Minnesota State Tax Routine (MNTX)

The Minnesota State Tax Routine Processing utilizes the following steps:

Line 1

Multiply the employee’s gross wages for the current payroll period by the number of payroll periods in a year to obtain their Annualized Gross Income (GI).

Line 2

Determine the employee’s personal exemption credit

State Tax Allowance (TAX)
Annual Exception Amount on TAXP

State Tax Allowance (TAX) multiply by Annual Exception Amount on TAXP.

Line 3

Determine the Taxable Amount by subtracting Lines 2 from Line 1.

Line 4

Determine the Minimum Amount withheld from DEDX.

Line 5

Determine the Net Taxable Income excess over amount by subtracting the Minimum amount withheld from the Taxable amount.

Line 6

Determine the Amount of Tax Withholding**, using the Marginal Tax Rates (DEDX) entries for the Minnesota State Tax Routine.

Tax Rate
Base Tax Amount

Line 7

Divide the amount on Line 6 by the number of payroll periods in a year to determine the employee’s Minnesota Withholding Tax for the pay period.

*Determine the Personal Exemption Amount

Take the Annual Exemption Amount on the Tax Parameters (TAXP) entry for the employee’s Minnesota State Tax deduction and Marital Status multiplied by the number of State Tax Allowances on the employee’s Employee Tax Parameter (TAX).

** Determine the Amount of Tax Withholding

Take the Net Taxable Income excess over amount from Line 5 and multiply with Tax Rate [6.A]. Add Base Tax Amount [6.B] to derive the Minnesota Annual State Tax Amount

RRR

Enable “Exclude from state Tax calculation” check box in Deduction Category Page.

Deduction Plan (DPLN) Setup for Massachusetts State Tax Routine.

Configure the Amount/Percent 1 for the maximum allowable as a deduction by Massachusetts during the year.

**Determine the Wages Subject to Withholding

Summ Employee Deduction (Line 4) and Employee Personal Exemption Credit (Line 3).
In order to derive the Wages Subject to Withholding subtract the sum value (Point 1) from Line 2.

Data Setup Considerations

Sites will need to ensure they have implemented the following Business Process/Data Setup changes at their site prior to using the Minnesota State Tax Routine.

Tax Parameters (TAXP) setup for Minnesota State Tax Deductions.

Annual exemption amount - the personal exemption amount for Minnesota Tax Withholding.
Maximum Standard Deduction Amount - The amount used in the calculation for the standard deduction amount if the annualized wage amount is between the Minimum Annual Gross Amount and Maximum Annual Gross amount.
Minimum Standard Deduction Amount - The standard deduction amount if the annualized wage amount is equal to or less than the Minimum Annual Gross Amount.
Rate - The standard deduction amount if the annualized wage amount is more than the Maximum Annual Gross Amount.
Maximum Annual Gross Amount - The higher gross income amount used to determine the Minnesota standard deduction amount.
Minimum Annual Gross Amount - The lower gross income amount used to determine the Minnesota standard deduction amount.

The Employee Tax Parameter (TAX) enrollment (Note: this only applies to employees enrolled in a Tax Class (TAXC) that includes a Minnesota State Tax Deduction).

The State Tax Allowance field captures the employee's claim for the number of exemptions.

Note: The point 2 functions if the MULTI_STATE_TAX parameter is set to N as part of the Application Parameter (APPCTRL) page, if the parameter is set to Y, then the system functions as per point 3.

Employee enrolled in the State Tax Enrollment (TAXS) (Note: this only applies to employees enrolled in the State Tax Class (TAXCS) that includes a Minnesota State Tax Deduction).
The State Tax Allowance field captures the employee's claim for the number of exemptions.
Deduction Plan (DPLN) setup for Minnesota State Tax Deductions.

If the Amount/Percent 5 value is 0, the state tax value is calculated at the actuals.
The Amount/Percent 5 value is 1, the state tax value per pay period will be round off to the nearest whole dollar value.

Note - This Deduction Plan (DPLN) set up is applicable only to Next Generation Payroll Services.