Minnesota 2006 income tax brackets expanded

St. Paul, Minn. – Minnesota’s individual income tax brackets for tax year 2006 will expand by about 3 percent, the Minnesota Department of Revenue announced today. State law requires the department to adjust the brackets to compensate for increases in the annual inflation rate.

Expanding the brackets prevents taxpayers from being pushed into higher income tax rate brackets solely because of inflationary raises in their income. Since 1999, Minnesota’s income tax brackets have expanded about 16 percent.

The inflation rate is measured by the change in the U.S. Urban Consumer Price Index for the average of 12 months ending August 1999 to the average of 12 months ending August 2005. The index measures annual inflationary changes in the cost of basic goods and services. The department adjusts the brackets by the inflation factor and rounds the result to the nearest $10.

The brackets apply to tax year 2006. Taxpayers who make quarterly payments of estimated tax should use this rate schedule to determine their payments, which are due starting in April 2006. Minnesota’s tax rates remain the same.

2006 Minnesota income brackets and rates for taxable income


Married joint
*More than*	*But not more than*	Rate
$0	$29,980	5.35 percent
$29,980	119,100	7.05 percent
$119,100		7.85 percent


Married separate
*More than*	*But not more than*	Rate
$0	14,990	5.35 percent
$14,990	59,550	7.05 percent
$59,550		7.85 percent


Head of household
*More than*	*But not more than*	Rate
$0	25,250	5.35 percent
$25,250	101,450	7.05 percent
$101,450		7.85 percent


Single
*More than*	*But not more than*	Rate
$0	20,510	5.35 percent
$20.510	67,360	7.05 percent
$67,360		7.85 percent

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