(The Center Square) – Minnesota’s economic outlook ranked poorly in 2026, according to a new report released on Tax Day.
Despite that, the report from the American Legislative Exchange Council found the state’s overall ranking improved slightly to 39th nationally, up from 41st in 2025. The increase follows several years of bottom-tier performance, including a 48th-place ranking in 2023.
ALEC published this 19th annual analysis titled “Rich States, Poor States,” ranking each state based on labor policies the conservative organization deems better for personal and corporate wealth.
The economic outlook ranking is based on 15 state variables, like property tax burdens, state minimum wage, and personal income taxes.
Of all the variables considered, Minnesota did not perform better than 13th nationally on any of them. The state’s sales tax burden came in at 13th, tort system costs ranked 15th, and debt service as a share of tax revenue ranked 17th.
Some of the worst rankings were 50th for having no estate or inheritance tax levied, 50th for not being a “right to work” state, and 45th for its top marginal personal income tax rate of almost 10%.
“Each of these factors is influenced directly by state lawmakers through the legislative process,” the report explained. “Generally speaking, states that spend less – especially on income transfer programs – and states that tax less—particularly on productive activities such as working or investing – experience higher growth rates than states that tax and spend more.”
The report comes as John Phelan, an economist at the Minnesota-based Center of the American Experiment, released an analysis this week finding that, in 2025, the average earner in Minnesota will pay more in state income taxes than those in 43 other states.
The average earning, single filing Minnesotan will hand over 4.9% of their 2025 wages to the state government, a higher share than in 43 out of 50 other states,” Phelan reported. “This share is up 0.2 percentage points from 4.7% a decade ago.”
Minnesota’s economic performance ranking also came in 29th nationally according to ALEC. Three variables are considered in this ranking: state gross domestic product, absolute domestic migration, and non-farm payroll employment.
In each of those areas, Minnesota ranked:
• 33rd in gross domestic product
• 29th in absolute domestic migration
• 39th in non-farm payroll employment
Utah, Tennessee, Idaho, North Carolina, Arizona, Arkansas, Indiana, Oklahoma, South Dakota and Florida all ranked in the top 10 on the report.
California, Connecticut, Hawaii, Illinois, Maine, Maryland, New Jersey, New York, Rhode Island and Vermont finished at the bottom of the report.
