What Is the Sales Tax in Minnesota?

Sales tax in Minnesota is a consumption tax applied to the retail sale of goods and certain services within the state. Businesses collect this tax at the point of sale and remit it to the Minnesota Department of Revenue. Understanding the sales tax system is important for consumers and businesses, as it impacts costs and dictates obligations. The revenue generated contributes significantly to the state’s general fund, supporting public services and infrastructure projects.

Minnesota’s General Sales Tax Rate

The statewide general sales tax rate in Minnesota is 6.875%. This rate has been in effect since July 1, 2009. The additional 0.375% sales tax is dedicated to funding outdoor heritage, clean water, parks and trails, and historical and cultural heritage, and is set to expire after June 30, 2034. While the state rate is consistent, the total sales tax paid can vary due to local sales taxes.

What is Subject to Sales Tax

In Minnesota, sales tax generally applies to the retail sale of tangible personal property, which includes most physical goods. A sale is considered taxable unless specifically exempted by law. This means that when you purchase items like electronics, furniture, or most general merchandise, sales tax will typically be added.

Beyond physical goods, certain services are also subject to Minnesota sales tax if specifically included by law. Examples of these taxable services include lodging, laundry and cleaning services, pet grooming, and lawn care. Digital products such as downloaded music, e-books, and streaming services are also generally subject to sales tax.

Common Sales Tax Exemptions

Minnesota provides several common sales tax exemptions for items considered necessities. Most food for home consumption is exempt from sales tax, meaning groceries purchased at a supermarket typically do not incur sales tax. Most clothing is also exempt from sales tax.

However, specific exceptions to the clothing exemption exist. Items such as sports and recreational equipment, protective equipment, and clothing made of fur are generally not exempt and are subject to sales tax. Other common exemptions include prescription drugs and many over-the-counter drugs for human consumption, as well as home heating fuels.

Local Sales Taxes and Special Taxes

Many cities and counties across Minnesota have the authority to impose their own local sales taxes. These local taxes are added on top of the state rate, increasing the total sales tax paid by the consumer. Local sales tax rates can vary significantly by jurisdiction, typically ranging from 0.5% to 3%.

These local taxes often fund specific projects, such as transportation improvements or housing initiatives. Certain types of transactions may also be subject to special, higher tax rates, such as prepared food. A separate motor vehicle excise tax also applies to the sale of motor vehicles.