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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 percent as Minnesota income tax.

Do not withhold Minnesota income tax on royalties paid to any of the following:

  • 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.

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