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Mining and Exploration Royalties

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Minnesota requires income tax withholding on mining and exploration royalty payments for use of Minnesota lands. If you pay these royalties, you must withhold 6.25% as Minnesota income tax.

Do not withhold tax on royalties paid to:

Partnerships
S corporations
C corporations
Simple trusts, if they distribute all royalty income to their beneficiaries
The State of Minnesota, if you pay royalties on state-managed mineral lands

A simple trust may still elect to have you withhold tax, but they must notify you of their choice.

Note: If you are an individual receiving royalties, see Royalty Recipients.

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Mining and Exploration Royalties [+]

Royalties are amounts (in money or value of property) individuals receive for having a right to, title in, or interest in any Minnesota land for permission to explore, mine, take out, or remove ore. Ores subject to withholding include:

Iron
Taconite
Minerals (such as copper, nickel, gold) subject to the net proceeds tax

Royalties may also include rents, bonus payments, and nonrecoverable lease payments.

How to Report Royalty Withholding [+]

Report royalty withholding with your regular wage income tax withholding or under a separate Minnesota Tax ID Number. If you would like a separate Minnesota ID number for royalty withholding, you can register for one online or by phone.

Provide each royalty recipient a federal Form 1099 by January 31 each year. You must also send all 1099 information reporting Minnesota withholding to the Minnesota Department of Revenue by January 31 each year. For details, see Forms W-2 or 1099.

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Last Updated

December 26, 2023