The sales tax rate in Inver Grove Heights, Minnesota is 8.125 percent in 2026, and it applies the same way across every neighborhood and business district in the city.1Minnesota Department of Revenue. Local Sales and Use Tax Rate Guide 2026 Q2 That single rate hides four stacked levies, and Minnesota exempts enough common purchases that the sticker rate overstates what a typical shopper actually pays.
What Makes Up the 8.125 Percent
Minnesota’s statewide sales tax of 6.875 percent, established under Chapter 297A, is the largest piece. Dakota County adds a 0.25 percent transit sales and use tax dedicated to regional transportation projects.2Minnesota Department of Revenue. Dakota County 0.25 Percent Transit Sales and Use Tax Two metro-area taxes that apply throughout the Twin Cities region make up the remaining 1.0 percent: 0.25 percent for housing and 0.75 percent for transportation.1Minnesota Department of Revenue. Local Sales and Use Tax Rate Guide 2026 Q2
Inver Grove Heights does not add a city-level sales tax of its own. Some neighboring cities layer on municipal taxes for specific projects, but that is not the case here.
What You Do Not Pay Sales Tax On
Minnesota exempts several large categories of consumer goods, and those exemptions carry through at Inver Grove Heights registers.
Clothing
Clothing suitable for general wear is exempt. Coats, shoes, underwear, uniforms, bathing suits, steel-toed boots, formal wear, and baby receiving blankets all qualify.3Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.67 – General Exemptions Three categories are carved out and remain taxable:
- Sports or recreational equipment, including cleated athletic shoes, ski boots, roller skates, and wetsuits
- Protective equipment, including hard hats, safety goggles, and welding masks
- Clothing accessories, including jewelry, handbags, wallets, watches, and nonprescription sunglasses
The line is not athletic versus everyday. It is whether the item is suitable for general everyday use.
Groceries
Unprepared food and food ingredients are exempt whether they are fresh, frozen, canned, or dried. Four categories are pulled back out and taxed in full: candy, soft drinks, dietary supplements, and prepared food.3Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.67 – General Exemptions Alcohol and tobacco are also outside the food exemption and taxed at the full rate.
Drugs and Medical Equipment
Minnesota’s medical exemption is broader than most states’. It covers all drugs, including over-the-counter medications, not just prescriptions. Insulin, medical oxygen, prosthetic devices, mobility-enhancing equipment, durable medical equipment for home use, prescription corrective eyeglasses, kidney dialysis equipment, and single-use blood glucose testing devices are all exempt.3Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.67 – General Exemptions
Services and Digital Products
Minnesota taxes a specific list of services rather than services broadly. If a service is not on the list, it generally is not taxable. The taxable services include:4Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.61 – Taxable Sales Definitions
- Laundry and dry cleaning, including pressing, altering, and storing clothes and cleaning carpets, drapery, and upholstery (coin-operated self-service machines are excluded)
- Motor vehicle washing, waxing, cleaning, rustproofing, undercoating, and towing
- Building and residential cleaning, janitorial work, maintenance, disinfecting, pest control, and exterminating
- Detective, security, burglar and fire alarm, and armored car services
- Pet grooming
- Lawn and garden care, including mowing, fertilizing, tree surgery, shrub pruning, stump removal, and indoor plant care
- Massages, unless provided by or on referral from a licensed healthcare professional for treatment of illness, injury, or disease
- Animal boarding at kennels and similar arrangements, excluding veterinary and horse boarding
Haircuts, legal work, accounting, and general consulting are not on the list and are not subject to sales tax. Business owners sometimes assume all repair and maintenance work is taxable; Minnesota’s list is more targeted than that.
Digital products get treated much like their physical counterparts. The state taxes digital audio works, digital audiovisual works, and digital books transferred electronically, along with prewritten computer software whether delivered on a disc or downloaded.4Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.61 – Taxable Sales Definitions Streaming video and music subscriptions fall under the pay television service definition, which covers audio, video, and programming transmitted to subscribers regardless of delivery method. All of these are subject to the full 8.125 percent in Inver Grove Heights, whether you buy permanent access or a subscription.
Use Tax on Out-of-State Purchases
When you buy something from an out-of-state seller that does not collect Minnesota tax, you owe use tax at the same 8.125 percent rate on tangible personal property or taxable services brought into the state for use, storage, or consumption.5Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.63 – Use Taxes Imposed If the seller already collected sales tax on the sale, no additional use tax is owed. Individuals can report use tax on their Minnesota income tax return; businesses report it through the same e-Services portal they use for sales tax returns.
If You Sell in Inver Grove Heights
Registering for a Permit
Any business that will collect sales tax in Minnesota must register for a Minnesota Tax ID through the Department of Revenue’s e-Services portal before making taxable sales. There is no fee. The application asks for the legal business name, a federal employer identification number (or Social Security number for sole proprietors), the business address, an industry classification code, and an estimate of monthly taxable sales.6Minnesota Department of Revenue. Minnesota Tax ID Requirements That sales estimate determines whether you file monthly, quarterly, or annually, so a reasonably accurate number matters from the start.
Remote Sellers and Marketplaces
Out-of-state sellers without a physical presence in Minnesota still have to register and collect sales tax once they cross either of two thresholds in any 12-month period: more than $100,000 in retail sales shipped to Minnesota, or 200 or more separate retail transactions delivered into the state.7Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.66 – Retailer Collection Requirements Either threshold triggers the obligation.
Marketplace facilitators, meaning platforms that host third-party sellers and process payments, are treated as the retailer for sales they facilitate and must collect and remit the tax.7Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.66 – Retailer Collection Requirements If you sell through a major online marketplace, the platform is almost certainly handling it. Sellers who also run their own websites need to track Minnesota sales independently.
Exemption Certificates
Businesses buying inventory for resale or purchasing for an exempt purpose can avoid paying sales tax by giving the seller a completed Form ST3, Certificate of Exemption, which can serve as a blanket certificate covering future purchases from that seller until canceled.8Minnesota Department of Revenue. Form ST3 Certificate of Exemption The liability for misuse falls on the buyer: using a certificate for purchases that do not qualify means owing use tax, interest, and a $100 penalty per misused transaction.
Filing and Deadlines
Returns go through the Department of Revenue’s e-Services portal. You report gross sales, subtract exempt sales and allowable deductions, and the system calculates the liability. Payment is by ACH debit or credit card.
Monthly and quarterly returns are due on the 20th of the month after the reporting period ends. Annual filers for calendar year 2026 have a February 5, 2027 deadline.9Minnesota Department of Revenue. Sales Tax Return Filing Due Dates When the 20th falls on a weekend or holiday, the deadline moves to the next business day.
Penalties for Filing or Paying Late
Minnesota adds a 5 percent penalty on unpaid sales tax for the first 30 days past due, with another 5 percent for each additional 30-day period up to a maximum of 15 percent. Failing to file the return at all adds a separate 5 percent penalty on the unpaid tax.10Minnesota Office of the Revisor of Statutes. Minnesota Code 289A.60 – Civil Penalties Interest runs at 7 percent annually for 2026 on both the unpaid tax and the penalties until the balance is paid.11Minnesota Department of Revenue. Tax Professional Tip – Income Tax Penalties and Interest Rates A business three months behind on a $2,000 monthly liability would owe $300 in penalties on top of the tax before interest is counted.