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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 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 must notify you of their choice.

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

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