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Severance Pay
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Severance pay may be taxable to Minnesota and subject to state withholding.
| If an employee is a | You must |
|---|---|
| Minnesota resident | Allocate the full payment to Minnesota |
| Nonresident of Minnesota | Allocate the payment based on the employee’s percentage of time worked in Minnesota |
Example 1: Steve worked nine years in Arizona and one year in Minnesota. He is a Minnesota resident when receiving his severance payment. You must allocate the full payment to Minnesota.
Example 2: Emma worked nine years in Minnesota and one year in Florida. She is a Florida resident when receiving her severance payment. You must allocate 90% of her severance pay to Minnesota.
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