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How Minnesota Taxes Nonresident Income

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Certain income received by nonresidents is taxed by Minnesota. For more information, see Minnesota Statute 290.17.

The table below shows how Minnesota taxes nonresident income.

Type of Income  
Wages, salaries, tips, commissions, bonuses, severance pay, annual leave, stock options​          Yes, if the services were performed or the income earned in Minnesota
Interest, dividends No
State refunds, alimony received, unemployment compensation ​ No
Qualified pensions, IRA distributions, annuities, deferred compensation plans​ No
Nonqualified plans (such as stock options) ​ Yes, if earned in Minnesota
Capital gains and losses from the sale of intangible assets (such as stock) ​ No
Capital gains and losses from the sale of tangible assets not used in a trade or business ​ Yes, for property located in Minnesota
Covenant not to compete, goodwill Generally, yes
Gain on the sale of a partnership interest Yes, for partnerships location in Minnesota
Business income from a sole proprietorship​ Yes, to the extent the activities are conducted in Minnesota
Rent and royalty income ​ Yes, for property located in Minnesota
Installment sales Yes, if the capital assets were located in Minnesota, but only the gain on the sale was assigned to Minnesota, not the interest
Like-kind exchanges​ No. If no gain or loss was recognized on the federal return (Internal Revenue Code, section 1031), none would be recognized on the Minnesota return. This is true even if the replacement was located outside of Minnesota​.
Partnership, S Corporation income or loss ​ Yes, to the extent the activities were conducted within Minnesota
Farm income or loss ​ Yes, to the extent the activities were conducted within Minnesota

 

Gambling Winnings  
From American Indian casinos ​ Yes, from casinos located in Minnesota ​
From Minnesota lottery Yes, from tickets purchased in Minnesota ​
From charitable or lawful gambling, or pari-mutuel wagering ​ Yes, from gambling in Minnesota ​

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