Most professional services in Minnesota are not subject to sales tax. The state’s sales tax on professional services works on an opt-in basis: a service is taxable only if the legislature has specifically named it in the tax code, and the default for everything else is exempt.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.61 – Definitions So attorneys, accountants, architects, engineers, management consultants, financial planners, IT consultants, marketing strategists, and medical providers do not charge sales tax on their fees. The general state rate is 6.875%, with local taxes added on top, but those rates apply only to the enumerated categories.2Minnesota Department of Revenue. Taxes and Rates If your work isn’t on the list, you don’t collect.
How the Exemption Works
The statute is explicit: the definition of “sale” does not include “the sale of services not specifically enumerated” in the law.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.61 – Definitions Knowledge-based professional work falls outside the tax base for that reason. If you run a law firm, an accounting practice, or a consulting office and sell only your expertise, you do not need a sales tax permit for those services.
The complication comes when a business does exempt professional work alongside something on the taxable list. Firms that bundle consulting with building maintenance, cleaning, or grounds work sit on the line and need to sort their charges carefully. The rules for that situation are below.
Which Services Minnesota Actually Taxes
The enumerated taxable services cluster into a handful of industries. Each one carries the full 6.875% state rate plus any local tax that applies at the job location.2Minnesota Department of Revenue. Taxes and Rates
Building and Grounds
Building cleaning, maintenance, and disinfecting are taxable, whether the property is commercial or residential.3Minnesota Department of Revenue. Sales – Building Cleaning and Maintenance That sweeps in janitorial companies, window washers, carpet cleaners, and exterminators.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.61 – Definitions Ongoing lawn care, including mowing, fertilizing, and weed control, is taxable as well. Boat storage and cleaning fall in the same group.
Personal and Garment Services
Laundry, dry cleaning, pressing, linen supply, industrial cleaning, and clothing alterations and repair are all taxable. Coin-operated laundry machines where the customer runs the wash themselves are not.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.61 – Definitions
Pet grooming and pet boarding are taxable. Boarding for horses is carved out, and veterinary boarding for medical purposes like hospitalization or observation is also excluded.4Minnesota Office of the Revisor of Statutes. Minnesota Rules 8130.8700
Massage is taxable with one exception that matters: massage provided to treat illness, injury, or disease by a licensed health care professional, or on written referral from one, is exempt.5Minnesota Department of Revenue. Revenue Notice 02-08 – Sales and Use Tax – Massage Services A spa massage is taxable. A therapeutic massage prescribed by a physician for a back injury is not.
Vehicle Services
Motor vehicle washing, waxing, and cleaning are taxable, including coin-operated car washes. Rustproofing, undercoating, and towing carry sales tax too.6Minnesota Department of Revenue. Towing, Cleaning, and Rustproofing Services Guide
Detective and Security Services
Private investigation, security guard services, burglar and fire alarm monitoring, and armored car transport are taxable.
Admissions, Lodging, and Related Categories
The statute also reaches admissions to amusement venues, athletic events, tanning facilities, health clubs, spas, and steam baths; short-term lodging under 30 consecutive days; nonresidential parking on a contractual, hourly, or periodic basis (metered parking is out); club initiation fees and dues where the facility isn’t open to the public on equal terms; and telecommunications, pay television, and digital products under separate provisions of the same section.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.61 – Definitions
Where Landscaping Gets Confusing
Landscaping trips up more Minnesota service businesses than almost any other category. The dividing line is between ongoing maintenance and a real property improvement. Ongoing maintenance, such as mowing, seasonal plant switch-outs, and mulch replacement on established beds, is taxable.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.61 – Definitions Construction contracts that improve real property, such as building a deck, installing a retaining wall, grading with a skid steer, or laying a new brick walkway, are not.7Minnesota Department of Revenue. Landscaping Construction Contracts Fact Sheet 121B
Planting trees, shrubs, and perennials is always treated as a real property improvement and is always exempt. Planting annuals or vegetables is exempt only when it is part of an initial landscaping construction contract. A single project can carry both flavors: new shrubs (exempt) plus seasonal mulch on a different bed (taxable). Break these out on the invoice. On the construction side, the contractor pays sales or use tax on materials like plants, sod, and stone, but doesn’t pass that tax through to the customer as a separate line.7Minnesota Department of Revenue. Landscaping Construction Contracts Fact Sheet 121B
When You Bill Exempt and Taxable Work Together
A single lump-sum price that includes both taxable and nontaxable items is a bundled transaction under Minnesota rules. The default: if any component is taxable, the whole price becomes taxable. The exception is a “de minimis” bundle, where the taxable piece is 10% or less of the total; that bundle stays nontaxable.8Minnesota Department of Revenue. Revenue Notice 16-03 – Bundled Transactions
This is the trap for firms that mix exempt consulting with something like building maintenance on one contract. If the taxable piece is more than 10% of the combined price and the invoice doesn’t itemize, the whole amount is taxable. The clean fix is to separately state the taxable and nontaxable components on every invoice, so only the taxable lines carry tax.
Which Rate to Charge and Where
Minnesota sources sales tax to the destination, meaning the rate is set by where the customer receives the service, not where the provider sits. The statute gives a hierarchy:9Minnesota Office of the Revisor of Statutes. Minnesota Code 297A.668 – Sourcing of Sale, Situs in This State
- If the customer picks up the service at your office or shop, use that location’s rate.
- If you perform work at the customer’s site or deliver the service elsewhere, use the rate for that location.
- If neither applies, use the customer’s address from your records.
- If you have no address on file, use whatever address the customer provided at the time of purchase.
- Only when none of the above yields a usable address do you fall back on your own location.
For a mobile crew working a different site every day, the job address controls. A cleaning company based in a suburb with no local tax may owe a higher combined rate when working in a city that imposes one, so job-by-job records matter. Services delivered to out-of-state clients may fall outside Minnesota’s reach entirely if the benefit is received elsewhere. Multi-state work needs a job-by-job look at where the service is physically performed.
What Happens If You Should Have Been Collecting
A provider who should be collecting but isn’t will owe the uncollected tax out of pocket, plus penalties and interest. Late or missing sales tax payments carry a 5% penalty for failure lasting 30 days or less, with another 5% added for each additional 30-day period, capped at 15% of the tax owed.10Minnesota Office of the Revisor of Statutes. Minnesota Code 289A.60 – Penalty Provisions Interest runs on top of that from the original due date.
The Department of Revenue audits businesses in the enumerated categories, and the audits focus on whether providers in fields like cleaning, lawn care, and security are properly registered and remitting. If you started a business on the taxable list and never registered, your exposure covers back taxes for every month you should have been collecting, plus penalty and interest. Getting into compliance sooner keeps the bill smaller.
Registering and Filing If You Do Owe
Before collecting, you need a Minnesota Tax ID number, obtained through the Department of Revenue’s e-Services portal. Have this ready:11Minnesota Department of Employment and Economic Development. Tax Identification Numbers
- Federal Employer ID Number, or Social Security number for a sole proprietor with no employees.
- Legal business name and any assumed names.
- NAICS code matching your line of work.
- The date you began or will begin performing taxable services.
- Phone number and email address.
The state usually issues the Tax ID within a few business days. That number is your identifier for every filing that follows.
Minnesota assigns a filing frequency of monthly, quarterly, or annual based on how much tax you collect. Returns are due by the 20th of the month after the reporting period. Quarterly filers submit in April, July, October, and January; annual filers for calendar year 2026 are due February 5, 2027.12Minnesota Department of Revenue. Sales Tax Return Filing Due Dates Even a period with zero taxable sales still requires a return showing zero. Skipping one triggers the same penalty structure as underpayment.