To figure the sales tax rate, combine the state general tax rate (6.875 percent) and all applicable local tax rates (local taxes, special local taxes, and special taxes). Apply the total rate to the taxable sales price. Rate charts are available at various percentages. See Rate Charts.
You may either:
- Add sales tax to the selling price. Show the tax separately on the receipt or invoice
- Include sales tax in the selling price. Mark the item “tax included” on the receipt or invoice, or post a sign indicating that tax is included.
What taxes apply to the sale?
There are five general sourcing rules that determine where a sale takes place and what taxes are due.
General sourcing rules have an order. Start with rule 1. If it does not apply, go to rule 2. When rule 2 does not apply, go to rule 3. The majority of sales fall into rule 1, 2, or 3.
- Seller’s Address – when the purchaser picks up the product at the seller’s location, charge tax based on the business location.
- Delivery Address – when the customer directs the seller to ship the product or service to a location, charge tax based on the location where the product or service is delivered.
- Billing Address – when 1 or 2 does not apply, charge tax based on the customer address in your records.
- When the above do not apply, charge tax based on the customer’s address obtained during the transaction (for example, the address on a customer’s check).
- When an address is not available, charge tax based on the address from where the item was shipped or the service was provided.
Note: For more information, see Minnesota Statutes 297A.668 and 297A.669.
