The history
Why was the original MN-WI reciprocity agreement terminated in 2010?
Minnesota and Wisconsin had a reciprocity agreement for decades. Under the agreement, residents of each state who worked in the other paid income tax only to their home state. The problem was an imbalance: more Minnesota residents worked in Wisconsin than the reverse. Because Minnesota's tax rates were generally higher than Wisconsin's, the net effect was that Minnesota collected less revenue under reciprocity than it would have without it.
In 2009, Minnesota Governor Tim Pawlenty gave notice to terminate the agreement, effective January 1, 2010. For tax years 2010 onward, workers in this corridor had to file in both states — a Wisconsin nonresident return and a Minnesota resident return — and claim a credit to avoid double taxation.
Was the MN-WI reciprocity agreement later reinstated?
After the termination, both states' legislatures worked on reinstating reciprocity. A new agreement was enacted — but the exact effective date and terms may differ from the original. This is the source of the widespread misinformation: many tax articles written between 2010 and the reinstatement still appear in search results, telling commuters there is no reciprocity, when in fact it may have been restored.
How does it work if reciprocity IS in effect?
When reciprocity is active, Minnesota residents working in Wisconsin follow the same pattern as other reciprocal state pairs:
- File a Wisconsin withholding exemption form with your Wisconsin employer (verify the current form number with the WI DOR).
- Your employer withholds Minnesota tax instead of Wisconsin tax.
- At year-end, file only your Minnesota resident return (Form M1). No Wisconsin return is needed for wage income.
How does it work if reciprocity is NOT in effect?
Without an active reciprocity agreement, Minnesota residents working in Wisconsin must file in both states:
- Your WI employer withholds Wisconsin income tax from your paycheck.
- File Wisconsin Form 1NPR (Nonresident/Part-Year Resident) reporting your WI-source wages.
- File Minnesota Form M1 (resident return) reporting all income. Claim a credit for taxes paid to Wisconsin on Schedule M1CR to avoid double taxation.
- The credit equals the lesser of the WI tax paid or the MN tax attributable to that same income.
This dual-filing approach is more complex than reciprocity but still prevents you from being taxed twice on the same wages. The paperwork burden is the main difference.
How do Minnesota and Wisconsin tax rates compare?
Minnesota has graduated brackets with rates that are generally among the higher state income tax rates in the country. Wisconsin also uses graduated brackets, historically with slightly lower rates than Minnesota. The comparison matters because:
- With reciprocity: You pay Minnesota's rates (your home state). If MN rates are higher than WI rates, you pay more in tax than a Wisconsin resident earning the same salary in the same WI job.
- Without reciprocity: You pay both states but get a credit. The net effect is similar — you generally pay the higher of the two rates, plus the administrative cost of dual filing.
Check current rates at the respective state DOR websites, as both states have adjusted their brackets in recent years.
What about remote work for MN-WI cross-border workers?
If you live in Minnesota and work remotely from home for a Wisconsin employer, the tax treatment depends on reciprocity status. With reciprocity, you pay only MN tax regardless of where you sit. Without reciprocity, the days you work from your Minnesota home are Minnesota-source income (not Wisconsin-source), which could actually simplify things — fewer WI-source days means a smaller WI nonresident filing. Track your work locations carefully for accurate apportionment.
For the other major Wisconsin border crossing, see work in Illinois, live in Wisconsin (which has active, well-established reciprocity). For the full list, visit the reciprocity agreements hub.
Questions
MN-WI commuter tax FAQ
Was the Minnesota-Wisconsin reciprocity agreement terminated?
Yes, the original agreement was terminated by Minnesota effective January 1, 2010. However, after years of negotiations, a new reciprocity agreement was enacted. Many outdated articles and tax guides still state that MN-WI reciprocity ended in 2010 without noting the reinstatement. Always verify the current status with the Minnesota Department of Revenue or Wisconsin Department of Revenue before filing.
How do I verify the current reciprocity status between MN and WI?
Check directly with the Minnesota Department of Revenue at revenue.state.mn.us or the Wisconsin Department of Revenue at revenue.wi.gov. These are the authoritative sources for the current agreement status. Do not rely on third-party tax blogs, which may reference the 2010 termination without noting subsequent changes.
If reciprocity is in effect, what form do I file?
When reciprocity is active, Minnesota residents working in Wisconsin file a Wisconsin withholding exemption form with their Wisconsin employer to stop WI withholding. The employer then withholds Minnesota tax instead. At year-end, you file only a Minnesota resident return. Verify the current form number with the Wisconsin DOR, as form numbers can change.
What if there is no reciprocity — do I file in both states?
Without reciprocity, Minnesota residents working in Wisconsin file a Wisconsin nonresident return and a Minnesota resident return. Minnesota grants a credit for taxes paid to Wisconsin on the same income, preventing double taxation. The credit equals the lesser of the WI tax paid or the MN tax attributable to that income.
Why was the original reciprocity agreement terminated in 2010?
Minnesota terminated the agreement because it was losing revenue. More Minnesota residents worked in Wisconsin than vice versa, creating a net revenue outflow from Minnesota. Under reciprocity, those MN residents paid MN tax on their WI wages, but MN's higher rates meant Minnesota received less per worker than Wisconsin lost. The imbalance made the agreement politically unsustainable in Minnesota.
- Sources: MN Dept. of Revenue (reciprocity history, Form M1) · WI Dept. of Revenue (Form 1NPR, reciprocity) · MN Statutes 290.081.
- 🔄 Last updated July 31, 2026 · Tax year 2026
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