Minnesota · LLC tax election
Minnesota LLC: S corp or C corp?
Minnesota's cost of an S election is a fee scaled to your Minnesota footprint, not to your profit.
See Minnesota at a glanceShort answer
Minnesota recognizes the federal S election and does not tax the S corporation under its corporate franchise tax, but it charges a minimum fee based on Minnesota property, payroll and sales: $0 under $1,280,000 for 2026, rising to $12,830. A C corporation pays 9.8% on taxable income.
Last checked .Minnesota at a glance
| Question | Minnesota |
|---|---|
| S election recognized? | Yes, Minnesota follows the federal election1 |
| Separate state form and deadline | No separate state form2 |
| Tax the S corp itself pays | Minimum fee: $0 below $1,280,000 of Minnesota property, payroll and sales, then $260 to $12,830 for 2026.3 |
| C corp rate and minimum | 9.8% flat4 |
| Entity tax on a default LLC | Single-member LLC: none. Multi-member LLC: a minimum fee once Minnesota property, payroll and sales pass $1,280,000.5 |
| Personal income tax | Yes, on wages and pass-through income6 |
What is different about Minnesota?
Minnesota defines an S corporation by the federal election. If you have a valid one, the corporation is not subject to the state's franchise tax, with a short list of exceptions that includes the minimum fee. That fee does not look at profit. It looks at the sum of your Minnesota property, payroll and sales, and for 2026 it is $0 below $1,280,000, then $260, $770, $2,560, $5,140 and $12,830 as you climb. The same fee schedule hits C corporations and multi-member LLCs, while a single-member LLC owes none. The other big number is the top individual rate, 9.85%, which is where S corporation profit ends up.
Does Minnesota recognize a federal S corp election?
Minnesota recognizes the federal S election: a corporation with a valid federal election is not subject to the Minnesota franchise tax except for specific taxes, including the minimum fee. There is no separate state election; the corporation files Form M8 each year. For 2026 the fee is $0 below $1,280,000 of Minnesota property, payroll and sales, $260 from $1,280,000, $770 from $2,560,000, $2,560 from $12,830,000, $5,140 from $25,640,000 and $12,830 from $51,280,000.
Does my LLC need a separate Minnesota election or form?
Minnesota follows the federal S election with no separate state election; the S corporation files Form M8 each year.2
What does Minnesota tax an S corp or LLC at the entity level?
- A Minnesota S corporation pays a minimum fee that is $0 below $1,280,000 of Minnesota property, payroll and sales and rises from $260 to $12,830 for 2026.3
- A single-member Minnesota LLC pays no minimum fee, but a two-member LLC taxed as a partnership does once its Minnesota property, payroll and sales pass $1,280,000.5
Is a Minnesota LLC taxed as a C corp ever better?
A Minnesota C corporation pays 9.8% of taxable income. The same minimum fee schedule applies, so a corporation with $1,280,000 or more of Minnesota property, payroll and sales owes at least $260 even in a loss year. Dividends are taxed again on your personal return, where Minnesota's top rate is 9.85%. The fee is not credited against the 9.8% tax; it is a separate line, so budget for both.
Run your Minnesota numbers
In Minnesota the S election pays when profit is large enough to make the 9.8% corporate layer matter, since the state taxes owners at graduated rates up to 9.85%. The minimum fee is the state cost that eats into the savings. It is $0 for small footprints and stays modest until your Minnesota property, payroll and sales pass $12,830,000.
Result
How much would a Minnesota LLC owner save as an S corp?
| Taxed as | At $80,000 profit | At $150,000 profit |
|---|---|---|
| Default LLC | $11,304self-employment tax $11,304 + Minnesota LLC tax $0 | $21,194self-employment tax $21,194 + Minnesota LLC tax $0 |
| S corp | $9,344payroll tax $7,344 + Minnesota S corp tax $0 + $2,000 payroll and prep | $15,770payroll tax $13,770 + Minnesota S corp tax $0 + $2,000 payroll and prep |
| C corp | $18,541payroll tax $7,344 + Minnesota tax $3,136 + federal $6,061 + $2,000 payroll and prep | $33,015payroll tax $13,770 + Minnesota tax $5,880 + federal $11,365 + $2,000 payroll and prep |
Assumes a 60% salary8 and a single filer. Income tax is left out. C corp dividends are taxed again.
When is the Form 2553 deadline for a Minnesota LLC, and what if I miss it?
Late relief: federal steps, deadline guide.
What to do next
How to start one, or have us form it from $123.75.
Registered agent $74.25/yr, annual report.
LLC vs S corp guide, election deadline, Form 2553 filed for $165.
More on Minnesota: How to start a Minnesota LLC · How to start a Minnesota corporation · Minnesota LLC cost · Minnesota annual report · Annual report late fees by state
File the S-Corp Election for your Minnesota LLC
We file Form 2553 for a flat $165.
Get the S-Corp ElectionCommon questions
Does Minnesota recognize the S corporation election?
Yes. Minnesota statute defines an S corporation as one with a valid election under section 1362 of the Internal Revenue Code, and says it is not subject to the franchise tax except specific taxes, including the minimum fee.
What is the Minnesota S corporation minimum fee for 2026?
It depends on Minnesota property, payroll and sales: $0 under $1,280,000, $260 up to $2,559,999, $770 up to $12,829,999, $2,560 up to $25,639,999, $5,140 up to $51,279,999, and $12,830 above that.
Do I pay the Minnesota minimum fee with a single-member LLC?
No, if the LLC reports on your personal return (Form M1). An LLC taxed as a partnership with two or more members owes it above the $1,280,000 threshold. An LLC taxed as an S corporation files Form M8 and owes the S corporation fee instead.
What is the Minnesota C corporation tax rate?
9.8% of taxable income, plus the minimum fee schedule when your Minnesota property, payroll and sales reach $1,280,000. That fee applies to C corporations too, and it is separate from the 9.8% tax on income. A C corporation under the threshold owes only the rate times taxable income.
Sources 9 links, checked Nov 6, 2026
- Minnesota treats a corporation as an S corporation if it has a valid federal S election, and does not tax it under the regular corporate franchise tax. revisor.mn.gov, checked Nov 6, 2026
- Minnesota follows the federal S election with no separate state election; the S corporation files Form M8 each year. revenue.state.mn.us, checked Nov 6, 2026
- A Minnesota S corporation pays a minimum fee that is $0 below $1,280,000 of Minnesota property, payroll and sales and rises from $260 to $12,830 for 2026. revenue.state.mn.us, checked Nov 6, 2026
- Minnesota taxes a C corporation at 9.8% of taxable income, plus the same minimum fee schedule as S corporations. revisor.mn.gov, checked Nov 6, 2026
- A single-member Minnesota LLC pays no minimum fee, but a two-member LLC taxed as a partnership does once its Minnesota property, payroll and sales pass $1,280,000. revenue.state.mn.us, checked Nov 6, 2026
- Minnesota taxes individual income at graduated rates up to 9.85%. revisor.mn.gov, checked Nov 6, 2026
- IRS: Form 1120 instructions, C corp rate irs.gov, checked Nov 6, 2026
- IRS: S corp reasonable compensation irs.gov, checked Nov 6, 2026
- IRS: Form 2553 instructions irs.gov, checked Nov 6, 2026
Last verified Nov 6, 2026.
This page explains the rules; it is not tax advice. Run your numbers with a CPA or enrolled agent before you elect.
Last verified Nov 6, 2026.