In the spring of 2014, the legislature passed, and the Governor signed, the first significant changes to the Minnesota estate tax in many years. The new legislation is scheduled to increase the estate tax exemption amount in $200,000 increments over five years until it tops out at $2 million in 2018. The law also raised the estate tax rate.
Prior to the changes, the Minnesota estate tax rate varied from 5% to 16% depending on the size of the estate. However, due to the way in which the tax was calculated, the effective rate of the tax could be as high as 41%. The changes now put the estate tax rate at between 10%- 16%; removing the lower bracket of 5%-9%. In effect, the law raises the exemption amount while at the same time raising the estate tax rate.
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