You do not need to charge Minnesota sales tax when you:
- Ship or deliver products to customers outside of Minnesota
- Sell items that are exempt by law
- Provide nontaxable services
Receive a completed Form ST3, Certificate of Exemption from your customer.
Items shipped or delivered to a customer out of state are not taxable. You must keep records that show the items were shipped or delivered outside of Minnesota.
Items Exempt by Law
When you sell an exempt item, show the item separately on the invoice. You do not have to provide any other proof why no tax was charged. Common examples include:
- Clothing for general use, see Clothing
- Food (grocery items), see Food and Food Ingredients
- Prescription and over-the-counter drugs for humans, see Drugs
Note: Each of the above categories may include both taxable and nontaxable items. See the corresponding fact sheet for details.
Firearm Storage Unit Exemption
Starting July 1, 2023, secure firearm storage units are exempt from sales tax. Secure firearm storage units are fully enclosed containers that are locked by padlock, keylock, combination lock, or similar locking device that is specifically designed for safe storage of firearms or is sold for that purpose by a federally licensed firearms dealer.
Most services are not taxable. For more information, see:
Form ST3, Certificate of Exemption
Sales to certain types of customers and for certain uses are not taxable. You must charge sales tax unless the customer gives you a completed Form ST3, Certificate of Exemption. You must keep the form in your records.
For the form to be complete, the customer must complete these required sections:
- Purchaser’s name and address
- Purchaser’s identification number
- Type of business
- Reason for exemption
Note: The federal government may provide proof of government purchase and payment instead of Form ST3, Certificate of Exemption. For more information, see Government – Federal Government.
Gift Certificates and Gift Card Sales
Gift certificates and gift cards are not taxable when sold. When a gift certificate or gift card is redeemed, charge sales tax on any taxable portion of the purchase. Apply the amount of the gift certificate or card as a cash payment.
Note: Your purchase of gift card or certificate stock is taxable.
Restocking fees are not taxable.
Minneapolis and Duluth Bag Fees
The cities of Minneapolis and Duluth approved ordinances in 2019 requiring retailers to collect a charge from customers for carryout bags provided by the retailer to transport food or merchandise.
Under each ordinance, the retailer must collect at least 5 cents for each carryout bag from its customer and itemize the charge on the invoice or bill given to the customer.
The charge for the carryout bag is not considered part of the sales price of the items purchased and is not subject to sales tax.
The Minnesota Department of Revenue does not administer the local charges for carryout bags. For more information, contact the cities directly.