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Last Updated: 9/14/2017

Taxable Purchases and Use Tax

Machinery, equipment, tools, and other durable items used in agricultural production are taxable unless an exemption applies. Several services are also taxable. If you do not pay sales tax on a taxable purchase, then use tax is due. See the table below for specific examples. 

Taxable Purchases

Examples

General items

  • Computer hardware and software, Fact Sheet 134
  • Furniture and fixtures
  • Office equipment and supplies
  • Safety equipment (respirators, gas masks, goggles, and safety suits)
  • Tree seedlings for windbreaks (unless part of a federal program)

Machinery and equipment

  • Lawnmowers (unless used to produce sod)
  • Snow blowers
  • Snowmobiles
  • Tires
  • Tools and shop equipment (pruners, shears, watering cans)

Taxable services

 For more information, see a complete list of taxable services.

Items that are not farm machinery

Certain items used in agricultural production do not qualify for an exemption. For more information, see Taxable Items Used in Agricultural Production.

ATVs

All-terrain vehicles (ATVs) are taxable. However, if the purchaser uses the ATV directly and principally in agricultural production, it qualifies for the farm machinery exemption. You must give the seller a completed Form ST3, Certificate of Exemption.

Motor vehicles

Motor vehicles that must be registered for road use are taxable. This includes cars, vans, utility vehicles, trucks, and horse and livestock trailers.

For more information, see the Motor Vehicle Industry Guide.

Use tax

If you buy equipment, supplies, or other taxable items for your business and the seller does not charge Minnesota sales tax, you owe use tax on the cost of the items. If your business is located in an area with a local tax, you may also owe local use tax.

Some common situations where you may owe use tax include:

  • You buy taxable items or services online without paying sales tax
  • You withdraw an item from inventory to use (instead of selling it), donate, or give away
  • You buy taxable items outside of Minnesota
  • You buy taxable items in another Minnesota city or county with a lower (or no) local sales tax

For more information, see Fact Sheet 146, Use Tax for Businesses and Fact Sheet 164, Local Sales and Use Taxes.

 

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