Minnesota has a 6.875 percent state sales tax rate. It also has several local tax rates and specialty tax rates. The state also has a use tax rate that works in conjunction with the state sales tax rate. The use tax rate is also 6.875 percent.
This guide does not fully describe all of Minnesota’s laws and regulations regarding taxes. Businesses should contact a business attorney or visit the Minnesota Department of Treasury website to learn more about the rules, regulations, tax laws, and tax information associated with their industries and the types of taxes due.
Types of taxes
Minnesota’s local rates are added to the state’s sales tax rate for tangible personal property and certain services. Other types of taxes might be in addition to state and local rates or in lieu of state sales and use tax rates.
Sales and use tax returns
Minnesota levies a sales and use tax against goods and services sold in the state. If a business purchases a taxable item and uses it or stores it in the business instead of reselling it, the business must pay use tax on the item or service.
Lodging
Hoteliers must pay sales tax on room rentals that are less than 30 days or more than 30 days with no enforceable written lease agreement. The lease agreement must be entered into on the day of the sale and must include a date, termination clause and signature.
Some local jurisdictions also charge a lodging rate on top of the state sales tax. Lodging facilities include:
- Campgrounds
- Hotels
- Motels
- Bed and breakfasts
- Rooming houses
- Resorts
- Vacation home rentals
- Trailer camps
The following local jurisdictions have a lodging tax that is in addition to state and local sales tax:
- Mankato: 3 percent
- Lake of the Woods County: 3 percent
- Lake County: 4 percent
- Two Harbors: 1 percent
- Giants Ridge Recreation Area: 2 percent
- Rochester: 7 percent
- St. Paul: 7 percent for establishments with 50 or more rooms; 3 percent for establishments with less than 50 rooms
Vehicle rentals
Minnesota levies a short-term motor vehicle rental tax on vehicle rentals that are 28 or fewer days. The rental taxes are in addition to state and local sales taxes.
The fees are due for rentals, including:
- Passenger cars
- Pickup trucks with a carrying capacity of ¾ ton or less
- Vans with a carrying capacity of ¾ ton or less
The vehicle rental tax is 9.2 percent. Some localities may charge a 5 percent rental fee. Thus, a business would charge states sales tax, plus local sales taxes, plus the two vehicle rental taxes and fees.
Marijuana excise tax
The Minnesota marijuana tax is $3.50 per gram. Marijuana for adult use must have a tax stamp or it is illegal. Medical marijuana is not taxed.
Tobacco tax
Minnesota has a tobacco tax. If a retailer sells individual cigarettes, the tax is $0.3315 per cigarette. The tax on packs of 20 is $0.66 and $0.82875 per pack of 25 cigarettes.
Food and beverage tax
Certain local jurisdictions have a food and beverage tax, including:
- Detroit Lakes: 1 percent
- Giant’s Ridge Recreation Area: 1 percent
- Mankato: 0.5 percent
- Marshall: 1.5 percent
- North Mankato: 0.5 percent
- Proctor: 1 percent
- St. Cloud: 1 percent
Examples of businesses that must charge the food and beverage tax include:
- Cafes
- Bars
- Clubs
- Concession stands
- Coffee houses
- Delis
- Dance clubs
- Drive-in, Drive-through, and delivery restaurants
- Pickup or carry-out restaurants
- Fast food restaurants
- Sit down restaurants
- Pubs
- Saloons
- Tea rooms
- Sidewalk vendors
- Teen centers
Each business should double-check its local rules as the food and beverage tax may or may not apply to certain types of places serving food.
Admissions and recreation tax and entertainment tax
Some jurisdictions charge an admission and recreation tax on top of state and local sales tax. These include:
- Giant’s Ridge Recreation Area: 2 percent
- Mankato (entertainment tax): 0.5 percent
Liquor tax
Some jurisdictions have a local liquor tax. These local areas include:
- Detroit Lakes: 2.5 percent gross receipts tax
- Giants Ridge Recreation Area: 2.5 percent gross receipts tax
- Mankato: 2.5 percent gross receipts tax
- Marshall: 2.5 percent gross receipts tax
- North Mankato: 2.5 percent gross receipts tax
- Proctor: 2.5 percent gross receipts tax
- St. Cloud: 2.5 percent gross receipts tax
Gross receipts mean that the business adds all other taxes to the bill then figures the alcohol tax. For example, a bottle of whiskey is $75. The sales tax is $5.16. The business is in a city where there are no local sales and use tax laws in effect. The total sale before adding the alcohol tax is $80.16. The alcohol tax is $2 (80.16 times 0.025). The retailer should charge $82.16.
Discretionary taxes for sale of goods (Local tax rates)
The cities, towns, and counties in Minnesota can levy additional tax rates. The best way to determine how much tax a business must pay is to enter the business location’s zip code into the local tax rate locator.
Alternatively, the state publishes a list of local taxes. However, if a business decides to use the list, it should ensure that it is using the most updated list published by the Minnesota Department of Revenue.
Registering for and filing Minnesota's taxes
Before you can pay Minnesota sales tax, you must register an account with the Minnesota Department of Revenue. To register the account, you will need the following information:
- The Federal Employer ID Number (FEIN) for the business.
- The business name and address.
- Officers’ names and Social Security numbers.
- The North American Industry Classification System (NAICS) code for the business.
- The name and email address of the business’s main contact, preferably a business owner or the person filing tax reports and remitting payments.
Due dates for Minnesota’s sales tax returns
Sales and use taxes are due on or before the 20th of the month after you collect the taxes unless the date falls on a weekend. In that case, the due date for the taxes is the first business day after the 20th. Quarterly taxes are due on the 20th day of the month after the quarter ends. Quarterly taxes are due in April, July, October and January. If you are required to pay annually, the business’s tax liability is due on January 20 of the year following the year the business collected taxes.
Minnesota sales tax exemptions
If a nonprofit needs to apply for a sales tax exemption, it must apply directly to the Minnesota Department of Revenue. Additionally, nonprofits must give sellers a completed Form ST3, Certificate of Exemption.
Calculating Minnesota's sales and use tax
To figure out Minnesota’s tax rate, add the state tax of 6.875 percent to the local tax rates for the business’s zip code. Add the special taxes. Multiply the total rate by the sales price. For example, Widget A sold for $100. You live in a county that has a 1 percent sales tax and a special tax for Widget A items of 5 percent. Add 6.875, 1 and 5, for a total of 12.875. Multiply 100 by 0.12875 for a total tax of $12.88 in taxes. The total sale is $112.88.
Remote and marketplace sellers
Remote sellers and marketplace sellers must apply for an account with the Minnesota Department of Revenue and collect state and local sales tax for the state. Minnesota does have a “small seller exemption” for filers. If a business has less than 200 transactions or has gross receipts of less than $100,000, it does not need to collect and remit Minnesota sales tax.
Minnesota sales tax holiday
Minnesota does not have a sales tax holiday for taxpayers.
FAQs
Minnesota’s state sales tax is 6.875 percent. Local jurisdictions also have a sales and use tax that businesses must add to the state’s rate. Some industries have special taxes.
Businesses must complete Form ST3, Certificate of Exemption. They present the resale certificate to sellers of goods. Both buyers and sellers must keep records of items purchased by the retailer for resale.
Yes. Some states require you to create an account and pay taxes. Other states do not require you to collect sales tax unless you have $100,000 or more in gross sales or 200 transactions with that state. However, you must still pay the sales tax even if you do not collect it.
Yes, you must still file a “zero return” even if the business did not have taxable sales.
Yes. Gross sales include taxable and non-taxable sales.
If the item the business is selling is taxable, then delivery charges, including crating, handling, packing, postage, shipping, and transportation, are taxable.
