How Much Is the Sales Tax in Minnesota?

Sales tax in Minnesota functions as a consumption tax, meaning it is levied on the purchase of goods and certain services. This revenue plays a significant role in funding various public services across the state.

Minnesota’s General Sales Tax Rate

Minnesota imposes a statewide sales tax rate of 6.875%. The general sales tax primarily applies to most retail sales of tangible personal property.

To illustrate, if a consumer purchases an item for $100 that is subject to the state sales tax, an additional $6.88 would be added to the price, bringing the total to $106.88. This 6.875% is the base rate that forms the foundation of sales tax calculations across Minnesota. It constitutes the state’s portion of the sales tax, distinct from any additional local taxes that may apply in specific areas. A portion of this state tax, specifically three-eighths of one percent, is allocated to arts and environmental projects, with the remainder going into the state’s general funds.

Local Sales Taxes Across Minnesota

Beyond the statewide sales tax, many cities and counties within Minnesota have the authority to impose their own local sales taxes. These local taxes are added to the state rate, resulting in a varying total sales tax rate depending on the specific location where a transaction occurs. The maximum local-option sales tax rate allowed by Minnesota law is generally 1.5%, though some sources indicate higher maximums for specific jurisdictions or tax types.

These local taxes can include city sales taxes, county sales taxes, and special district taxes. For instance, the seven-county Twin Cities metropolitan area (Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington counties) imposes additional metro area sales and use taxes for housing and transportation. Consequently, the combined state and local sales tax rates can vary significantly, ranging from the base 6.875% up to 9.875% in certain cities like Minneapolis and Saint Paul.

Determining the correct local rate for a given area requires precision, as rates are destination-based, meaning the tax rate is determined by the buyer’s location where the product or service is received. The Minnesota Department of Revenue provides online tools such as a Sales Tax Rate Calculator and an interactive map to help identify the precise combined rate for a specific address. Relying solely on zip codes is not recommended for determining sales tax rates, as zip codes can cross multiple taxing jurisdictions, leading to incorrect calculations.

Common Items Subject to Sales Tax

Most retail sales of tangible personal property are subject to sales tax in Minnesota. This broad category includes a wide array of common purchases such as electronics, furniture, appliances, and general merchandise.

Certain services are also subject to sales tax in Minnesota. Examples of taxable services include telecommunications services, lodging, laundry and cleaning services, pet grooming, and lawn care. Digital goods, such as streamed media or electronically delivered software, are also subject to sales tax. Additionally, shipping and handling charges are generally taxable if they are part of the sale of a taxable good.

Prepared food is another common category subject to sales tax. This includes meals purchased from restaurants, food trucks, and other eating establishments. Candy and soft drinks are also specifically classified as taxable items.

Common Exemptions from Sales Tax

Not all purchases made in Minnesota are subject to sales tax; various goods and services are exempt by law. These exemptions are often in place to reduce the tax burden on essential goods or services, or to avoid taxing certain transactions multiple times.

One significant exemption applies to most groceries, which refers to unprepared food items intended for home consumption. This contrasts with prepared foods, which are generally taxable. Prescription drugs and certain medical devices are also exempt from sales tax.

Clothing for general use is another notable exemption in Minnesota. However, this exemption does not extend to all clothing-related items; accessories, sports or recreational equipment, and protective gear are typically subject to sales tax. Professional services, such as legal or medical consultations, are generally not taxable unless explicitly specified by law. Other exemptions include items purchased for resale by businesses and sales made to certain non-profit organizations or government entities. Beginning July 1, 2023, secure firearm storage units also became exempt from sales tax.