Sales tax is an important consideration for both businesses and consumers in Minnesota. The state has a 6.875% statewide sales tax rate, with additional local taxes bringing the total rate to over 10% in some areas. Properly calculating, collecting, reporting and remitting sales tax is crucial for businesses to remain compliant and avoid penalties.
Consumers also need to be aware of sales tax rates to accurately budget for their purchases. This comprehensive guide will provide an overview of key aspects of Minnesota sales tax, including the rates, calculator tools, exemptions, and administration.
Minnesota Sales Tax Calculator
Given the complexity of Minnesota sales tax rates, online calculators are helpful for quickly determining the total tax due. Here is a recommended sales tax calculator for addresses in Minnesota:
Minnesota Sales Tax Calculator
Minnesota Sales Tax Calculator
Minnesota Sales Tax Rates
Minnesota has a statewide sales tax rate of 6.875%, which applies to most transactions. This includes retail sales of tangible goods and some services. On top of the statewide rate, local governments can add up to an additional 1.5% in local sales taxes. There are over 200 local jurisdictions in Minnesota that collect local sales taxes, bringing the total rate over 10% in many areas. Some of the highest combined state and local rates include:
- Minneapolis: 10.025%
- St. Paul: 10.025%
- Rochester: 9.625%
- Duluth: 8.875%
Minnesota does not apply sales tax uniformly to all items and services. There are exemptions, special rates, and items not subject to sales tax under state law. Common examples include:
- Clothing: Exempt, except athletic uniforms and protective gear
- Food: Generally exempt, except candy and soft drinks
- Prescription drugs: Exempt
- Newspapers: Exempt
- Services: Taxable only if specifically enumerated; most are exempt
County/Metropolitan Sales Tax Rates in Minnesota
Due to variable local taxes and exemptions, sales tax rates can vary across the state. Businesses need to identify all the relevant state, county and city rates that apply to their locations.
- Aitkin County: 6.875%
- Anoka County: 7.275%
- Becker County: 6.875%
- Beltrami County: 6.875%
- Benton County: 6.875%
- Big Stone County: 6.875%
- Blue Earth County: 7.125%
- Brown County: 6.875%
- Carlton County: 6.875%
- Carver County: 7.275%
- Cass County: 6.875%
- Chippewa County: 6.875%
- Chisago County: 7.275%
- Clay County: 7.125%
- Clearwater County: 6.875%
- Cook County: 6.875%
- Cottonwood County: 6.875%
- Crow Wing County: 6.875%
- Dakota County: 7.275%
- Dodge County: 6.875%
- Douglas County: 6.875%
- Faribault County: 6.875%
- Fillmore County: 6.875%
- Freeborn County: 7.125%
- Goodhue County: 7.125%
- Grant County: 6.875%
- Hennepin County: 7.275%
- Houston County: 6.875%
- Hubbard County: 6.875%
- Isanti County: 7.275%
- Itasca County: 6.875%
- Jackson County: 6.875%
- Kanabec County: 6.875%
- Kandiyohi County: 7.125%
- Kittson County: 6.875%
- Koochiching County: 6.875%
- Lac qui Parle County: 6.875%
- Lake County: 6.875%
- Lake of the Woods County: 6.875%
- Le Sueur County: 7.125%
- Lincoln County: 6.875%
- Lyon County: 7.125%
- McLeod County: 7.125%
- Mahnomen County: 6.875%
- Marshall County: 6.875%
- Martin County: 6.875%
- Meeker County: 7.125%
- Mille Lacs County: 6.875%
- Morrison County: 7.125%
- Mower County: 7.125%
- Murray County: 6.875%
- Nicollet County: 7.125%
- Nobles County: 7.125%
- Norman County: 6.875%
- Olmsted County: 7.125%
- Otter Tail County: 7.125%
- Pennington County: 6.875%
- Pine County: 6.875%
- Pipestone County: 7.125%
- Polk County: 7.125%
- Pope County: 6.875%
- Ramsey County: 7.275%
- Red Lake County: 6.875%
- Redwood County: 6.875%
- Renville County: 6.875%
- Rice County: 7.125%
- Rock County: 6.875%
- Roseau County: 6.875%
- St. Louis County: 7.125%
- Scott County: 7.275%
- Sherburne County: 7.275%
- Sibley County: 7.125%
- Stearns County: 7.125%
- Steele County: 7.125%
- Stevens County: 6.875%
- Swift County: 6.875%
- Todd County: 6.875%
- Traverse County: 6.875%
- Wabasha County: 7.125%
- Wadena County: 6.875%
- Waseca County: 7.125%
- Washington County: 7.275%
- Watonwan County: 7.125%
- Wilkin County: 6.875%
- Winona County: 7.125%
- Wright County: 7.275%
- Yellow Medicine County: 6.875%
- Higher rates of 7.125-7.275% apply in greater Twin Cities and suburban counties.
Sales Tax Exemptions in Minnesota
Minnesota provides sales tax exemptions to a variety of individuals, organizations, and transactions. Knowing these exemptions is important for retailers to properly administer sales tax. Some of the most common Minnesota sales tax exemptions include:
Food and Clothing Exemptions
- Most food intended for home consumption is exempt, including groceries, ingredients, and prepackaged meals. Exceptions include candy, soft drinks, dietary supplements, and prepared foods.
- Most clothing apparel is exempt, including normal street clothes. Exceptions include athletic uniforms, protective safety gear, and accessories like handbags and jewelry.
Prescription Drugs and Medical Devices
- Prescription drugs and over-the-counter drugs with active medicinal ingredients are exempt.
- Medical devices like crutches, wheelchairs, glucose monitors and CPAP machines are exempt when prescribed.
Nonprofits and Governments
- Purchases made by approved charitable, religious, educational organizations are exempt.
- Qualified purchases by local, state and federal government agencies are exempt, besides some utilities.
Farming and Agriculture
- Commercial farm equipment, farm drainage tile, and agricultural processing materials are exempt.
- Livestock, feed, seed, fertilizers, and other farm supplies are exempt.
Manufacturing
- Materials and equipment used primarily for manufacturing, fabricating, mining or refining are exempt.
- Tools, instruments and other short-lived equipment are taxable even when used in production.
Administration of Minnesota Sales Tax
Properly administering sales tax includes registration, collection, filing returns, and record keeping. Here is an overview of key administrative requirements for Minnesota sales tax:
Registration
Businesses must register for a Minnesota Tax ID if they engage in taxable sales. Registration can be done online or by submitting a form. Some marketplace facilitators register sellers on their platform.
Collecting Tax
At point of sale, retailers should use a reliable sales tax rate calculator to determine total tax for the customer’s delivery address. Tax must be separately stated and collected on receipts.
Filing Returns
Retailers must file monthly or quarterly sales tax returns reporting gross sales and calculating total tax due. Returns can be filed electronically through the state’s e-Services system.
Record Keeping
Detailed records must be kept for a minimum of 3.5 years. Retailers need to keep exemption certificates, delivery addresses and sales receipts to support exemptions claimed.
Managing Marketplace Sales
For sales through online marketplaces, special rules determine whether the marketplace or seller is responsible for collecting and remitting the sales tax.
Complying with all registration, collection, filing and record-keeping requirements is essential for retailers to avoid sales tax problems in Minnesota. Professional sales tax automation software and services can help streamline compliance.
Conclusion
Minnesota has a complex sales tax regime with over 2,000 jurisdictions and rates reaching over 10% in some metro areas. Navigating exemptions, proper calculation and reporting of tax is challenging for both businesses and consumers. Using trusted online sales tax calculators helps determine the combined state and local rates that apply. Exemptions for items like food, clothing and prescriptions provide tax relief to individuals.
Strict administrative rules govern registration, tax collection, filing returns and record retention for retailers. With sound compliance practices using available automation tools, businesses can confidently manage Minnesota sales tax requirements. Consumers also need a basic understanding of tax rates and exemptions to accurately budget for spending. This guide provides a detailed overview of key aspects of Minnesota sales tax to assist all parties in properly calculating and applying sales tax.
