Minnesotans Brace for Property Tax Increases

Minnesota’s trend of rising property taxes shows no sign of reversing course, as next year’s levies are expected to increase by as much as 6.9% statewide. This amounts to another $948 million being taxed out of property owners. Given that housing costs are already taking a chunk out of their wallets, this increase was most definitely not on their holiday wish lists.

Here are some of the factors driving these increases and why property owners won’t all be affected the same way.

It Doesn’t Show Signs of Stopping

Over the past decade, property tax levies in Minnesota have steadily increased by 4% to 6% each year. Based on the House Research Department, the jurisdictions largely responsible for the increases are school districts, cities, and counties. These entities have struggled with rising costs for labor, materials, and services. School referendums for operations and construction projects have also led to increased demand for tax revenue. Moreover, the declining value of commercial property, especially for office buildings, has largely shifted the tax burden to homeowners. This means that many Minnesotans will likely see higher property tax bills in 2026.

Declining Population and Federal Funding Cuts

Minnesota’s property tax system is designed so that property owners carry their fair share of the tax burden. Unfortunately, it seems that residents have less people to share that burden with. According to the Minnesota State Demographic Center, Minnesota has experienced a net outflow of residents over the past 20 years. That will exacerbate the effect of levy increases on homeowners.

Cuts to federal funding will also impact Minnesota property taxes. Counties administering programs such as SNAP and Medicaid are typically reimbursed by the federal government. However, the One Big Beautiful Bill Act cut SNAP funding by $186 billion and Medicaid by $1 trillion. This means counties will need to upfront a higher portion of these costs to continue administering these programs.

Unequal Impact

Though property taxes are expected to rise across the state, that doesn’t mean all Minnesotans will experience the same effect. In fact, some may find that their tax bills haven’t changed one bit. That’s because there is no single statewide rate that determines tax bills. Rather, property taxes are determined by local governments based on budgetary needs. But there are other factors that can contribute to variation in how property owners will be impacted.

The rise and fall of property values plays a large role in how property owners will be affected. Since property taxes are based on assessed value, increases in fair market value can expectedly lead to significant property tax increases. Likewise, property owners who haven’t had major changes in fair market value can expect much smaller increases, if any.

Minnesota also assigns different property classifications which result in different percentages of fair market value being taxable. Therefore, different property classifications can result in property owners being affected very differently.

Not Set in Stone… Yet

Despite all the unfortunate property tax buzz, there is a silver lining for Minnesota property owners. 2026 levies aren’t yet final, and by law the increase over the prior year can’t exceed 6.9%. In other words, there’s a limit to how much property owners can be hit with increased levies each year. Sometimes the final amount is actually less than projections. For instance, last year’s final levy was $63 million less than what was expected. While it’s possible that Minnesota’s levy increase won’t reach 6.9%, rising costs and a greater need for tax revenues are doing little to keep hopes up.

You can read more about Minnesota’s expected levy increase and its potential impacts here: Minnesota Property Taxes Could Rise Nearly $1 Billion in 2026.