Mining and Exploration Royalties
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 any of the following:
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 must notify you of their choice.
Note: If you are an individual receiving royalties, see Royalty Recipients.