What payroll deductions are employers required to withhold?

Payroll Tax Withholding Requirements for Employers in Minnesota

Employers operating in Minnesota must withhold specific payroll taxes from employee wages to comply with state and federal regulations. Understanding these requirements ensures accurate payroll processing and helps maintain compliance.

Mandatory Payroll Deductions in Minnesota

• Federal Income Tax Withholding: Employers must withhold federal income tax based on IRS tax tables and employee Form W-4 information.
• Social Security Tax: Withhold 6.2% of wages up to the annual wage base limit, matching the amount as the employer’s contribution.
• Medicare Tax: Withhold 1.45% on all wages, with an additional 0.9% Medicare surtax on wages exceeding $200,000 for single filers (no employer match on surtax).
• Minnesota State Income Tax: Employers must withhold state income tax using Minnesota Department of Revenue withholding tables or formulas based on employee Form W-4MN.
• Minnesota State Unemployment Insurance (SUI): While this is typically an employer-paid tax, employers should be aware of reporting requirements related to unemployment insurance.

Additional Considerations

• Local Taxes: Minnesota does not impose local payroll taxes, but employers should verify any city-specific requirements.
• Voluntary Deductions: Employers may withhold voluntary deductions such as retirement contributions or health insurance premiums if authorized by the employee.
• Recordkeeping and Reporting: Maintain accurate payroll records and submit timely tax filings to the IRS and Minnesota Department of Revenue to avoid penalties.
• Automation: Use payroll software or services that integrate federal and state tax tables to ensure correct withholding calculations.

As of 2026, stay updated with any changes in withholding rates or reporting requirements by consulting official IRS and Minnesota Department of Revenue resources.