Minnesota Mileage Deduction 2026: Up to 9.85% State Tax

Minnesota's top income tax rate is 9.85%, the sixth highest in the country. No local income taxes, but the state rate alone makes every deductible mile worth significantly more here.

The Savings

At 72.5¢/mile and 15,000 business miles, using a mid-bracket rate of 7.85%:

How to File

Deduct on federal Schedule C, Line 9 at 72.5¢/mile. Minnesota uses your federal adjusted gross income as the starting point, so the deduction flows through to your state return. Keep a mileage log with the date, destination, purpose, and miles for each trip.

Employer Reimbursement

Minnesota does not require private employers to reimburse mileage. The state minimum wage ($11.13/hr for large employers in 2026) applies as the floor, unreimbursed expenses cannot push effective pay below it.

FAQ

Does Minnesota have local income taxes?

No. Minnesota has no local or municipal income taxes. Your deduction reduces federal and state taxes only.

Does my mileage deduction reduce Minnesota state taxes?

Yes. Minnesota uses your federal AGI as the starting point. Your Schedule C mileage deduction reduces that number, which directly reduces your state tax at rates up to 9.85%.

Can W-2 employees deduct mileage in Minnesota?

No. The mileage deduction for W-2 employees was permanently eliminated under the One Big Beautiful Bill. Minnesota does not require employer reimbursement, so if your employer does not reimburse, you have no tax remedy.

High state tax, high deduction value. Start tracking free →