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Last Updated: 11/29/2016

Taxable 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 below for specific examples.

 

Taxable Purchases

Examples

General items

  • Cleaning supplies

  • Computer hardware and software, Fact Sheet 134

  • Employee name badges

  • Furniture and fixtures

  • Invoices

  • Office equipment and supplies

  • Paper towels

  • Toilet tissue

  • Training videos and materials

Retail equipment and supplies

  • Cash registers and register tape
  • Price guns and labels
  • Price stickers
  • Product and price lists
  • Scanners
  • Security tags (reusable)
  • Shelves and racks
  • Shopping baskets and carts

Promotional items

  • Calendars
  • Magnets
  • Pens

Utilities

  • Electricity
  • Gas
  • Water

Taxable services

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

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.

Note: If you are not required to be registered for sales tax, you may register for use tax only to pay the use tax.

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