POPULATION: 5,420,380 (2013)
LABOR FORCE: 3,001,186 (October 2014)
RIGHT TO WORK: No
TRADITIONAL INDUSTRIES:Health care, medical product manufacturing, computer and electronic product manufacturing, food processing, industrial machinery manufacturing.
EXPANDING INDUSTRIES: Health care, administrative services, professional and technical services, clean energy.
COLLEGE GRADUATES: (Age 25 and over) 33.5%, Rank 11th (2013)
BASIC BUSINESS TAXES:
Corporate Income Tax: Corporations' rate is 9.8 percent, one-factor sales formula (sales, property, payroll): 100 percent-sales.
Sales and Use Tax:The overall state sales tax rate is 6.875 percent with a local tax maximum of 1.1 percent. Unlike other states, Minnesota does not tax materials and fuels used in the manufacturing process. Minnesota currently refunds sales tax paid on capital equipment (machinery and equipment) used in the manufacturing process. Beginning July 1, 2015, there will be an upfront exemption on these taxes. There are also several other major exemptions for businesses, including fees for capital equipment installation and repair. For qualified data centers, enterprise information technology equipment and electricity used in the operation of the center are exempt. Computer software is refunded. A qualified data center is a facility in Minnesota that consist of at least 25,000 square feet, where the total cost of construction or refurbishment, investment in information technology equipment and computer software is at least $30 million within a period of 48 months.
Property Tax: Personal property, including machinery and inventory, is exempt from property tax; as well as personal property used for control of air, water, or land pollution including heavy machinery that would be considered real property otherwise. Local governments tax all real property not specifically exempted; each property's assessed value is multiplied by 1.5 percent for the first $150,000 of value and 2 percent of any value over $150,000; this new value, or tax capacity, is multiplied by the local and state property tax rates plus any local referendum rate to determine property tax liability.
BUSINESS INCENTIVES:
Tax-Free Development (JOBZ): Provides local and state tax exemptions to qualified companies that start up or expand in targeted areas of Greater Minnesota. There are 10 job zones comprising more than 29,000 acres in about 325 communities. Benefits include corporate franchise tax, income tax for operators or investors, property tax on commercial and industrial improvements (but not on land), wind energy production tax, and employment tax credit for high paying jobs.
Job Creation Fund: Offers performance-based financial incentives to new and expanding businesses that meet certain job creation and capital investment targets. Eligible companies to participate may receive up to $1 million for creating or retaining high-paying jobs and for constructing or renovating facilities or making other property improvements. In cases with significant investment and job creation, companies may receive awards of up to $2 million.
Minnesota Investment Fund: Provides financing to help add new workers and retain high-quality jobs on a statewide basis. The focus is on industrial, manufacturing, and technology-related industries to increase the local and state tax base and improve economic vitality statewide.
Minnesota Job Skills Partnership Program: Provides training grants of up to $400,000 to educational institutions that partner with businesses to develop new-job training or retraining for existing employees.
Data Center Sales Tax Exemptions: For qualified data centers, enterprise information technology equipment, electricity used in the operation of the center, and computer software (refund) are exempt. A qualified data center is a facility in Minnesota that consist of at least 25,000 square feet, where the total cost of construction or refurbishment, investment in information technology equipment and computer software is at least $30 million within a period of 48 months.
Angel Tax Credit: Provides a 25-percent credit to investors or investment funds that put money into startup companies focused on high technology, new proprietary technology, or a new proprietary product, process or service in specified fields. The maximum credit is $125,000 per person, per year ($250,000 if filing jointly). The credit is refundable and non-Minnesota residents (including residents of foreign countries) are eligible. Beginning 2015, there will be $15 million in tax credits per year (up from $12 million).
Greater MN Job Expansion Program: Provides tax benefits to businesses located in Greater Minnesota that increase employment. Qualifying businesses that meet job-growth goals may receive sales tax refunds for purchases made during a seven-year period.
