$51,280,000 and above	$12,830

Two examples show how the ladder works. A corporation with $1,500,000 of Minnesota property, payroll and sales falls in the $1,280,000 bracket and owes $260. A corporation with $2,600,000 falls in the next bracket and owes $770. Both figures are for tax year 2026 only.

The brackets are indexed every year, so do not treat the table above as permanent. The Minnesota Department of Revenue publishes the current minimum fee table on its website, updated December 2025 for this year's figures. Use that table, not the statute, to find your bracket each year. Your CPA can tell you how property, payroll and sales are measured for your business.

Who pays the minimum fee and who does not

Entity type decides both the rate and whether the minimum fee applies. The table below summarizes the general rules as stated for 2026. Confirm how your specific entity is treated before you file.

Entity	How it is taxed federally	Minnesota income tax	Minimum fee
C corporation	C corporation	9.8 percent corporation franchise tax	Applies
LLC that elected corporate tax treatment	C corporation	9.8 percent corporation franchise tax	Applies
S corporation	S corporation	The 9.8 percent rate is stated for C corporations. Confirm with Revenue and your CPA how S corporation income is handled.	Applies
Multi-member LLC	Partnership	Owners pay individual income tax on their share	Applies
Single-member LLC reporting only on the owner's return	Disregarded entity	Owner pays individual income tax	Does not apply

Two details catch people. First, an LLC that has not elected corporate tax treatment pays no corporation franchise tax, so the 9.8 percent rate does not apply to it. Second, a multi-member LLC taxed as a partnership is on the list of entities subject to the minimum fee, even though it pays no corporate income tax. Do not assume a partnership-taxed LLC is exempt because it is an LLC.

Worked check: finding your number

Use this sequence each tax year for a C corporation or any other entity that owes the minimum fee:

Add up the Minnesota portion of your property, payroll and sales for the year.
Find the matching bracket on the Revenue minimum fee table for that tax year.
Calculate the 9.8 percent tax on Minnesota taxable income if the entity is a C corporation.
Confirm with your CPA how the minimum fee and the income tax combine on the return.

Step four matters. This guide does not state whether the minimum fee is added to or offset against the income tax on a given return, so get that answer from Revenue or your CPA before you estimate your total bill.

Steps to take before and after you form

Choose your federal tax classification first. Your classification decides whether the 9.8 percent rate can apply to you. Make that decision with your CPA before you form the entity or make an election.
Register with the Minnesota Department of Revenue. Registration gets you a Minnesota Tax ID and, if you will make taxable sales, a sales and use tax account. Revenue's online registration page is at the new business registration page on mndor.state.mn.us. Tax registration is not a business license.
Track Minnesota property, payroll and sales every year. The minimum fee changes with these totals, so bookkeeping should separate the Minnesota figures from the rest.
Look up your bracket each year. Use the current Revenue table for the tax year you are filing.
Confirm filing dates and forms with Revenue. This guide does not list return due dates or form numbers, so check them on the agency site before you file.
Keep the Secretary of State Annual Renewal current. It costs $0, but it is due December 31 every year, and missing it has consequences. A corporation that misses December 31 is dissolved without further notice under Minn. Stat. 302A.821, and an LLC is terminated or revoked without further notice under Minn. Stat. 322C.0705.

Common mistakes

Assuming every LLC pays 9.8 percent. Only an LLC that elects corporate tax treatment pays the corporation franchise tax.
Treating the Annual Renewal as a tax. It is a Secretary of State filing that costs $0. The tax obligations are with the Department of Revenue.
Using an old bracket table. The minimum fee brackets are indexed every year. Last year's figures will not match this year's.
Assuming a single-member LLC owes the fee. It is exempt only when it reports solely on the member's individual return.
Confusing a registration with a license. Minnesota has no general statewide business license. Licensing is by trade or activity, and Revenue registration is not a license.

Where to confirm the figures

Minnesota Department of Revenue: revenue.state.mn.us. Find the corporate tax pages and the current minimum fee table from the site's search or menus.
Minnesota Secretary of State: sos.mn.gov. Check entity filings and the Annual Renewal. Search the business records at the Business Search portal.
Minnesota Small Business Development Center Network: mn.gov/deed/business/help/sbdc. The network is administered by the Department of Employment and Economic Development and can help you think through entity and tax questions before you file.

Bottom line

For 2026, a Minnesota C corporation pays a flat 9.8 percent on its taxable income. The minimum fee ladder, which runs from $0 under $1,280,000 of Minnesota property, payroll and sales to $12,830 at $51,280,000 and above, applies to C corporations, S corporations and partnerships. Single-member LLCs that report only on the owner's return are exempt, and an LLC that has not elected corporate tax treatment pays no corporation franchise tax. Because the brackets change each year and the right treatment depends on your structure, check Revenue's current table and have a qualified CPA or attorney review your situation before you file.