All-items parity
98.6
US = 100.0
Minnesota (MN) | All-items parity 98.6
Minnesota Cost of Living 2026
Minnesota reads 98.6 on the BEA all-items price parity for 2024, just under the national level, with housing a genuine bargain at 91.3 against the national 100.6. The state runs a high-tax, high-service model: income tax starts at 5.35%, the highest bottom bracket in the country, and tops out at 9.85%, but clothing and groceries are exempt from sales tax, healthcare quality is nation-leading, and the uninsured rate of 4.2% is among the lowest anywhere. Median income of $87,117 carries the load comfortably.
Income tax starts at 5.35%Clothing & groceries untaxedHousing parity 91.3
Median Home
$344,600
2BR rent $1,369/mo
Median Income
$87,117
Household, Census ACS
Category breakdown
The four BEA price parities vs the nation
| Category | MN index | National avg | Difference |
|---|---|---|---|
| All items | 98.6 | 100.0 | -1.4% |
| Services: housing rents | 91.3 | 100.6 | -9.2% |
| Goods | 100.5 | 99.6 | 0.9% |
| Services: utilities | 90.8 | 98.4 | -7.7% |
| Services: other | 100.2 | 100.1 | 0.1% |
U.S. Bureau of Economic Analysis publishes these four component parities and no others. There is no federal grocery, healthcare or transportation price parity, so this table shows none. Food at home sits inside Goods; medical and transport services sit inside Services: other.
Sources: BEA Regional Price Parities by State (table SARPP), 2024 reference year, U.S. Bureau of Economic Analysis. Census ACS 2024 1-year (median income, home value), Minnesota Department of Revenue (income and sales tax), Tax Foundation (effective property tax), EIA (electricity rates), KFF (uninsured rate).
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Pros / offsets
What works in Minnesota.
Affordable housing for a top-tier economy. The $344,600 median home and 91.3 rents parity are remarkable for a state hosting 15-plus Fortune 500 headquarters (Target, Best Buy, 3M, UnitedHealth among them). The Twin Cities deliver big-metro salaries on Midwest housing.
No sales tax on clothing or groceries. The 6.875% state sales tax skips both categories entirely, a structural exemption that benefits families most and is a founding reason the Mall of America sits in Bloomington rather than across a border.
Healthcare quality with near-universal coverage. Mayo Clinic, strong HMO networks and MinnesotaCare produce a 4.2% uninsured rate and some of the best health outcomes in the country. The $8,050 average annual healthcare spend buys more here than almost anywhere.
High incomes, deep public services. Median household income of $87,117 ranks in the national top tier, and the taxes fund visible goods: strong schools, parks and transit by Midwest standards, and county services that lighter-tax neighbors simply do not offer.
Cons / drivers
Where Minnesota costs more.
The income tax starts high and climbs. Minnesota's bottom bracket of 5.35% is the highest first rate in the nation, and the top 9.85% bracket is Californian in spirit. There is no local income tax, but middle earners pay more state tax here than nearly anywhere in the Midwest.
Social Security is partially taxed. Minnesota is one of the few states that still taxes Social Security benefits, though exemptions now shield most lower- and middle-income retirees; higher-income retirees pay tax on a portion. Pension and retirement-account income is taxed as ordinary income, which pushes some retirees toward South Dakota or Florida on paper.
Winter is a budget line. Average lows of 30F mean a long heating season: the $92 average gas bill understates January peaks, and winter costs extend to tires, plowing and higher auto insurance claims. The climate premium is real money, not just discomfort.
Property tax is middling, not cheap. At 1.02% effective with homes appreciating in the Twin Cities, bills on ordinary suburban homes commonly run $3,500 to $5,500, cheaper than Illinois or Wisconsin but no bargain against the Dakotas or the South.
Tax + benefit signals
Minnesota tax and access overview
State income tax
5.35-9.85%
Graduated or flat
Property tax effective
1.02%
Of assessed value, annual
Sales tax (state)
6.88%
Local can add 1-4% more
Uninsured rate
4.2%
Medicaid: expanded
Your take-home pay in Minnesota
Federal, Minnesota and any local income tax on your salary, per paycheck.
The mortgage on a $344,600 home
Monthly payment at today’s rates with Minnesota property tax (1.02%) and average home insurance.
Metro variation
State averages mask city variation.
Minnesota averages 98.6 on the BEA all-items parity, split roughly into three markets:
Minneapolis-Saint Paul (the Twin Cities): Around two-thirds of the state’s population and economy. Housing runs above the state figure, with Edina, Wayzata and the southwest suburbs carrying the premium; Saint Paul and the first-ring suburbs remain the value side of the metro.
Rochester: Mayo Clinic’s company town, with healthcare employment pushing incomes and housing modestly above Greater Minnesota norms.
Greater Minnesota (Duluth, St. Cloud, Mankato, the Iron Range): Prices well below the state average; Duluth pairs Lake Superior quality of life with housing that still sells in the low $200,000s.
The Twin Cities premium is modest by national standards, which is exactly Minnesota’s pitch: metropolitan pay without coastal housing.
Frequently Asked
Minnesota cost of living, answered
Does Minnesota tax Social Security?
Partially. Minnesota is one of the small group of states that still taxes Social Security benefits, but a state-specific subtraction now fully exempts most lower- and middle-income retirees; above the income thresholds, a portion of benefits is taxed. Pensions, 401(k) and IRA withdrawals are taxed as ordinary income at Minnesota's 5.35 to 9.85% rates. Retirees comparing against South Dakota (no income tax, next door) should run the numbers on total income, not just benefits.
Why does Minnesota's income tax start at 5.35%?
Minnesota chose a high-floor structure: its lowest bracket, 5.35%, is the highest starting rate in the country, and brackets climb to 9.85%. The model funds high-service government, strong schools, healthcare programs, infrastructure, rather than relying on property tax (Illinois) or sales tax (Tennessee). Whether that trade works for you depends on how much of the service bundle your household actually uses.
Is it true clothing is tax-free in Minnesota?
Yes. Minnesota exempts clothing and footwear from its 6.875% sales tax, along with unprepared groceries and prescription drugs. The clothing exemption is why the Mall of America draws shoppers from Wisconsin, the Dakotas and Canada. On a family's annual budget the exemptions offset a meaningful slice of the income-tax premium, particularly for larger households.
How expensive are the Twin Cities compared to other major metros?
Among the best value of any top-20 US metro. Median homes in the Minneapolis-Saint Paul metro run moderately above the state's $344,600 figure, roughly half of Seattle or Boston equivalents, while Fortune 500 density keeps professional salaries competitive. The honest costs are winter and state income tax; housing is the part that surprises coastal transplants in a good way.
What does winter actually add to a Minnesota budget?
Plan for a real seasonal premium: natural-gas heating averaging $92 a month across the year but peaking far higher in January, winter tires or an AWD vehicle, occasional plowing or snow-blower costs, and higher collision-insurance claims in icy months. Spread annually it typically adds a few hundred dollars a month versus a Sun Belt budget, partially offset by cheap summer utilities (electricity averages $118 a month).
How do Minnesota groceries compare?
BEA publishes no grocery parity; food sits inside the goods parity, which reads 100.5 for Minnesota against a national 99.6. Groceries are fully exempt from sales tax, and household spending averages $400 a month, essentially the national norm. Minnesota is not a cheap-food state, but the tax exemption and strong grocery competition in the Twin Cities keep it from being a dear one.