State guide · Minnesota · 2026 rules
S corporation in Minnesota: what the election changes
In Minnesota the election adds one payroll cost and usually no entity tax. Your salary pays the Paid Leave premium, but a 25% owner-officer is outside unemployment insurance.
Choose a state and enter your profit and salary to see the comparison.
The state
Minnesota follows the federal S election; there is no separate state form. The S corporation files Form M8 each year. Minnesota has no local income taxes.
An S corporation owes a minimum fee based on the sum of its Minnesota property, payroll and sales. For 2026 the fee is $0 when that sum is under $1,280,000 and $260 from $1,280,000 to $2,559,999. Your salary counts as payroll in that sum. A sole proprietor or one-owner LLC pays no such fee.
An LLC that elects stays an LLC, so the election changes no Secretary of State filing.
Payroll taxes on your salary
Unemployment insurance does not cover a corporate officer who owns 25 percent or more of the corporation. A one-owner S corporation with no other employees owes no Minnesota unemployment tax on your salary. The same rule applies to an LLC member who owns 25% or more.
Minnesota Paid Leave started on January 1, 2026. The premium is 0.88% of wages for 2026 and 2027, and the employer pays at least half. A W-2 owner with a 25% or larger stake is covered. A sole proprietor is outside the program unless they opt in, so the election starts this cost. The calculator uses the full 0.88% rate; a qualifying small employer pays 0.66%.
The optional pass-through entity tax
An S corporation can elect Minnesota’s pass-through entity tax at 9.85%, the top individual rate, on Schedule PTE with Form M8. You claim a refundable credit for your share. The calculator leaves it out.
Worked examples
A single-member LLC owner, single filer, 22% federal bracket, default payroll and return costs. The figure is total tax and added costs as an S corporation compared with staying as you are.
| Profit / salary | Statewide |
|---|---|
| $80,000 / $45,000 | $262 lower |
| $120,000 / $60,000 | $2,543 lower |
| $200,000 / $90,000 | $7,083 lower |
Starting payroll in Minnesota
Register for state income tax withholding with the Minnesota Department of Revenue, and for a Paid Leave account with Unemployment Insurance Minnesota. An owner of 25% or more who has not elected unemployment coverage gets a Paid Leave-only account.
Other states
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- Washington, DC
- West Virginia
- Wisconsin
- Wyoming
Sources
- Minn. Stat. 290.9725
- MN DOR, 2025 Form M8 Instructions, Filing Requirements
- Minn. Stat. 290.0922, subd. 1(b)
- MN DOR, 2026 Form M8, M8A Minimum Fee Table (final draft 10/1/26)
- Minn. Stat. 289A.08, subd. 7a(b)
- Minn. Stat. 290.06, subd. 2c(a)
- Minn. Stat. 268.035, subd. 20(29) (noncovered employment)
- Unemployment Insurance Minnesota, Unemployment Tax Rates
- Minn. Stat. 268.051, subd. 5(a)
- Unemployment Insurance Minnesota, Owner officer wages
- Minnesota Paid Leave, Premium rate and contributions
- Minn. Stat. 268B.14, subd. 3
- Minn. Stat. 268B.01, subd. 15(c)
- MN DEED, Minnesota Paid Leave presentation (October 9, 2025)
- Unemployment Insurance Minnesota, Reporting wages paid to business owners (table row: W-2, 25% or more, no UI election)
- Minn. Stat. 116L.20, subd. 1(a)
Federal figures: IRS Publication 15 (2026), Schedule SE and Form 2553 instructions. Every figure was read on an official page and checked a second time. Checked October 24, 2026. How we check facts.