The Minnesota liquor tax is not one tax but a stack of them. A bottle sold at retail can carry a state excise tax set per gallon, a 2.5% liquor gross receipts tax, the 6.875% state sales tax, any local sales or special liquor taxes, and a federal excise tax built into the wholesale price. Rates and responsibility depend on the beverage, the seller, and the size of the producer.
State Excise Tax Rates by Beverage
Minnesota’s excise taxes are volume-based, set in Chapter 297G of the statutes, and vary by beverage type and alcohol content.
Distilled Spirits
All distilled spirits, liqueurs, cordials, and specialties (excluding ethyl alcohol) are taxed at $5.03 per gallon, or $1.33 per liter, regardless of alcohol content.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.03 – Tax on Distilled Spirits and Wine
Wine
Wine is taxed in tiers based on alcohol by volume:
- 14% ABV or less: $0.30 per gallon ($0.08 per liter)
- Over 14% to 21% ABV: $0.95 per gallon ($0.25 per liter)
- Over 21% to 24% ABV: $1.82 per gallon ($0.48 per liter)
- Over 24% ABV: $3.52 per gallon ($0.93 per liter)
Most table wines land in the lowest tier. Fortified and high-proof dessert wines climb the schedule quickly.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.03 – Tax on Distilled Spirits and Wine
Beer and Malt Beverages
Beer and other malt beverages are taxed per 31-gallon barrel, with fractional barrels taxed proportionally:
- 3.2% alcohol by weight or less: $2.40 per barrel
- Over 3.2% alcohol by weight: $4.60 per barrel
The category covers beer, ale, and any malt-fermented drink of at least 0.5% ABV. Flavored malt beverages such as hard seltzers fall here if at least 51% of their alcohol comes from grain fermentation and they are 6% ABV or less.2Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.01 – Definitions3Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.04 – Fermented Malt Beverages Rate of Tax
Cider
Cider fermented from apple or pear juice at 0.5% to 7% ABV is taxed at $0.15 per gallon. Flavored, sparkling, and carbonated ciders qualify for the lower rate as long as they meet the fermentation and ABV requirements.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.03 – Tax on Distilled Spirits and Wine
Credits for Small Producers
Smaller Minnesota producers can wipe out or sharply reduce their state excise burden through statutory credits.
- A qualified brewer producing fewer than 250,000 barrels in the prior calendar year gets a $4.60-per-barrel credit on the first 25,000 barrels sold each fiscal year, capped at $115,000. The $4.60 credit matches the higher-tier barrel rate, so the excise on those first 25,000 barrels effectively drops to zero regardless of alcohol content. Facilities owned or controlled by the same entity count as one brewer.3Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.04 – Fermented Malt Beverages Rate of Tax
- A licensed microdistillery gets $1.33 per liter on the first 100,000 liters per fiscal year, capped at $133,000.4Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.03, Subd 5 – Microdistillery Credit
- A winery producing fewer than 75,000 gallons in the prior calendar year gets a credit equal to the full excise tax on wine and cider sold, capped at $136,275 per fiscal year.5Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.03, Subd 6 – Small Winery Credit
Credits are claimed monthly, on the 18th.
The 2.5% Liquor Gross Receipts Tax
Every Minnesota liquor retailer owes a 2.5% tax on gross receipts from alcohol sales. It applies to on-sale establishments (bars and restaurants) and off-sale outlets (liquor stores) alike.6Minnesota Office of the Revisor of Statutes. Minnesota Code 295.75 – Liquor Gross Receipts Tax
Gross receipts means the total received in money or barter for retail liquor sales, excluding any tax imposed directly on the consumer and stated separately on the receipt. The statute imposes the 2.5% on the retailer, not the buyer; retailers may collect it from customers but are not required to.6Minnesota Office of the Revisor of Statutes. Minnesota Code 295.75 – Liquor Gross Receipts Tax
“Liquor” here includes intoxicating liquor, beverages containing intoxicating liquor, and 3.2% malt liquor when sold at a place licensed to sell intoxicating liquor. A convenience store selling only 3.2% beer without an intoxicating liquor license does not owe this tax on those sales.
Sales Tax and Local Add-Ons
Alcohol is subject to Minnesota’s 6.875% state sales tax, which combines the 6.5% base rate with a voter-approved 0.375% addition.7Minnesota House of Representatives. Minnesota Sales and Use Tax Minnesota applies its full sales tax to alcoholic beverages.
Many cities and counties add local sales taxes, and some jurisdictions impose special local liquor taxes on top of the general local rate. Special local taxes for liquor, restaurants, lodging, and entertainment are calculated separately from the general combined rate.8Minnesota Department of Revenue. Sales Tax Rate Map Two purchases a few miles apart can carry noticeably different totals. The Department of Revenue’s rate calculator returns the exact combined rate for any address.
Federal Excise Taxes
Federal excise tax is built into the wholesale price before any Minnesota tax attaches. The Alcohol and Tobacco Tax and Trade Bureau sets these rates, in effect since 2018 under the Craft Beverage Modernization Act.
Distilled spirits: $13.50 per proof gallon at the full rate. Small distillers pay $2.70 per proof gallon on the first 100,000 proof gallons and $13.34 between 100,000 and 22.23 million.9TTB: Alcohol and Tobacco Tax and Trade Bureau. Tax Rates
Beer: $18.00 per 31-gallon barrel at the general rate. Brewers producing 2 million barrels or fewer per year pay $3.50 per barrel on the first 60,000 and $16.00 above that. Larger brewers pay $16.00 per barrel on the first 6 million.9TTB: Alcohol and Tobacco Tax and Trade Bureau. Tax Rates
Wine: tiered by ABV. Still wine at 16% ABV or under is $1.07 per wine gallon at the base rate, dropping as low as $0.07 per gallon on a small producer’s first 30,000 gallons through graduated credits. Wine over 21% to 24% ABV runs $3.15 per wine gallon.9TTB: Alcohol and Tobacco Tax and Trade Bureau. Tax Rates
Who Owes Each Tax
The excise tax falls on manufacturers of beer and on wholesalers of distilled spirits and wine. If a beer manufacturer does not pay, the wholesaler or importer becomes liable.10Minnesota House of Representatives. Alcoholic Beverage Taxes Retailers do not owe excise directly. Their obligations are the 2.5% gross receipts tax and collecting sales tax from customers.
Filing is monthly by default. Returns and payment are due by the 18th of the month following the taxable activity, and returns must be filed even when no tax is owed.11Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.09 – Returns Payment of Tax
Smaller operations can file less often. Average monthly liquor tax liability of $500 or less per quarter, with a clean four-quarter compliance record, qualifies you to request quarterly filing. Average monthly liability of $100 or less over a calendar year opens the door to annual filing.11Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.09 – Returns Payment of Tax
What Is Exempt From the Excise Tax
Section 297G.07 lists situations where the excise tax does not apply:12Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.07 – Exemptions
- Sales by a manufacturer, brewer, or wholesaler for shipment outside Minnesota in interstate commerce.
- Sales or transfers between Minnesota-licensed wholesalers.
- Wine sold for sacramental purposes.
- Beer brewed at home, or fruit juice fermented at home, for personal family use and not offered for sale.
- Alcohol sold to authorized food-product manufacturers or pharmaceutical firms for exclusive use in manufacturing.
- Sales to federal agencies that Minnesota cannot constitutionally tax.
- Sales to Indian tribes as defined in Section 297G.08.
- Malt beverages served on-premises at a brewery at no charge, or distributed to employees under a labor contract.
- Bulk distilled spirits or bulk wine shipped to licensed farm wineries as inputs for their final product.
The chapter also does not apply to medicines intended for therapeutic use, industrial alcohol, or nonpotable alcohol-containing compounds.
Penalties for Late or Missing Payments
Civil penalties escalate with the length and nature of the failure:13Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.18 – Civil Penalties
- Late payment: 5% of unpaid tax for the first 30 days, plus another 5% for each additional 30-day period, up to 15%.
- Failure to file a return: 5% of the unpaid tax, or a flat $25 per unfiled return when no tax is due.
- Negligence or intentional disregard: 10% of any additional assessment.
- Repeated failures after a written warning from the Department of Revenue: 25% of the unpaid tax for each subsequent failure.
- Fraud: 50% of the tax due for the period covered by the false or fraudulent return, less any amount paid on that return.
Criminally, failing to file a required return or failing to pay or remit tax under Chapter 297G is a misdemeanor, and a knowing failure raises the severity of the charge.14Minnesota Office of the Revisor of Statutes. Minnesota Code 297G.19 – Criminal Penalties The line between a civil penalty and a criminal charge generally turns on whether the failure was deliberate.
THC Beverages Are Taxed Separately
THC-infused drinks and other cannabis products do not fall under the liquor excise system, even when they sit next to beer on the shelf. Retail sales of taxable cannabis products, including lower-potency hemp edibles sold as beverages, carry a 15% cannabis gross receipts tax on top of the 6.875% state sales tax and any local sales taxes.15Minnesota Department of Revenue. Sales A business selling both alcohol and cannabis-derived beverages has two separate compliance tracks to manage.