Minnesota features progressive state income tax brackets starting at 5.35 percent and climbing to 9.85 percent. Travel nurses accepting contracts in Minneapolis, St. Paul, Rochester, or Duluth must allocate their earnings on a Minnesota nonresident tax return.
Assignments at premier institutions like the Mayo Clinic in Rochester or major hospital networks in the Twin Cities offer strong pay, but state tax withholding requires careful planning.
How Minnesota calculates nonresident income tax
Travel nurses working in Minnesota file Form M1 and attach Schedule M1NR (Nonresidents and Part-Year Residents). Minnesota computes tax liability on your full federal adjusted gross income, then calculates the ratio of your Minnesota gross income to your total gross income.
To determine your Minnesota source income, your agency allocates wages based on the actual number of days worked within Minnesota compared to total working days nationwide. Only compensation earned for services performed inside Minnesota borders is taxable to the state.
Stipends for housing and meals paid under an accountable plan are excluded from Minnesota taxable wages. You can test different contract offers and see your projected take-home pay with our Contract Analyzer.
Reciprocity with Michigan and North Dakota
Minnesota maintains individual income tax reciprocity agreements with two neighboring states: Michigan and North Dakota. If your permanent tax home is in Michigan or North Dakota and you work a travel nursing contract in Minnesota, you are taxed solely by your home state.
To claim this exemption, submit Form MWR (Reciprocity Exemption/Affidavit of Residency) to your staffing agency payroll department before your contract starts. Reciprocity between Minnesota and Wisconsin ended years ago, so Wisconsin residents working in Minnesota must file nonresident returns in Minnesota and claim a credit in Wisconsin.
Check statutory updates on the Minnesota Department of Revenue website.
Preserving your travel status on long assignments
Travel nurses working in Minnesota frequently renew contracts through harsh winter months and into the summer. Be vigilant regarding the IRS 12-month rule. If you remain on assignment in Rochester or the Twin Cities for more than 365 days, the IRS revokes your travel status, rendering all subsequent stipends taxable.
Confirm that you maintain continuous, duplicate living expenses at your primary residence throughout your Minnesota contract. You can evaluate your documentation using our Tax Home Quiz.
Frequently asked questions
How does Minnesota allocate nonresident wages on Form M1NR?
Minnesota computes tax on your entire federal adjusted gross income, and then multiplies that liability by your Minnesota source income ratio, which is determined by days worked inside Minnesota compared to total work days.
Does Minnesota have tax reciprocity with Wisconsin or Michigan?
Minnesota has tax reciprocity agreements with Michigan and North Dakota. Reciprocity with Wisconsin was dissolved, meaning Wisconsin residents working in Minnesota must file Form M1NR and claim a credit in Wisconsin.
Can Minnesota tax my housing stipends if my agency pays under GSA rates?
No. Housing and meal stipends paid under a valid accountable plan that do not exceed federal GSA limits are excluded from Minnesota gross taxable income.