How Minnesota property tax works and what the homestead saves

How is your tax calculated?

Three steps produce the bill.

1. The assessor sets market value as of January 2 each year (Minn. Stat. § 273.01; Hennepin County). Each parcel must be reappraised at least every five years, and the assessor lists all property each year.
2. State law turns market value into “net tax capacity.” The class sets the percentage. A homestead house (class 1a) counts 1% of its first $500,000 and 1.25% of the value above that (§ 273.13, subd. 22).
3. Each taxing district applies a rate to that capacity. Hennepin County publishes the rates for the county, city, school district, metro agencies and other districts, then adds them up. Voter-approved school referendum levies use a smaller rate on the full market value instead.

The sections I read set no cap on how fast a home’s market value can rise from one year to the next. If you think a value is wrong, the remedy is an appeal.

What does the homestead save?

The saving comes from the homestead market value exclusion (§ 273.13, subd. 35). Part of the value is removed before the 1% is applied.

Examples from the formula: a $200,000 home gets a $28,550 exclusion, a $300,000 home gets $19,550, and a $400,000 home gets $10,550. The exclusion shrinks as value rises.

A nonhomestead single-family home (class 4bb) has the same 1% and 1.25% rates but no exclusion (§ 273.13, subd. 25). Two other homestead options exist:

• Blind or disabled owners (class 1b): the first $50,000 of value is taxed at 0.45% (subd. 22).
• Senior deferral: an owner 65 or older with household income of $96,000 or less who has lived in the home five years can apply to defer part of the tax (§ 290B.03). The deferred tax stays as a lien.

To get homestead status, you must file a homestead application with the county assessor (§ 273.124, subd. 13). Hennepin County says: “You must own, occupy and apply by December 31.”

What are the rates in Minneapolis?

The latest final rates I could read from Hennepin County are for taxes payable in 2025. The county’s 2026 rate documents are labeled “proposed” (October 2025). Final 2025 rates for Minneapolis (Hennepin County rate card, first Minneapolis taxing area):

The Minneapolis school district also levies a referendum rate of 0.14151% of market value. Across the six Minneapolis taxing areas on the card, the total rate runs from 132.419% to 134.575%, depending mostly on the watershed district.

Example: a $400,000 homestead in Minneapolis

This example uses the final 2025 rates above, the first Minneapolis taxing area, and a $400,000 market value. It ignores special assessments, so your bill will differ.

The referendum tax uses the value before the exclusion (§ 126C.01, subd. 3). The total is about 1.43% of market value. The same home without a homestead would owe $5,862.80, or $139.70 more.

When are the deadlines?

A late payment costs 2% on a homestead (4% on nonhomestead property). If it stays unpaid into the next month, add another 2%. After that, 1% a month accrues through December, capped at 8% for a homestead (§ 279.01).

How do you appeal an assessment?

Start with the valuation notice. If you disagree with the value or class, you can go to the local board in April or May. If your city holds no local board, Hennepin County says you can appeal directly to the county board in mid-June. To attend, contact the county by the date on the notice (612-348-7050 or countyvalueappeal@hennepin.us). You may go to the Minnesota Tax Court instead. Appeals are about value and class, not about the rate.

For the costs due when you buy, see closing costs in Minnesota and our Minneapolis guide. Lenders often collect the tax monthly through an escrow account.