Navigate Up
Sign In
Last Updated: 6/22/2012

2% Withholding on Independent Contractors

Law Change for Individual Construction Contractors - 2 Percent Withholding Repealed

After June 30, 2012, businesses are no longer required to withhold 2 percent from payments made to individual construction contractors. For details, see Law Change for Individual Construction Contractors. 

From Jan. 1, 2012 - June 30, 2012

Construction contractors are required to withhold 2 percent (.02) of the total payments made to an individual construction contractor who is carrying on a trade or business as a sole proprietorship for work performed in Minnesota. 

This withholding is required if total payments you make to the individual construction contractor exceed $600 in a calendar year. When the total exceeds $600, all of the payments-including the first $600-are subject to withholding.

For more information, see Minnesota Income Tax Withholding on Payments to Independent Contractors in the Construction Trades (Withholding Tax Fact Sheet 18).