Use tax is the counterpart of sales tax. You owe use tax when Minnesota sales tax is not charged on taxable items you buy, whether you buy them in Minnesota or outside the state.
For example, if you travel to another state or country and bring back items that are normally taxed in Minnesota, you owe use tax on those purchases. The same applies if you buy taxable items through mail-order catalogs or the Internet and Minnesota sales tax is not charged on the purchase.
Use tax does not apply to items currently tax exempt in Minnesota, such as clothing, prescription drugs for humans and most groceries.
If the items you are buying are for your personal use (as opposed to buying items to use in a business), you can buy up to $770 worth of taxable items during the calendar year without paying use tax. If, however, your purchases total more than $770, you must pay use tax on the entire amount. This exemption does not apply to businesses.
Minnesota’s use tax rate is the same as the state’s 6.875 percent sales tax rate (or 6.5 percent prior to July 1, 2009). If you live in an area with one or more local use taxes, you owe local use tax on your purchases as well.
Local use taxes
You also owe local use tax on your purchases. The rate of local use tax is based on where you live. The link below will take you to a listing of local tax rates.
Local sales and use tax information
Credit for sales tax paid to another state
You are allowed a credit for any Minnesota general sales tax and/or local taxes paid on your purchases to Minnesota or to another state. For example, if you paid the correct amount of Minnesota sales tax, but not the correct local tax, you may deduct the Minnesota sales tax paid when determining the use tax on your purchases.
Minnesota also allows a credit for sales tax paid to another state up to the 6.875 percent rate (or 6.5 percent rate if prior to July 1, 2009) charged by Minnesota. For example, if you paid sales tax to another state at a rate lower than Minnesota’s rate, you could receive a credit for the amount paid. If the other state’s rate is the same or higher than Minnesota’s rate, you could receive a credit equal to the 6.875 percent rate.
You are not allowed credit for customs duty charges or tax paid to other countries.
File use tax electronically
You can file and pay your individual use tax using our electronic filing system. Log in and follow the prompts to file and pay individual use tax. When filing electronically, you may start a return and use the Save and Finish Later function if needed.
If you are an individual and your purchases subject to use tax were for personal use, you must file an annual return by April 15 of the following year. Form UT1, Individual Use Tax Return.
Businesses not required to have a Minnesota tax ID number
If your purchases subject to use tax were for business use and total $18,500 or less for the year, file a return and pay the tax due by April 15 of the following year.
If your total purchases subject to use tax exceeds $18,500 before the end of the year, your return and payment are due by the 20th day following the end of the month in which your purchases exceeded $18,500.