For all taxpayers, including nonresidents and part-year residents, Minnesota starts its tax calculation using federal adjusted gross income. The tax is calculated as if it was earned completely in Minnesota.
Then, for nonresidents and part-year residents, the tax liability is prorated using an income percentage. The income percentage is a ratio of your Minnesota income to your total income. For example, if you only earned 40% of your total income in Minnesota, your income percentage would be 40%.
For example, if your Minnesota tax liability based on your total income is $10,000 but you only earned 40% of your income in Minnesota - you would only have to actually pay $4,000 ($10,000 * 40%) to Minnesota.
So, while Minnesota does start out by calculating tax as if all of your income was earned in Minnesota, the tax liability itself is prorated so that you aren't actually paying tax on all of your income in Minnesota.
