This publication explains how Minnesota Sales Tax applies to nursery and greenhouse production. Greenhouse and nursery operations that grow trees, shrubs, perennials, annuals, potted plants, and other plants to be sold at retail, qualify for the agricultural production and farm machinery exemptions.
Note: Nursery and greenhouse operations that store plant stock waiting to be sold at retail or house inventory for landscapers do not qualify for the agricultural production and farm machinery exemptions.
Agricultural Production Exemption
Agricultural production includes, but is not limited to, the following activities when they result in a product that will be sold at retail:
- Floriculture – growing flowering plants
- Horticulture – growing fruits, vegetables, and plants
- Silviculture – growing and caring for forest trees
Agricultural producers may purchase certain items exempt from sales tax. This exemption applies to items used or consumed in the production process, whether or not they become part of the product produced. See Agricultural and Farming.
To purchase these items exempt from tax, you must give your vendor a completed Form ST3, Certificate of Exemption. Specify the Agricultural production exemption.
Items that Qualify for Exemption
Crop Inputs
- Chemicals or additives, depending on how they are used in agricultural activities
- Materials, including chemicals, fuels, and electricity purchased by persons engaged in agricultural production to treat waste generated as a result of the production process
- Seeds, trees, fertilizers, and herbicides, purchased for use by farmers in a federal farm, state farm, or conservation program
- Soil and soil amendments including peat
Machinery and Greenhouse Fuel
- Fuels, electricity, gas, and steam used or consumed in agricultural production. Including, energy used for excess climate control or specialized lighting necessary to produce agricultural products.
- Petroleum products and lubricants used or consumed in the production of agricultural products
Temporary Greenhouse Coverings
Temporary greenhouse coverings must be consumed in agricultural production to qualify for the exemption. Examples include:
- Ground cover
- Poly film (short lived, pliable plastic film used on temporary greenhouses) and fastening supplies
- Shade cloth and heat retention cloth
- Shade compounds and greenhouse paints
Permanent greenhouse coverings and building materials are taxable. Examples include:
- Glass and polycarbonate coverings
- Portable framing materials
Accessory Tools, Equipment, and Other Short-Lived Items
Accessory tools, equipment, and other short-lived items are exempt if all three of the following requirements are met:
- Are separate, detachable units
- Produce a direct effect on the product
- Have a useful life of less than 12 months when used continuously in production under normal conditions
Items Included with the Product
The following items may be sold with the product and may be purchased exempt for resale. See Agricultural and Farming
- Bamboo and other support material
- Non-returnable packaging materials including plant pots, containers, plant sleeves, and decorative pot covers
- Non-returnable pallets
- Product labels and other marking materials
Farm Machinery Exemption
New and used farm machinery is exempt from sales tax. This exemption applies to new or used machinery, equipment, implements, and accessories used in qualifying agricultural production activities. Qualifying items must be used 50% or more of its operating time in agricultural production.
To claim the exemption, give your supplier a completed Form ST3, Certificate of Exemption. Specify the Farm machinery exemption.
Exempt Nursery and Greenhouse Farm Machinery
Irrigation and Application Equipment
- Application sprayers, foggers and nozzles, shutoff valves, hoses
- Automatic watering systems including poly pipe and fittings, misting nozzles, controllers and timers
- Backflow preventers
- Capillary water mats
- Fog nozzles and shutoff valves
- Hoses and water wands
- Sprayers and foggers
Climate Control Equipment
- Climate control systems, including light meters and temperature alarms necessary to the system
- Evaporative cooling equipment
- Greenhouse heaters and fans
- Operable roof venting systems, excluding the materials used in constructing the roof into which the operable venting system is installed
- Special greenhouse lighting for growing plants
Production Equipment (propagation, soil preparation, and plant preparation equipment)
- Carts for movement of plants within the production area
- Conveyors used within the production area
- Potting machines
- Propagation mats and thermostats
- Seeders
- Soil mixers and potting machines
- Soil sterilizer machinery
Other Qualifying Machinery
- Cultivators
- Front end loaders and forklifts used in production areas
- Harvesting equipment and accessories
- Planters
- Production loaders and forklifts
- Specialized greenhouse benches
- Tractors
- Weed control implements
ATVs
Generally, all-terrain vehicles (ATVs) do not qualify for the farm machinery exemption. However, when an ATV is used directly and principally in agricultural production, it qualifies for the farm machinery exemption.
Taxable Items
Examples of taxable items:
- Building materials
- Carts for movement of plants within a retail area
- Communication equipment and cell phones
- Equipment used primarily in retail areas
- Hand tools such as pruners, rakes, shears, and shovels
- Landscaping equipment that does not qualify for the agricultural or farm equipment exemptions
- Lawn mowers, unless used in production of sod for sale
- Motor vehicles
- Office and retail equipment
- Safety equipment including gas masks, goggles, and respirators
- Shop equipment and tools
- Snow blowers
- Tarps
- Tires
- Watering cans
- Welding equipment
Repair and Replacement Parts
Repair and replacement parts for farm machinery are exempt from tax. This exemption applies to repair and replacement parts installed in place of a part that has a specific or generic part number assigned by the farm machinery manufacturer.
This exemption does not include tires, which are taxable.
To claim the exemption, give your supplier a completed Form ST3, Certificate of Exemption. Specify the Farm machinery exemption.
Landscaping Contractors
A landscape construction contract is not taxable.
You must pay sales or use tax on the cost of the items used to complete the contract. This includes plants, trees, shrubs, sod, and other materials, supplies and equipment. See Contractors and Other Property Installers.
Use Tax
If you buy taxable items or services that are used, stored, or consumed in Minnesota without paying sales tax, you owe use tax. See Use Tax for Businesses.
Local Sales and Use Taxes
If you are located in or make sales into an area with a local tax, you may owe local sales or use tax. See Local Sales and Use Taxes.
Legal References and Resources
Minnesota Statutes
- 297A.61, Definitions
- 297A.69, Agricultural exemptions
Minnesota Rules
Publications
