For 2025, Minnesota charges a separate net investment income tax of 1% on net investment income above $1,000,000.
Below that threshold this extra tax is zero; ordinary Minnesota tax and federal tax on a crypto gain remain separate.
This page follows the 2025 Schedule NIIT route. For the other state mechanisms, start at crypto taxes by state.
What is different in Minnesota
For 2025, Minn. Stat. 290.033 puts a separate net investment income tax on top of regular Minnesota income tax: 1% of net investment income over $1,000,000, reported on Schedule NIIT.
It reaches individuals, estates and trusts. The 2025 Schedule NIIT instructions exclude corporate taxpayers.
The base is net investment income, rather than crypto sale proceeds or crypto profit alone.
2025 Schedule NIIT removes net gain on Minnesota class 2a agricultural property and net interest and mutual fund dividends from U.S. bonds.
Gain that never entered gross income at all, with excluded gain on a principal residence under IRC 121 as the common case, was never in the base to begin with.
Dividends and other investment income can contribute to the same threshold. Start with the income base: zero under this tax is not zero tax.
Ordinary Minnesota income tax and federal tax on the same gain are separate obligations on their own forms, untouched by the result on Schedule NIIT.
Does my state change anything? A record-first checklist
- Pull the year's domicile and sale-date records: move dates, lease or closing documents, and the trade history behind each disposition.
- Identify the ordinary state layer you file anyway, on Form M1.
- Identify this separate NIIT and test your total net investment income against $1,000,000, not your crypto figure alone.
- Check the documented exclusions above against your own income items.
- Locate the year-matched forms: 2025 Schedule NIIT with Form M1, or Form M2 for an estate or trust.
- Note the limits: crypto application is an inference; later amendments sit outside this 2025 walkthrough.
Residency method itself belongs to the hub rather than this page: crypto taxes by state.
Rates, thresholds and deductions
The 2025 schedule multiplies by 0.01 (current figure at the Minnesota Department of Revenue). The Department's NIIT page identifies taxable years beginning after December 31, 2023; the tax was first imposed by 2023 c 64 art 1 s 30. The table distinguishes that operative rate from the May 15, 2025 proposal.
| Figure | Tax year | Authority document | Scope / caution |
|---|---|---|---|
| 1% rate | 2025 | Department of Revenue, NIIT page | Applies to net investment income above the threshold, not to the whole amount |
| $1,000,000 threshold; zero NIIT at or below it | 2025 | 2025 Schedule NIIT | Line 11 for individuals; line 19 uses undistributed net investment income for estates/trusts |
| 0.01 schedule multiplier | 2025 | 2025 Schedule NIIT | A nonresident or part-year result then depends on the allocation fraction |
| Taxable years beginning after December 31, 2023 | Effective boundary | Department of Revenue, NIIT page | First imposed by 2023 c 64 art 1 s 30 |
| 1.5% | 2025 proposal | HF 2437/SF 2374 Senate omnibus analysis | Historical proposal context only; never the operative 2025 rate |
Read the 2025 Schedule NIIT calculation
Establish three inputs before any multiplication: the federal starting amount from Form 8960 line 8, the state adjustments, and the exclusions listed above. Then the schedule's arithmetic is short:
Individual threshold tax = max(net investment income - $1,000,000, 0) x 0.01
For a nonresident or part-year individual, multiply that result by Minnesota-allocable net investment income / total net investment income. At or below the threshold, the result is zero. Estates and trusts have a separate computation using undistributed net investment income.
This is Schedule NIIT arithmetic, not your complete Minnesota or federal tax calculation.
How a crypto sale reaches the Minnesota return
Part 1 of 2025 Schedule NIIT begins with total investment income from federal Form 8960 line 8. Capital gains arrive inside that federal number. Applying this route to an investment crypto gain is an inference from the income base, rather than a Minnesota crypto-specific instruction.
State adjustments and deductions establish net investment income. For individuals, line 11 subtracts $1,000,000, line 12 applies 1%, and line 15 applies the allocation fraction and transfers the result to Form M1 line 14a.
An estate or trust reports it with Form M2 instead.
One route that is closed: this tax cannot be paid through a composite return or a pass-through entity election, so an entity election made for other reasons does not absorb an owner's individual NIIT.
Our record-keeping approach is to reconcile the underlying transactions before carrying a total between forms (a useful bookkeeping habit here). A state schedule starting at a federal line carries errors in that total forward.
The transaction-level work sits upstream on the federal return, and our walkthrough covers how to reconcile a sale on Form 8949 before any of it becomes a Minnesota figure.
If you moved during the year
A month count is not the test.
Under section 290.033, a nonresident or part-year individual computes the 2025 tax as if a full-year resident, then multiplies it by Minnesota-allocable net investment income under section 290.17 divided by total net investment income.
Nonresidents are taxed on the income allocated to Minnesota. Estates and trusts use an allocation fraction drawn from sections 290.17, 290.191 and 290.20.
So the records that matter are the ones establishing where income is allocated, not a calendar tally of days in Minneapolis. Two filers who moved on the same date can land on very different fractions.
The Department of Revenue's NIIT guidance allows no credit against this NIIT for tax paid to another state. Do not carry a credit from your ordinary income-tax calculation into this separate tax.
What Minnesota says about crypto by name
None of the Minnesota NIIT pages behind this article mentions cryptocurrency, virtual currency or digital assets. That covers the Department's NIIT page, section 290.033 and the 2025 Schedule NIIT with its instructions. Applying them to crypto is an inference: the capital-gains component of federal net investment income enters at Form 8960 line 8, and a crypto gain sits inside that component.
For a plain sale of a coin held as an investment, that inference is straightforward. Staking rewards, mining receipts and similar income were not researched for this page and are not covered by anything claimed here. The scope of that finding is the NIIT material reviewed, not every page of Minnesota guidance.
Form 1099-DA and the state
The IRS About Form 1099-DA page, in its January 7, 2026 entry, records exclusion from the Combined Federal/State Filing program for tax year 2025. The collected material supplies no Minnesota-specific direct-filing instruction; 2026 eligibility remains outside this page's 2025 scope.
Exclusion from one forwarding program says nothing about other information channels, and it changes nothing about the tax you owe on a gain.
Check the tax year and reporting scope
Later amendments. Section 290.033 records amendment by 2026 c 128 art 1 s 21. This walkthrough uses the 2025 schedule; later opportunity-zone adjustments need their own year-specific treatment.
The May 26, 2026 Governor's bill analysis describes a proposal and does not establish the enacted effective date.
A Minnesota document naming crypto. No such document is in this evidence set.
Later-year information reporting. Tax year 2026 CF/SF eligibility for Form 1099-DA, and any Minnesota-specific duty attached to it, are not established by what was collected.
The filing calendar. This source set contains no filing or payment calendar for M1 or M2. Check the Department's year-matched calendar and extension instructions before scheduling either task.
Bottom line
Start with your net investment income and the tax year's schedule. For a 2025 individual return, at or below $1,000,000 this extra tax is zero; ordinary state and federal taxes remain separate. Above it, subtraction and allocation matter.
Consider a licensed preparer for a large sale combined with a move or estate/trust holdings.
Questions
Is Minnesota's investment income tax 1% or 1.5%? For 2025, it is 1%. The 1.5% figure in the May 2025 Senate omnibus bill analysis is a proposal.
Can I pay this tax through a pass-through entity election? No. The 2025 Schedule NIIT instructions rule out payment through a PTE election or composite return.
Does the $1,000,000 threshold count only my crypto gains? No. For individuals, the threshold uses net investment income after the schedule's adjustments; total investment income starts at Form 8960 line 8. Crypto proceeds alone are the wrong comparison.
Where should the NIIT amount appear on my Minnesota return? For a 2025 individual return, Schedule NIIT line 15 transfers to Form M1 line 14a. Estates and trusts use Form M2 instead.
Related
Two other states tax above a threshold, and the comparison is about mechanism rather than numbers: Massachusetts' 4% surtax and Washington's capital gains excise.
For the layer underneath, see federal short- and long-term rates, and estimate the federal tax on a sale with a calculator that covers the federal side only.
Before you move a single figure onto a state form, gather the year-matched Schedule NIIT, your federal investment-income total, the state adjustments and, if you moved, the records behind the allocation fraction.
Reconcile those first; transfer second.
Sources
- Minnesota Revisor, section 290.033: mechanism, allocation and amendment history; retrieved September 29, 2026.
- Minnesota Department of Revenue, NIIT: 1% rate and first-year boundary; retrieved September 29, 2026.
- 2025 Schedule NIIT and instructions: income base, exclusions and individual transfer to M1 line 14a; retrieved September 29, 2026.
- HF 2437/SF 2374 Senate omnibus analysis: May 15, 2025 proposal; retrieved September 30, 2026.
- IRS, About Form 1099-DA: January 7, 2026 entry on the 2025 CF/SF exclusion; retrieved September 30, 2026.
