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Last Updated: 10/29/2018

Interstate Carrier Companies

Special rules for Minnesota Withholding Tax apply for employees of interstate carrier and air carrier companies.

What if I am an interstate carrier company?

If you have employees who perform regularly assigned duties in more than one state (such as truck drivers, bus drivers, or railroad workers), withhold income tax for their state of residence only. 

What if I am an interstate air carrier company?

If you have employees who perform regularly assigned duties on aircraft in more than one state, you must withhold income tax for their state of residence and any state in which they earn more than 50 percent of their pay. Your employees are considered to have earned more than 50 percent of their pay in any state where scheduled flight time is more than 50 percent of total scheduled flight time for the calendar year.

See the examples below on how to withhold income tax for interstate air carrier employees.

Example 1: You employ Bill as a flight attendant. Bill is an Iowa resident, but his regular flight schedule takes him to Minnesota 60 percent of the time. Since Bill spends over half of his scheduled flight time in Minnesota, you must withhold income tax for both Minnesota and Iowa.

Example 2: You employ Sally as a pilot. Sally is an Iowa resident, but her regular flight schedule also takes her to Minnesota, Wisconsin, and South Dakota. Sally spends equal amounts of flight time in each state. You are only required to withhold Iowa income tax from her wages.