9 Reasons People Are Leaving Minnesota in 2026

Since 2019, Minnesota has lost a net 47,865 residents to other states, a decline worse than 33 other states saw over the same stretch.

That’s no small drain.

These are the reasons so many Minnesotans are choosing somewhere else in 2026.

Note: This is general information, not tax or financial advice. Minnesota’s tax rates, brackets, and thresholds are subject to change.

1. Insurance Premiums up 34%

Minnesota homeowners are facing the steepest home insurance increase of any state in the country.

Premiums rose 34% during 2025, according to the insurance comparison site Insurify.

Ouch.

Hail and wind storms tore through the state in 2022 and 2023, and insurers have spent the years since passing those losses on to Minnesota policyholders.

The bills keep coming.

2. Health Insurance up 21%

Minnesota’s individual health insurance market is about to get a lot more expensive.

The state approved average rate increases of about 21.5% for 2026 individual plans, the steepest jump since 2017, according to the Minnesota Department of Commerce.

Not cheap.

About 187,000 Minnesotans buy coverage on that individual market.

It’s a lifeline for self-employed workers, early retirees who haven’t reached Medicare age, and anyone whose job doesn’t come with health benefits.

Minnesota’s small businesses aren’t spared either: Premiums in the state’s small-group market, which covers roughly 200,000 more residents at companies with 2 to 50 workers, are rising 14.2% at the same time.

Expiring federal premium tax credits are driving much of the individual-market jump.

Minnesota’s own reinsurance program is the only thing keeping that hike from running closer to 69%.

Without it, the number would look far worse.

3. Income Tax Tops 9.85%

Minnesota taxes its top earners at 9.85%, one of the highest state income tax rates in the country.

The Tax Foundation ranks Minnesota’s individual income tax 44th out of 50 states on its 2026 competitiveness index.

The state’s overall tax climate lands at the same spot.

Not a badge of honor.

Minnesota’s brackets start at 5.35%, so even middle earners feel the increase long before they reach the top rate.

That top bracket also kicks in well before a household would call itself wealthy.

4. Estate Tax Starts at $3 Million

Minnesota’s estate tax kicks in at $3 million, one of the lowest thresholds left in the country.

Estates above that line owe the state 13% to 16%, on top of anything owed to the Internal Revenue Service (IRS).

No portability.

Minnesota’s exemption doesn’t carry over between spouses, so a surviving spouse can’t simply claim the $3 million their late husband or wife never used.

That single detail sends retirees and business owners shopping for a new home state well before they ever plan to use it.

5. Minnesota Still Taxes Social Security

Minnesota remains one of the few states that still taxes Social Security benefits.

Married couples filing jointly keep their full Social Security exemption only if their adjusted gross income stays under $108,320, according to the Minnesota Department of Revenue.

Single filers hit that same wall at $84,490.

That’s the cutoff.

The exemption then phases out 10% for every $4,000 of income over that line.

A retiree drawing a pension alongside Social Security can hit that threshold faster than expected.

6. New Payroll Tax

Minnesota started pulling a brand-new tax out of every paycheck in January 2026.

The state’s new Paid Leave program runs on a 0.88% payroll premium on wages up to a $185,000 cap, split at minimum half and half between employers and workers.

It adds up fast.

A worker earning that $185,000 cap sees up to $814 a year held back from their own paycheck, matched by an equal share from their employer.

That puts the total Paid Leave premium at $1,628 a year for a single employee earning the cap.

For a small-business owner with 20 employees near that cap, the premiums the company remits to the state can top $32,000 a year, one more new cost landing the same year as Minnesota’s insurance hikes and its high income tax bracket.

7. Child Care That Rivals Rent

Minnesota parents pay some of the highest child care bills in the country.

Infant care runs about $1,800 a month, the third-highest average in the country behind only Massachusetts and Washington, D.C.

A second rent check.

A single parent earning Minnesota’s median household income spends almost 34% of it on child care for one kid, according to Child Care Aware of America.

For a married couple with two kids in care, the bill runs 26% of their income, more than the 16% they’d typically pay on a mortgage.

8. Winters That Turn Dangerous

January 2026 brought a brutal reminder to Minnesota, when a stretched polar vortex sent temperatures plunging across the state.

Overnight lows in the Twin Cities hit 21 below zero, the coldest reading there since January 2019, while wind chills up north fell to 50 below zero or colder in Duluth, Brainerd, and Hibbing.

That’s not a typo.

A stretch that cold shuts down school buses and cracks water mains.

Heating bills rise right alongside the temperature drop.

It’s the kind of week that has more than a few Minnesotans pricing out flights to somewhere warm.

9. Layoffs Hit the Biggest Employers

Minnesota’s largest employers spent early 2026 cutting jobs instead of adding them.

Target eliminated 815 corporate positions at its Twin Cities offices in January 2026, cutting 528 jobs at its downtown Minneapolis headquarters and 287 more at its Brooklyn Park campus.

Those local cuts were part of a much bigger, separate reduction: Target trimmed about 1,800 corporate roles nationwide, split between 1,000 layoffs and 800 positions left unfilled.

Corporate Minnesota felt it first.

UnitedHealth Group posted a sharp drop in profits through 2025 and has been managing costs ever since.

A handful of Fortune 500 companies anchor much of Minnesota’s white-collar job market, so a round of cuts at one of them narrows the options for everyone else.

Not Everyone Is Leaving

Minnesota gained more residents from other states than it lost in 2025, the first year that’s happened since 2018.

The state pulled in 8,300 more people from other states than it lost, according to the Star Tribune’s review of new Census Bureau data.

The doors swing both ways.

That net figure hides a lot of churn: Close to 100,000 people still left Minnesota for another state in 2025, and roughly the same number moved in to replace them.

Minnesota’s state demographer, Susan Brower, called herself cautiously optimistic and said she wants to see several more years of gains before calling it a turnaround.

Where the Leavers Still Go

Minnesotans who do leave the state tend to land in places with no income tax or a much lower cost of living.

An analysis of Census and IRS migration data by the Center of the American Experiment, a Minnesota think tank, found the state lost a net 47,865 residents to other states between 2019 and 2024.

Worse than 33 states.

Wisconsin and North Dakota draw the largest raw numbers of Minnesota movers, mostly nearby relocations, while Florida stands out as the top magnet among states with no income tax at all.