Minnesota enacts state gift tax – Charitable donations exempt from tax

Information regarding Minnesota’s new state gift tax has been hard to come by and potentially confusing. Ridgeview Foundation recently received this concise explanation about the new tax from About.com Wills &Estate Planning. Ridgeview Foundation does not provide counsel in these matters, so please contact your attorney or accountant for more information or clarification.


• The new tax went into effect July 1, 2013.
• Annual gifts to the same person that do not exceed $14,000 will be exempt from the tax.
• Gifts to spouses and charitable donations will be exempt from the gift tax.
• A lifetime gift tax credit of $100,000 per taxpayer will be available that will effectively shelter $1,000,000 from the tax.
• Gifts that exceed $1,000,000 will be subject to a flat 10 percent tax.
• The gift tax will apply to nonresidents who make gifts of real estate, tangible personal property and/or business interests located in Minnesota.
• The gift tax will not apply to transfers of real estate, tangible personal property and/or business interests located outside of Minnesota made by a Minnesota resident. For example, a Minnesota resident can gift her Florida condo to her son and not be subject to the Minnesota gift tax, although federal gift tax rules will apply.
• With regard to Minnesota estate taxes, they will now be calculated by including all gifts made within the three years of the decedent’s date of death. This provision will be retroactive for deaths occurring after December 31, 2012.

Aside from enacting the state gift tax, the Minnesota legislature also tweaked the Minnesota estate tax laws that effect nonresidents. Under current law, a nonresident’s estate that owns real estate and/or tangible personal property located in Minnesota is subject to the Minnesota estate tax. The new legislation takes this one step further by including Minnesota property held in a pass-through entity such as an S corporation, a partnership (including a multimember LLC taxed as a partnership), a single-member LLC or similar entity, or a trust in a nonresident’s estate.

This information regarding Minnesota's new state gift tax was originally published on the Wills & Estate Planning Guide site at about.com and was written by Julie Ann Garber. Thank you to Ms. Garber for her permission to use this content. Ridgeview Foundation does not provide counsel in these matters, so please contact your attorney or accountant for more information or clarification.