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Minnesota Sales and Use Tax Business Guide
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Taxes and Rates

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Sales tax is charged by the seller and applied to retail sales of taxable services and tangible personal property sold in Minnesota.

Sales tax is a transaction tax. The seller must look at each transaction to determine its taxability.

Sales tax is imposed at the state and local levels.

Calculating Sales Tax

To figure the sales tax rate, combine the state general tax rate (6.875%) 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.
You must subtract the sales tax from your total receipts before filing your sales tax return. For more information, see Subtracting Sales Tax from Receipts.
 

Sourcing Rules

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. 

  1. Seller’s Address – when the purchaser picks up the product at the seller’s location, charge tax based on the business location.
  2. 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.
  3. Billing Address – when 1 or 2 does not apply, charge tax based on the customer address in your records.
  4. 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).
  5. 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.

Local Sales Taxes

Some cities and counties have local sales and use taxes. All sellers, regardless of location, must collect local based on where the customer receives the taxable product or service.
 

To determine the sales tax rate, use the location where the customer receives the product, typically a business or delivery address. We offer resources to help you determine the total tax rate (state and local) on our website. You can:

  • Use our Sales Tax Rate Calculator. If you have a street address, it will identify the nine-digit ZIP Code for you. Best to use when you have one or two addresses at a time.
  • Use our Sales Tax Rate Map. You can visually confirm your location of interest by entering an address.
  • Download our Sales Tax Rate Spreadsheet to use at your desk. You must know the nine-digit ZIP Code. Best for use when you have multiple nine-digit ZIP Codes to look up at one time.
  • Download our Sales Tax Rates and Boundaries Tables to program into your point of sale system. (From the Streamlined Sales Tax website.)
For more information, see:

Note: These options do not provide information on most special local taxes (see below). You must add any special local taxes to the total sales tax rate.

Special Local Taxes

Special local taxes apply to specific types of sales, including:
 
  • Admissions
  • Entertainment
  • Food and beverages, including restaurants
  • Liquor
  • Lodging accommodations

Note: Some special local taxes are administered by a local government and not the Minnesota Department of Revenue. For questions, contact the city or county that administers the tax.

 

For more information on special local taxes administered by the department, see:

Special Tax Rates

Some items have additional taxes in addition to the state general rate sales tax. These items include:

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 Use Tax for Businesses.