Whether labor is taxable in Minnesota depends on what kind of work is being done. The state’s 6.875% sales tax applies to a specific list of services — fabrication, building cleaning, lawn care, laundry, and a handful of others — while most other labor, including auto repair and professional services, is not taxed. Minnesota builds its sales tax around an enumerated list: if a service isn’t named in the statute, it’s exempt by default.
Labor That Is Taxable
Several categories of labor are clearly taxable under Minnesota Statute 297A.61. The most common ones a business or customer will run into are these.
Fabrication
Labor to create new tangible personal property from raw materials is taxable, even when the customer supplies the materials.1Minnesota Office of the Revisor of Statutes. Minnesota Statutes 297A.61 – Definitions A woodworker building a bookshelf from lumber you drop off, or a print shop turning your file into posters — those are taxable transactions on the full charge, labor included. Minnesota Rule 8130.0700 separates fabrication from repair by asking whether the work turns materials into something new or just keeps an existing item working in its original form.2Minnesota Office of the Revisor of Statutes. Minnesota Rule 8130.0700 – Producing, Fabricating, Printing, or Processing of Property Furnished by Consumer Gluing a broken chair back together is repair. Building a new chair from boards is fabrication.
Building Cleaning and Maintenance
Building and residential cleaning, maintenance, disinfecting, and pest control are taxable, both commercial and residential.1Minnesota Office of the Revisor of Statutes. Minnesota Statutes 297A.61 – Definitions The Department of Revenue’s list covers janitorial work, window washing, carpet cleaning, duct cleaning, pressure washing, chimney cleaning, junk removal, and swimming pool maintenance, among many others.3Minnesota Department of Revenue. Building Cleaning and Maintenance The concept behind the category: these services maintain or restore an existing condition rather than permanently improve the property.
Lawn and Tree Services
Lawn care is taxable, including mowing, raking, trimming, fertilizing, watering, weed control, pest treatment, and lawn diagnostics.4Minnesota Department of Revenue. Revenue Notice 08-07 – Sales and Use Tax – Lawn and Tree Services Pruning, bracing, spraying, or removing trees, bushes, and shrubs (including stumps) is generally taxable too. Installing new trees, sod, or shrubbery, though, is not taxable — the state treats that as an improvement to real property rather than maintenance.
Laundry, Dry Cleaning, and Clothing Repair
Laundry and dry cleaning services are taxable, including pressing, altering, and storing clothes, linen supply, hat cleaning, and carpet or upholstery cleaning.1Minnesota Office of the Revisor of Statutes. Minnesota Statutes 297A.61 – Definitions Coin-operated laundry, where you do the work yourself, is the exception. Clothing repair and alteration are also taxable, which surprises people because Minnesota exempts most clothing from sales tax. The exemption covers buying the garment, not servicing it.2Minnesota Office of the Revisor of Statutes. Minnesota Rule 8130.0700 – Producing, Fabricating, Printing, or Processing of Property Furnished by Consumer
Vehicle Washing, Detailing, and Towing
Motor vehicle washing, waxing, detailing, rustproofing, undercoating, and towing are all specifically listed as taxable.1Minnesota Office of the Revisor of Statutes. Minnesota Statutes 297A.61 – Definitions Note the split from the next section: cosmetic and cleaning work on a vehicle is taxed, but fixing what’s broken is not.
Auto Repair Labor Is Not Taxable — If You Itemize
Automotive and auto body repair labor is not taxable in Minnesota, provided the shop lists it separately from parts on the invoice.5Minnesota Department of Revenue. Service Department Sales The parts themselves are taxable, but the labor to install them is not, as long as the charges are broken out. A mechanic charging $100 in labor and $45 for a replacement part should collect sales tax only on the $45. If the two are bundled into one lump-sum charge, the whole thing can become taxable under the bundling rules discussed below.
Construction Labor on Real Property
Work on land and buildings runs on a different track under Minnesota Rule 8130.1200. When a contractor builds a new structure or makes permanent improvements to real property, the customer’s labor charge is not taxed directly. The contractor is treated as the end consumer of the building materials and pays sales tax on those materials at purchase.6Minnesota Office of the Revisor of Statutes. Minnesota Rule 8130.1200 – Sales of Building Material, Supplies, or Equipment Hire someone to build a garage or add a room and you won’t see sales tax on the labor line, though the price you pay reflects the tax the contractor already paid on lumber and drywall.
The dividing line between a nontaxable capital improvement and a taxable maintenance service is whether the work creates a permanent addition. Replacing a roof is a capital improvement. Cleaning the gutters is maintenance. Installing new windows is an improvement. Washing the existing windows is taxable maintenance.3Minnesota Department of Revenue. Building Cleaning and Maintenance Contractors who do both need to track and invoice them separately.
Professional and Personal Services
Most professional services are not taxable in Minnesota. Legal advice, accounting, medical treatment, architectural design, and engineering aren’t on the statute’s list of taxable services, so they’re exempt. If the value of the work comes from expertise and judgment rather than creating or physically maintaining tangible property, it generally falls outside the sales tax.
Personal services like hair styling, massage therapy, and tutoring are also not subject to sales tax. Providers of these services do not need to collect it from clients.
Why Itemizing on the Invoice Matters
How you write the invoice can change what gets taxed. When a seller combines taxable and nontaxable items into a single, nonitemized price, Minnesota may treat the entire amount as a bundled transaction and tax the whole thing.7Minnesota Department of Revenue. Revenue Notice 16-03 – Sales and Use Tax – Optional Warranty and Maintenance Contracts on Equipment There’s a de minimis exception: if the taxable portion is 10% or less of the total, the bundle isn’t taxed. Once the taxable share crosses that line, the full bundled price becomes taxable. Itemizing every charge is the simplest way to avoid the problem, and it’s what makes the auto repair labor exemption actually work.
The Rate Isn’t Just 6.875%
The state rate is only the starting point. Many cities and counties add local sales taxes on top. In the second quarter of 2026, combined rates run from around 7% in smaller cities to 9.875% in St. Paul, with Minneapolis at 9.025% and Duluth at 8.875%.8Minnesota Department of Revenue. Local Sales and Use Tax Rate Guide – 2026 Q2 Businesses need to charge the correct combined rate based on where the taxable service is performed or delivered. The Department of Revenue publishes a quarterly guide listing every local rate.
Penalties for Getting It Wrong
Late sales tax payments trigger a 5% penalty on unpaid tax for the first 30 days past the due date, with an additional 5% for each subsequent 30-day period, capping at 15%.9Minnesota Office of the Revisor of Statutes. Minnesota Statutes 289A.60 Interest runs on top until the balance is paid. For a business with steady taxable labor sales, an honest mistake about whether a service is taxable can turn into a sizable assessment before anyone notices.