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Last Updated: 2/23/2017

Purchases and Use Tax

Taxable purchases

Items you use to operate your business 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


General items

  • Cash register tapes
  • Computer hardware and software, Fact Sheet 134
  • Furniture and fixtures
  • Office equipment and supplies

Laundry services

  • Coats and coveralls
  • Floor mats and rugs
  • Shirts
  • Work uniforms

For more information, see Fact Sheet 120, Laundry and Cleaning Services.

Promotional items

  • Calendars
  • Key chains
  • Pens

Note: Clothing items, such as T-shirts and caps, are not taxable.

Safety equipment and supplies

  • Breathing masks
  • Fire extinguishers
  • Hearing protectors
  • Safety glasses or goggles (nonprescription)
  • Welding gloves or helmets

Shop supplies

  • Cleaning products
  • “Floor dry” products
  • Rags

Note: cleaning products and rags may be exempt if they are used up while making repairs.

Tools and equipment

  • Lifting equipment
  • Paint booths
  • Power tools
  • Wrenches


  • Electricity
  • Gas for cooking and heating
  • Water

Taxable services

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


If you donate or give away taxable items, you owe sales or use tax on your cost of the items, no matter who receives them. For example, if you change the oil in a church van at no charge, you owe use tax on your cost of the filter and the oil used.

Nontaxable purchases

Subcontracted repairs and services

If you subcontract with another business for repair work or services, do not pay sales or use tax on your purchase. Instead, give the subcontractor a completed Form ST3, Certificate of Exemption. Specify the Resale exemption.

But you must charge sales tax to your customer for any taxable subcontracted labor, parts, or materials. Charges for repair labor are not taxable when separately stated from repair parts on the invoice.


General clothing items are not taxable. Examples include:

  • cloth or latex gloves
  • coveralls and uniforms
  • disposable clothing
  • steel-toe shoes or boots

For more information, see Fact Sheet 105, Clothing. 

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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