Work in Minnesota, Live in Wisconsin: How Taxes Work

Reciprocity

Do Minnesota and Wisconsin Have a Tax Reciprocity Agreement?

No. Minnesota and Wisconsin do not have a current reciprocity agreement. The two states maintained a reciprocity arrangement for decades, but Minnesota terminated it effective January 1, 2010. The agreement has not been reinstated despite several legislative efforts in both states.

Minnesota now maintains reciprocity agreements with only two states: Michigan and North Dakota. Wisconsin has reciprocity with several other states, but not Minnesota. See the Wisconsin Department of Revenue website for its current reciprocity list.

Without reciprocity, both states claim a right to tax the same wages. Minnesota taxes nonresidents on income earned within the state. Wisconsin taxes its residents on all income from every source. The mechanism that prevents double payment is a tax credit on your Wisconsin return, not an exemption from filing in Minnesota.

Filing Obligations

Which Tax Returns Do I File as a Wisconsin Resident Working in Minnesota?

File the Minnesota nonresident return first. You need the final Minnesota tax figure to calculate the credit on your Wisconsin return. On Form M1 with Schedule M1NR, report all income in the federal column and use Schedule M1NR to separate Minnesota-source income from the rest. Minnesota taxes only the portion earned within its borders.

On your Wisconsin Form 1, report all income from every source. Claim the credit for Minnesota taxes paid on Schedule OS. Attach a copy of your completed Minnesota return as supporting documentation.

Both returns are due April 15. Wisconsin grants an automatic extension when you file federal Form 4868. Minnesota also honors the federal extension.

Tax Credit

How Does Wisconsin's Credit Prevent Double Taxation?

Wisconsin taxes residents on all income. Minnesota taxes nonresidents on income earned within the state. Without a credit, you would owe both states' full rates on the same wages. Wisconsin Schedule OS eliminates this overlap.

The credit equals the lesser of:

• The net income tax you actually paid to Minnesota on your MN-source wages, or
• The Wisconsin tax attributable to that same income

Minnesota's four tax rates are 5.35%, 6.8%, 7.85%, and 9.85%. Wisconsin's four rates are 3.5%, 4.4%, 5.3%, and 7.65%. Because Minnesota's rates exceed Wisconsin's rates at comparable income levels, the Minnesota tax on your wages will typically be larger than the Wisconsin tax on the same dollars. The Schedule OS credit covers your entire Wisconsin tax on those wages, and your total state income tax equals the Minnesota amount.

The credit cannot exceed the actual tax paid to Minnesota. Keep your Minnesota return and W-2 forms as records in case Wisconsin requests verification.

If you have Wisconsin-source income not taxed by Minnesota, such as rental income from Wisconsin property, that income is taxed only by Wisconsin and does not factor into the Schedule OS credit calculation.

Employer Withholding

How Should My Minnesota Employer Handle Withholding?

Your Minnesota employer withholds Minnesota income tax from your wages. This is required for all employees performing services in Minnesota who are not covered by a reciprocity agreement. Since Wisconsin is not a reciprocity state for Minnesota, Minnesota withholding applies to your wages.

Your employer does not withhold Wisconsin state tax. Because only Minnesota tax is withheld, your Wisconsin Form 1 may show either a balance due or a refund at the state level. Since Minnesota's rates generally exceed Wisconsin's rates, the Schedule OS credit typically covers your entire Wisconsin state tax on those wages.

If the Minnesota job is your only income, you may owe nothing to Wisconsin at the state level after the credit. If your credit falls slightly short of your Wisconsin liability due to bracket differences, you may owe a small balance. Review your withholding situation early in the year and consider making a Wisconsin estimated payment using Form 1-ES if needed.

Remote Work

What If I Work Remotely from Wisconsin for a Minnesota Employer?

Neither Minnesota nor Wisconsin applies a convenience of the employer rule. Minnesota taxes nonresidents only on income for services physically performed in the state. Days you work from your Wisconsin home are Wisconsin-source income, not Minnesota-source income.

If you split your workweek between both states, allocate your wages based on the number of days worked in each location. Report only the Minnesota portion on Schedule M1NR. The Wisconsin portion is taxed only by Wisconsin, with no Minnesota credit needed on those dollars.

Tracking workdays by state can lower your total tax bill. With Minnesota's rates running higher than Wisconsin's across most brackets, each day shifted from Minnesota to Wisconsin reduces the effective rate on that day's wages. Keep a daily log or calendar showing where you worked, as both states may request documentation during a review.

If you work entirely from your Wisconsin home for a Minnesota employer, all wages are Wisconsin-source income. You would not need to file a Minnesota return, and your employer should not withhold Minnesota tax. Notify your employer of your remote work arrangement so withholding is set correctly.

Worked Example: WI Resident Earning $75,000 in Minnesota

Single filer, all wages from Minnesota employer, 2025 MN brackets and 2026 WI brackets applied before standard deductions

Local Taxes

Are There Any Local Income Taxes in the MN-WI Corridor?

Neither Minnesota nor Wisconsin imposes a local or municipal income tax. There is no city, county, or school district income tax in either state. This makes the MN-WI crossing simpler than many other state border pairings. Your only income tax obligations are at the state level, with the credit mechanism on Wisconsin Schedule OS as the sole adjustment needed.

Compare this to corridors like the Philadelphia-Wilmington route, where local wage taxes add 1% to 3% on top of state rates, or the Indiana-Illinois border, where Indiana county income taxes create an additional layer the state credit does not cover. For MN-WI commuters, the absence of local taxes means the Schedule OS credit captures the full picture.

Reciprocity History

What Happened to the MN-WI Reciprocity Agreement?

Minnesota and Wisconsin maintained a reciprocity agreement for roughly 40 years, beginning in the late 1960s. Under the agreement, each state agreed not to tax the other state's residents on wage income. Commuters filed only one return in their home state.

Minnesota terminated the agreement effective January 1, 2010. More Wisconsin residents worked in Minnesota than the reverse, so the net revenue flow under reciprocity benefited Wisconsin. When compensation payments from Wisconsin to Minnesota fell behind, Minnesota ended the deal.

Since 2010, several legislative efforts in both states have tried to reinstate reciprocity. In 2012, revenue officials announced an agreement in principle, but it was never finalized. Wisconsin lawmakers commissioned an official reciprocity study, published by the Wisconsin Department of Revenue in late 2024. As of 2026, the agreement remains inactive. Both states continue to require dual filing for cross-border workers.

Mid-Year Move

What If I Moved Between Minnesota and Wisconsin During the Year?

If you changed your permanent residence between Minnesota and Wisconsin during the year, file as a part-year resident in each state. Use Minnesota Form M1 with Schedule M1NR for the nonresident or part-year period. Use Wisconsin Form 1NPR (Part-Year Resident and Nonresident Income Tax Return) instead of the standard Form 1.

During months you lived in Wisconsin and worked in Minnesota, the credit mechanism described above applies. During any months you lived in Minnesota, you file as a Minnesota resident on all income, and Wisconsin taxes only your Wisconsin-source income for that period.

Document your exact move date. Utility activation records, lease or mortgage dates, and driver's license changes serve as evidence. Both states require you to identify the date your residency changed, and each state's claim to your income depends on which days you were a resident.

Withholding Errors

What If My Employer Withheld for the Wrong State?

If your Minnesota employer mistakenly withheld Wisconsin tax instead of Minnesota tax, you will owe Minnesota the full amount when you file Form M1 with Schedule M1NR. Claim the incorrectly withheld Wisconsin amount on your Wisconsin Form 1, and Wisconsin will apply it to your liability or issue a refund.

A more common problem is an employer not updating withholding after the 2010 reciprocity termination. If your employer still treats you as exempt from Minnesota withholding based on the old reciprocity rules, you will owe Minnesota when you file and may face underpayment penalties.

Confirm that your employer is withholding Minnesota income tax from your wages for work performed in Minnesota. Check your first pay stub of the year to verify that Minnesota withholding appears on the state tax line. If your employer has not registered for Minnesota withholding, ask them to do so.