Breaking News
More () »

New inflation-adjusted Minnesota income tax brackets released

The brackets are adjusted for inflation every year, but this year was the biggest shift in decades.

ST PAUL, Minn. — The Minnesota Department of Revenue has released the new inflation-adjusted individual income tax brackets for the 2023 tax year.

For tax year 2023, those brackets will shift by 7.081% from tax year 2022.

This adjustment, called indexing, has been done every year in Minnesota since 1979. Indexing is done to avoid something called "bracket creep."

"If we didn't adjust those thresholds each year, then people whose income was growing with inflation, but didn't have any real extra buying power, would see their taxes go up," said Eric Willette, Research Director at the Minnesota Department of Revenue.

This is what Minnesota's income tax brackets will look like for the 2023 tax year:

Credit: MN Dept. of Revenue
The Minnesota income tax brackets for the 2023 tax year.

While indexing is done every year, Willette says the adjustment this year was especially high, because inflation is high right now. 

"In most of the last few decades, inflation has been in the two, three, four percent range…nothing like the seven percent we're seeing now," he said.

The standard deduction and dependent exemption amounts have shifted to account for inflation, too. 

The Department of Revenue says to adjust the brackets they use an inflation factor, rounded to the nearest $10, based on the change in the U.S. Chained Consumer Price Index for all urban consumers.

Again, all of this is to prevent people from paying more in taxes just because their income went up to match inflation.

So what if you didn't get a raise to match inflation? Or a raise at all?

Depending on where your income falls on the brackets, if the brackets moved up enough due to the adjustment while your income stayed the same, it could push at least part of your income into a lower tax category. Meaning you'll pay less in taxes.

Watch more KARE11 Sunrise:

Watch the latest coverage from KARE11 Sunrise in our YouTube playlist:

Before You Leave, Check This Out