No Tax on Tips Calculator for Minnesota (2026)
Calculate how much Minnesota workers save now that tips are deductible from federal taxable income (caps and income limits apply) under the OBBBA.
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Your Annual Tax Savings in Minnesota
Tips Tax Deduction in Minnesota
Under the One Big Beautiful Bill Act (OBBBA), workers in Minnesota who earn tips can deduct 100% of their tip income from federal income tax for tax years 2025 through 2028.
Minnesota Minimum Wage for Tipped Workers
The minimum wage in Minnesota is $11.13/hour. Minnesota does not allow a lower tipped minimum wage — all workers receive the full minimum wage regardless of tip income.
Top Tipped Industries in Minnesota
- Restaurant servers
- Bartenders
- Hotel staff
- Delivery drivers
Does Minnesota Tax Tips? (State Conformity)
State Income Tax Applies to Tips
Minnesota has a state income tax rate of 9.8%. While the OBBBA exempts tips from federal income tax, Minnesota may still tax tip income at the state level. Check with a local tax professional for details.
How the No Tax on Tips Law Works
What Qualifies
- Cash tips received directly from customers
- Credit/debit card tips
- Tips from tip pools or tip sharing
- Service charges distributed as tips
What Doesn't Change
- FICA taxes still apply: You still pay 6.2% Social Security + 1.45% Medicare on tip income
- Tips must still be reported: Report all tips to your employer and on your tax return
- Annual cap: Deduction limited to $25,000 per year in tip income
- Income limit: The deduction applies to workers earning less than $150,000/year (single) or $300,000 (married filing jointly)
Overtime Tax Deduction in Minnesota (2026)
The same OBBBA Schedule 1-A rules apply nationwide: only the FLSA overtime premium (the half of time-and-a-half) is deductible, up to $12,500 ($25,000 joint), with MAGI phase-outs. Minnesota state income tax may still apply to overtime wages even when the federal premium deduction is available.
Use the free Overtime Tax Calculator to estimate federal savings for Minnesota workers — including common searches like “minnesota overtime tax calculator.”
Federal Calculators
Compare with the federal-level tools: Tip Tax Savings (Federal) | Overtime Tax Calculator (Federal)