Does Minnesota follow the federal no-tax-on-tips and overtime deductions?
DOES NOT CONFORM
Minnesota does not follow the federal deductions for state income tax. You can still claim the tips and overtime deductions on your federal return (Schedule 1-A) — they simply do not reduce your Minnesota state tax. Do not assume your state return treats this income the way your federal return does.
Verified against the official state source below — last verified October 26, 2026
| Deduction | Minnesota position |
|---|---|
| Federal tips deduction (IRC §224) | Does not conform |
| Federal overtime deduction (IRC §225) | Does not conform |
What the state itself says
"No entries are necessary on Minnesota non-conformity schedules for tips and overtime pay because these are subtracted below-the-line on Federal Form 1040."
- Official source
- Minnesota Department of Revenue, "Tax Professional Tip #3 – What You Need to Know About Non-Conformity" (MNREV bulletin)
- Tax years covered
- Settles treatment for 2025 returns (DOR non-conformity guidance covers TY2022–2025; the Legislature was expected to address H.R. 1 non-conformity in the 2026 session).
Minnesota is a static (fixed-date) conformity state — IRC reference frozen as amended through May 1, 2023 ("Adoption is not automatic") — and starts from federal AGI, so the deductions neither reduce Minnesota income nor require an addback entry.
Your federal deduction is separate
Whatever your state does, the federal deductions run on their own rules: check your W-2 codes with the W-2 Code Checker, estimate with the Tips Calculator and Overtime Calculator, and see the glossary for any term. All state positions: the state-by-state index.
State position verified October 26, 2026 from the official source above. State guidance changes; confirm on the source before filing. This page is general information, not tax advice.