The Litchfield, MN sales tax rate is 7.375% through June 30, 2026, and climbs to 7.875% on July 1, 2026, when a new Meeker County transit tax takes effect. That combined rate applies to every taxable purchase made inside city limits.
Where the Rate Comes From
Three layers stack to produce the total. The Minnesota state sales tax of 6.875% is the base. On top of that, the city of Litchfield added a 0.5% local sales and use tax on July 1, 2023 under Ordinance No. 816, which funds specific community projects.1Minnesota Department of Revenue. Litchfield 0.5% Sales and Use Tax Local Tax General Notice Together those two make the current 7.375% rate.2Minnesota Department of Revenue. Local Sales and Use Tax Rate Guide Q2 2026
Starting July 1, 2026, Meeker County begins collecting a 0.5% transit sales and use tax on retail sales throughout the county. The revenue is earmarked for road maintenance, bridge reconstruction, and safety improvements on county transportation infrastructure.3Meeker County. Local Option Sales Tax (LOST) The Minnesota Department of Revenue handles collection.4Minnesota Department of Revenue. Meeker County 0.5% Transit Sales and Use Tax Local Tax General Notice Once that goes live, the breakdown in Litchfield looks like this:
- Minnesota state: 6.875%
- City of Litchfield: 0.5%
- Meeker County transit (effective July 1, 2026): 0.5%
- Combined total: 7.875%
Retailers in Litchfield collect the full combined rate at checkout and remit it to the state, which then routes the money to the appropriate state, county, and city funds.
What You Pay Tax On
Physical Goods
Most tangible items at a retail store are taxable: electronics, furniture, household supplies, tools, pet accessories. If it’s tangible personal property and no specific exemption applies, the full combined rate is charged.
Prepared Food
Groceries you cook at home are exempt (more on that below), but food the seller has prepared, or food sold with eating utensils provided by the seller, is taxable.5Minnesota Department of Revenue. Food and Food Ingredients That covers restaurant meals, deli sandwiches, and ready-to-eat salads from the grocery store. The dividing line is whether the seller did the preparation, not the temperature of the food.
Services
Minnesota only taxes services that are specifically listed in statute. The taxable list includes lawn and landscape maintenance, pet grooming and boarding, laundry and dry cleaning, building cleaning, parking, lodging, massages, detective and security services, telecommunications, and motor vehicle washing, waxing, rustproofing, and towing.6Minnesota Department of Revenue. Taxable Services in Minnesota Services that aren’t on that list are not taxed. Auto repair labor is a notable example: when the labor charge is separately stated from parts on the invoice, the labor itself isn’t taxable, though the parts are.7Minnesota Department of Revenue. Service Department Sales
Software and Digital Products
Prewritten (canned) computer software is taxable no matter how it’s delivered. Custom software built for a specific client is not. Subscriptions to online-hosted software (SaaS) are not taxable in Minnesota, and that includes maintenance or upgrade charges on hosted software.8Minnesota Department of Revenue. Computer Software and Digital Products
For other digital goods, downloaded music, audiobooks, e-books, movies, video games, and e-greeting cards are taxable. Digital news articles, charts, data reports, and digital photos are not.8Minnesota Department of Revenue. Computer Software and Digital Products
What’s Exempt
Several large categories of purchases are exempt from both state and local sales tax, which means they’re exempt in Litchfield too.
Clothing. Most everyday clothing and footwear is exempt: shoes, coats, underwear, uniforms, and similar items. The exemption does not cover accessories (jewelry, handbags, wallets), sports or recreational equipment (cleats, ski boots, wetsuits), protective gear (hard hats, safety goggles), or fur clothing.9Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.67 – General Exemptions
Drugs and medical equipment. All drugs are exempt, including over-the-counter medications, not just prescriptions. The exemption also covers insulin, medical oxygen, prosthetic devices, durable medical equipment for home use, mobility-enhancing equipment, prescription corrective eyeglasses, and kidney dialysis equipment.9Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.67 – General Exemptions
Unprepared food. Food and food ingredients sold for home preparation are exempt. Bread, milk, produce, meat, canned goods, and similar staples don’t carry sales tax.5Minnesota Department of Revenue. Food and Food Ingredients
Buying From Out of State
Use tax is the mirror image of sales tax. If you buy something taxable from a seller that doesn’t collect Minnesota tax, you owe use tax at the same combined Litchfield rate on anything you use, store, or consume here. The obligation sits with the buyer, not the seller.
Individuals report and pay through the Department of Revenue’s Individual Use Tax Return.10Minnesota Department of Revenue. Use Tax for Individuals In practice, most large online retailers already charge Minnesota sales tax, because a remote seller has to register and collect once its sales shipped to Minnesota over the prior 12 months exceed either $100,000 in revenue or 200 separate transactions.11Minnesota Department of Revenue. Sales Tax for Remote Sellers Use tax usually comes up with smaller out-of-state sellers or private sales where no tax was collected at purchase.
A Note for Litchfield Businesses
Sellers in Litchfield collect the full combined rate and remit it to the Minnesota Department of Revenue, reporting the state and local portions on separate lines of the return. Filing frequency depends on how much tax you collect, ranging from annual filings for the smallest sellers to monthly filings for those averaging more than $500 per month in tax.12Minnesota Department of Revenue. Filing Returns and Recordkeeping
Late payment carries a 5% penalty on the unpaid tax, with another 5% added for each additional 30-day period (or fraction of one), capped at 15%, plus interest. Repeat failures after a written warning from the Department can push the penalty to 25% on each subsequent violation. Misreporting local tax on the wrong line of a return draws its own 5% penalty, and omitting location information from a consolidated return costs $500 per return.13Minnesota Office of the Revisor of Statutes. Minnesota Code 289A.60 – Civil Penalties