Minnesota's franchise tax works just like a corporate income tax. This tax targets the portion of your net income that comes from Minnesota, not your worldwide profits. If you're a C corporation (or an LLC/partnership that chose C-corp status), you pay this directly to Minnesota at a flat 9.8% rate.
Minnesota's franchise tax doesn't apply to every business. Your entity type and federal tax election determine whether you're subject to the tax, just the minimum fee, or neither.
Required to file and pay franchise tax:
File informational returns only (may owe minimum fee):
Exempt from filing:
Your Minnesota franchise tax filing is separate from federal filing, but they travel as companions. Your entity type for federal purposes determines which form you'll use.
C corporations attach federal Form 1120 to Minnesota Form M4. S corporations include Form 1120-S with Form M8. Partnerships and most multi-member LLCs submit Form 1065 with Form M3.
Include the same schedules you sent to the IRS:
Minnesota doesn't charge a separate filing fee. Instead, every return faces either the corporate tax or the state's minimum fee. This minimum fee applies when your Minnesota property, payroll, and sales exceed certain thresholds and it ranges from a few hundred to several thousand dollars. If your calculated tax is less than the minimum fee, you pay the higher amount.
Your Minnesota corporate tax timeline starts when your tax year ends, and the state doesn't bend on deadlines. Calendar-year C corporations must file by April 15 or the 15th day of the fourth month after a fiscal year closes. This matches federal rules and appears in Minnesota Statutes 289A.18.
S corporations and partnerships face an earlier deadline: March 15, or the 15th day of the third month after a fiscal year ends, matching the federal Form 1120S and 1065 schedules. If your corporation expects to owe more than $500 in tax, you must make quarterly estimated payments. These fall on the 15th day of the third, sixth, ninth, and twelfth months of your tax year. Minnesota Revenue posts the exact calendar each January on its income-tax due dates page.
Minnesota automatically grants a six-month extension to file, allowing C corporations to submit Form M4 by October 15 and pass-throughs to file Form M8 or M3 by September 15. But the extension only covers paperwork. Any tax still unpaid after the original due date accrues interest and the 6 percent late-payment penalty outlined in section 289A.60.
Calculating Minnesota corporate tax starts with your federal taxable income and then adds state-specific twists that might catch you off guard.
Begin with federal taxable income, then apply Minnesota modifications that add or subtract items the state treats differently. Once you have Minnesota-modified taxable income, apportion it if you operate in multiple states. Minnesota uses a single-sales-factor formula, so only your Minnesota receipts matter:
Minnesota Taxable Income = Modified Taxable Income × (Minnesota Sales ÷ Total Sales).
If half your $1 million in receipts come from Minnesota, only $500,000 faces state tax. Multiply that by the flat 9.8% corporate rate, and you owe $49,000.
Even when your calculated tax is minimal, Minnesota still expects a minimum fee from most corporations, S corps, partnerships, and electing LLCs. This fee scales based on your Minnesota property, payroll, and sales through brackets published yearly in the Form M4 instructions. Sole proprietorships escape this requirement.
Say your apportioned income creates only a $300 tax bill, but your Minnesota presence puts you in a $500 minimum-fee bracket. You pay $500, the higher amount. Conversely, if your calculated tax is $49,000 and the fee bracket says $1,000, you pay $49,000.
Operating for less than a full tax year? The minimum fee prorates—six months of operations, which means roughly half the annual amount. The income tax doesn't prorate, though. Income earned during that shorter period still faces the full 9.8% rate.
You have three options for filing your Minnesota corporate tax return: e-file yourself, mail paper forms, or hire a professional. Each approach begins with the same foundation: your completed federal return and the corresponding Minnesota form for your entity type.
C corporations use Form M4. S corporations file M8. Partnerships and most LLCs use M3.
E-filing gives you the fastest results. After completing your federal return, open Minnesota-certified tax software and:
Missing a Minnesota corporate tax deadline can be costly, with multiple penalties creating a compounding effect that increases your bill each month of delay.
Most businesses can skip Minnesota's corporate tax entirely. Pass-through entities—S corporations, partnerships, and LLCs that haven't elected C-corp treatment—file informational returns but pay no entity-level tax.
Sole proprietorships have it simpler. Since the business and owner are legally one entity, neither the tax nor the minimum fee applies. Just include your Schedule C figures on your individual Minnesota return.
The corporate tax is just one part of Minnesota's complex tax landscape. Even after mastering that calculation, your business faces several other state taxes that operate independently with their own rules and deadlines, including:
Universal obligations (all entity types):
Entities exempt from corporate tax don't escape other obligations. The annual minimum fee exists as a separate assessment, charged even when your calculated corporate tax would be zero, creating compliance requirements across multiple tax types regardless of your federal election or profitability.
Sometimes, your numbers aren't ready by the regular deadline. Minnesota gives you an automatic six-month extension to file your corporate tax return: no forms or requests needed. For calendar year C corporations, this moves your due date from April 15 to October 15. S corporations and partnerships shift from March 15 to September 15.
The extension covers filing only. Any tax you expect to owe remains due on the original date. If you need more time to complete the return, estimate your liability and pay through the Department of Revenue's online services.
Later discoveries or federal changes that affect state returns may require an amended Minnesota return. File the same year's form, check the "amended" box, attach a copy of the amended federal return, and include any changed schedules.
Minnesota's franchise tax calculations and quarterly estimated payments require detailed financial analysis, which tax professionals typically handle.
While Discern can't help you with these complex tax filings, we can automate your Minnesota annual report deadlines, manage your registered agent requirements, and handle Secretary of State compliance across all states where you operate. Ready to simplify your Minnesota compliance? Book a demo with Discern today.
.png)
.png){kind=small}