Yes, Minnesota taxes all of your income. They start with your federal income and go from there. Your capital gain from the home sale would be entered in the federal part of your taxes and would flow to Minnesota.

The question you didn't ask was about Arizona. As a nonresident you must file. See below.

Generally, you must pay Minnesota income tax if any of the following are true:

• You are a Minnesota resident for all or part of the year.

• You live in or spend more than half the year in Minnesota.

Arizona:

Are You Subject to Tax in Arizona?

If you are in this state for a temporary or transitory purpose or did not live in Arizona but received income from sources within Arizona during 2018, you are subject to Arizona tax. You are subject to Arizona income tax on all income derived from Arizona sources. Income from Arizona sources includes the following:

wages,

rental income,

business income,

the sale of Arizona real estate,

interest and dividends having a taxable

The complete nonresident document from Arizona:

https://azdor.gov/forms/individual/arizona-nonresident-personal-income-tax-booklet

If you hav other questions, ask in the comment box below.

I am a resident of AZ and sold a house in MN.  Do I need to file a MN return.

Yes, you need to report the proceeds from the sale of the house in MN to the state of MN.

@Tiger11dog