The Minnesota food tax can be complicated to calculate and claim exemptions for. This comprehensive guide will provide you Mn food tax calculator and everything you need to know about calculating, collecting, filing, and claiming exemptions from the Minnesota food tax as a grocery store or restaurant.
Mn Food Tax Calculator
To make calculating, collecting, and remitting Minnesota food sales tax easier, we have developed a Mn food tax calculator tool. This web-based calculator allows groceries and restaurants to enter their location in Minnesota and immediately get the applicable state and local tax rates.
Minnesota Food Tax Calculator
Minnesota Food Tax Calculator
Tax: $0.00
The food business can then enter the total sales for taxable items for a particular period. The Mn food tax calculator will automatically compute the sales tax owed by applying the correct tax rate. This makes tax collection and reporting simple and mistake-proof.
Read More: North Carolina Food Tax Calculator: Exemption and Administration Guide
Overview of Minnesota Food Tax
The state of Minnesota imposes a sales tax on prepared food, soft drinks, candy, dietary supplements, and liquor sold in grocery stores and restaurants. The general state sales tax rate is 6.875%. However, grocery stores and restaurants must also collect local sales taxes, which can raise the total tax rate to over 10% in some cities.
Some items are exempt from sales tax in Minnesota. These exempt items include:
- Most food products meant to be prepared and eaten at home, including bread, produce, meat, eggs, milk, cheese, etc.
- Water in containers of 1 gallon or larger
- Prescription drugs and medicine
- Baby products like formula, pacifiers, diapers, etc.
The full list of sales tax exemptions is available here.
Read More: City Wise Michigan Food Tax Calculator: Exemption and administration
Determining Taxability of Food Items
Classifying food items as taxable or exempt can be tricky. Here are some guidelines:
- Prepared food meant for immediate consumption is generally taxable. This includes restaurant meals, deli items, heated food, and food sold with utensils.
- Bakery items meant to be heated or thawed before eating are taxable. This includes frozen pizza, cookie dough, etc.
- Food meant to be combined with other ingredients is exempt. Examples are bread, flour, meat, produce, etc.
- Soft drinks, candy, dietary supplements are always taxable.
See the full guidelines from the MN Department of Revenue here.
MN State and Local Tax Rates
The state sales tax rate in Minnesota is 6.875%. However, local taxes can raise the total rate significantly:
- Minneapolis charges an extra 0.5% local tax, for a total of 7.375%
- St. Paul charges an extra 0.625% local tax, for a total of 7.5%
- Rochester charges an extra 0.5% local tax, for a total of 7.375%
See a full list of local tax rates in Minnesota here.
To summarize, sales tax rates on taxable food items in Minnesota range from 6.875% to over 10% depending on the location. Groceries and restaurants must collect both state and local sales taxes.
Read More: Wisconsin Food Tax Calculator: Exemptions and Regulations
Calculating MN Food Tax for Grocery Stores
Grocery stores in Minnesota need to carefully calculate sales tax on food items. Here is a step-by-step guide to calculating Minnesota food tax for grocery store owners:
1. Identify Taxable and Exempt Food Items
Go through your inventory and identify which items are taxable and exempt according to the guidelines above. Some tips:
- Prepared food is usually taxable
- Soft drinks, candy and supplements are taxable
- Most unprepared grocery staples are exempt
If unsure, check the MN revenue guidelines.
2. Determine Applicable Tax Rates
The state tax rate is 6.875%. Check the Minnesota sales tax charts to find your local rates. Add the state and local rates to get the combined rate.
For example, a grocery store in Minneapolis would charge 7.375% sales tax on taxable items.
3. Calculate Tax on Taxable Items at Point of Sale
When customers checkout, make sure the register system calculates sales tax only on food classified as taxable.
The tax is calculated as:
Tax = (Price of taxable items) x (tax rate)
The total tax collected must then be remitted to the state.
4. Reporting and Remitting MN Food Tax
Grocery stores must file sales tax returns either monthly, quarterly or annually based on revenue. See reporting frequencies here.
Returns are filed online through the Minnesota Sales and Use Tax System. The total sales tax collected must be remitted with the return. Instructions are available here.
Carefully follow all requirements for reporting frequency, online filing, and remitting taxes to avoid penalties from the MN Department of Revenue.
Read More: Food Tax in California: Exemptions and Administration
Calculating MN Food Tax for Restaurants
Restaurants in Minnesota also need to calculate, collect, report, and remit sales tax on food and beverages. Here is a guide:
1. Classify Menu Items as Taxable or Exempt
All prepared food and drinks meant for dine-in or takeout are taxable. This includes:
- Main dishes
- Side dishes
- Salads
- Soups
- Smoothies
- Sodas and juices
- Alcoholic beverages
Any food ingredients sold unprepared in a grocery form are exempt. For example, raw meat or produce sold from a restaurant market area would be exempt.
2. Determine Tax Rates to Charge
Look up the state (6.875%) and local sales tax rates based on your restaurant location. Add them together to find the total rate.
For example, a restaurant in St. Paul would charge 7.5% sales tax.
3. Calculate Tax on Bills
When generating customer bills, make sure to calculate sales tax on all prepared menu items.
Tax = (Price of taxable menu items) x (tax rate)
This sales tax must be collected from customers and remitted to MN.
4. Sales Tax Reporting and Remittance
Like grocery stores, restaurants must also file sales tax returns monthly, quarterly or annually based on revenue. The returns are submitted online along with total sales tax payments.
Follow all requirements for sales tax reporting and payments to remain compliant. Consider using accounting software or working with an accountant to simplify the process.
Claiming Exemptions from MN Food Tax
Certain organizations may qualify for exemptions from paying sales tax on grocery and restaurant purchases in Minnesota.
Food Shelf Exemption
Food shelves registered with the MN Department of Revenue can purchase food tax-free to distribute to those in need. The food shelf must provide an exemption certificate to the grocery store or restaurant when making purchases. See details here.
School Exemption
Public and private schools, including K-12 schools, colleges, and universities, are exempt from sales tax on food and drinks. The school must submit Form ST3 to vendors. See school exemption details here.
Senior Citizen Group Exemption
Nonprofit senior citizen groups can get exemption from sales tax on meals provided to members aged 60+ or disabled. The group must apply for exemption with the MN Department of Revenue and submit form ST16 to restaurants. See details here.
Nursing Home & Hospital Exemption
Nursing homes, boarding care homes, and hospitals are exempt from food tax on patient meals. They must submit Form ST3 to food vendors. See details here.
Nonprofit organizations should apply for any eligible exemptions from MN food tax to reduce costs. Proper exemption certificates must be provided to vendors.
Avoiding Penalties and Audits
The Minnesota Department of Revenue takes sales tax compliance seriously. Groceries and restaurants can avoid penalties by:
- Carefully categorizing food items as taxable and exempt
- Charging all required state and local tax rates accurately
- Filing returns and remitting taxes on time
- Keeping detailed sales tax records
If your business is randomly selected for a Minnesota sales tax audit, cooperate fully by:
- Providing the requested transaction records and tax documents
- Clarifying any issues identified by auditors
- Paying any additional taxes owed promptly
Signing up for a [sales tax account](https://www.revenue.state.
Conclusion
Calculating, collecting, reporting, and remitting food sales tax in Minnesota can seem complicated for grocery stores and restaurants. Tax rates vary across the state from 6.875% to over 10% when local taxes are added. Additionally, determining which food items are taxable vs. exempt requires careful evaluation.
By understanding how to classify food items, look up state and local tax rates, accurately calculate tax, file returns, and remit payments on time, food businesses can remain compliant. Certain organizations like schools, hospitals, and nonprofit senior groups may qualify for sales tax exemptions as well.
Utilizing a programmable calculator tailored to Minnesota food tax laws can streamline the entire process. With the right knowledge and tools, grocery stores and restaurants in Minnesota can feel confident in their ability to handle food sales tax properly. Adhering to all regulations will help avoid costly penalties and audits from the Department of Revenue.
