MinnesotaCare Rebates and Gross Revenues

Due to a 2025 tax law change, wholesale drug distributors must include all rebates paid to customers in their gross revenues received after June 30, 2025. 

2025 Annual Return

Wholesale drug distributors may factor certain rebates into consideration when calculating their gross revenues received from January 1 to June 30, 2025. You may factor the rebates allowed by the Minnesota Supreme Court decision in Dakota Drug Inc. v. Commissioner of Revenue. See more details under the Legal and Legislative Background section.

For gross revenues received from July 1 to December 31, 2025, wholesale drug distributors must include rebates in their gross revenues. We will be updating our instructions for this change.

We will not request rebate calculations with the annual return. However, these returns are subject to audit, and we may request rebate calculations.

You should keep accurate filing-related records for relevant periods, including records related to your rebate calculations and rebate-related customer agreements.   

Legend Drug Use Tax

The Legend Drug Use Tax and Wholesale Drug Distributor Tax are complementary taxes. Starting July 1, 2025, all rebates received are included in the price paid for legend drugs subject to the Legend Drug Use Tax. Entities subject to the Legend Drug Use Tax should no longer reduce the price paid by rebates received.

Hospitals, Providers, and Surgical Centers

Hospitals, providers, and surgical centers no longer need to subtract rebates received from their prescription drug purchases when calculating the Legend Drug Exemption.

Pharmacy Refund

Pharmacies requesting a refund for the purchase of legend drugs in Minnesota that were subsequently shipped outside of Minnesota no longer need to subtract rebates received from their purchase price.

Legal and Legislative Background

In 2024, the Minnesota Supreme Court issued its decision in Dakota Drug Inc. v. Commissioner of Revenue, 13 N.W.3d 387 (Minn. 2024). The Court found that some payments for legend drugs were overpayments or not received for purposes of gross revenues when the wholesale drug distributor provided certain rebates to the purchaser.

In 2025, the Minnesota Legislature amended the definition of gross revenues to specifically include any rebates from a wholesale drug distributor to a customer. The amendment was intended to reverse the impact of the Dakota Drug case for gross revenues received after June 30, 2025.