Taxes
Minnesota’s business taxes are very competitive and give companies a distinct advantage when it comes to the cost of doing business.
Commercial & Industrial Property Taxes
Property tax rates in Moorhead are based on the assessed market value of the property. Moorhead, as a border city, enjoys rates capped at 1.6% (effective 1/1/2015) of the assessed market value through special Border City Legislation known as the “Disparity Reduction Credit”. To find property tax information on a specific property, please visit Moorhead’s Property Information page.
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Moorhead Commercial / Industrial Parcels |
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|---|---|---|---|---|---|---|
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Property Value |
Gross Tax |
Gross ETR |
Net ETR |
% Reduction in Tax due to DRC |
Dollars saved due to DRC |
Net Tax |
|
$100,000 |
$2,759 |
2.76% |
1.60% |
42% |
$1,159 |
$1,600 |
|
$250,000 |
$7,755 |
3.10% |
1.6% |
48% |
$3,755 |
$4,000 |
|
$500,000 |
$16,796 |
3.36% |
1.60% |
52% |
$8,796 |
$8,000 |
|
$1,000,000 |
$34,878 |
3.49% |
1.60% |
54% |
$18,878 |
$16,000 |
|
$5,000,000 |
$179,533 |
3.59% |
1.60% |
55% |
$99,533 |
$80,000 |
|
$10,000,000 |
$360,353 |
3.60% |
1.6% |
56% |
$200,353 |
$160,000 |
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ETR: Effective Tax Rate – Pay 2015 |
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Corporate Income Tax
Minnesota is currently phasing in a Single Sales Apportionment of corporate income by the year 2014. Minnesota’s lack of a throwback rule (sales to states without income taxes “thrown back” to the taxing state for apportionment purposes) reduces net income, and a generous carry-forward period helps reduce tax liabilities. States such as California and North Carolina have throwback for sales to the U.S. government.
Minnesota has one of the most generous foreign royalty deductions in the country. Minnesota corporations can license technology to foreign corporations and deduct 80% of the foreign royalties they receive if the payer is a member of the unitary group.
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Breakdown of Corporate Income Taxes |
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|---|---|
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Corporate Income Tax Rate |
9.80% effective tax rate |
|
Apportionment Formula (sales-property-payroll) |
100% - 0% - 0% |
|
R & D Credit |
Refundable; 10% of first $2 million of qualified expenses and 2.5% thereafter. |
|
Throwback Rule |
No |
|
Sales to U.S. Government Throwback |
No |
|
Carry forward |
Yes (zero back, 15 forward) |
Source: MN Department of Employment and Economic Development
Sales & Use Tax
Minnesota refunds sales tax paid on capital equipment used in the manufacturing process. There are several other major exemptions for businesses, including fees for equipment and installation repair, and most services. Utilities, chemicals, and gases used in industrial production are also exempt.
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Breakdown of Sales & Use Taxes |
|
|---|---|
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State Sales & Use Tax Rate |
6.875% |
|
Local Sales Tax Rate – Moorhead |
0% |
|
Tax on Manufacturing Machinery |
No (refunded) |
|
Tax on Utilities |
No |
|
Tax on Materials Consumed on Production |
No |
|
Tax on Fuels in Production |
No |
Source: MN Department of Employment and Economic Development
Unemployment Insurance Tax
Minnesota companies with the most favorable employment histories received an unemployment insurance base tax rate of 0.5% in 2012.
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Average Unemployment Insurance Taxes in 2013 |
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|---|---|
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Taxable Wage Base: |
$29,000 |
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Minimum-Maximum Experience Rates |
0.5 to 9.4% |
|
New Employer Rate |
3.00% |
|
Minimum Time to Experience Rate |
18 months ending June 30 |
Source: MN Department of Employment and Economic Development
Workers Compensation
Private insurers offer coverage, with an Assigned Risk Pool, available for new businesses and those with high-risk classifications. Premium costs range from 33 cents per $100 of payroll for office workers to $5.43 for light manufacturing and machine operators. The City of Moorhead buys down a portion of this expense through the “Border City Enterprise Zone Tax Credit Program.” Click here for more information about this program.