Minnesota’s sales tax is 6.875% statewide, with cities and counties able to add local taxes that push the combined rate as high as roughly 9.875%. It applies to most tangible goods and a specific list of services. Groceries, general clothing, and prescription drugs are the biggest everyday exemptions.
The Rate You Actually Pay
The 6.875% state rate is the floor. Counties and cities can layer on local option sales taxes ranging from 0.5% to 3%, so the combined rate depends entirely on where the sale happens.1Minnesota Department of Revenue. Taxes and Rates
Minnesota is a destination-based state. The rate that applies is the rate at the delivery address, not the seller’s location. If a shop in a low-tax town ships to Minneapolis, the Minneapolis rate applies.
What Goods Are Taxable
The default rule is simple. All tangible personal property is taxable unless something specific exempts it. Electronics, furniture, appliances, and general merchandise are all in. Sales, leases, and rentals are treated the same way, and used items are taxed just like new ones.
Motor Vehicles
Cars, trucks, and other motor vehicles pay the standard 6.875% rate. Two exceptions exist. A vehicle at least 10 model years old with both a purchase price and market value under $3,000 pays a flat $10 in-lieu tax. Vehicles registered as collector, classic, street rod, or pioneer models pay a flat $150 in-lieu tax.2Minnesota Department of Public Safety. Vehicle Sales Tax
Alcohol
Beer, wine, and liquor pay the 6.875% state tax plus any local tax. Establishments holding an intoxicating liquor, club, or wine license also collect an extra 2.5% liquor gross receipts tax on top. Venues that sell only 3.2% malt liquor skip the extra 2.5% but still owe standard sales tax.3Minnesota Department of Revenue. Sales – Beverages
Delivery Charges
If the item is taxable, the delivery fee is taxable too. That covers shipping, handling, crating, packing, postage, freight, and fuel surcharges. Delivery on nontaxable items is not taxed. For mixed shipments with a single lump-sum delivery charge, the seller allocates the charge by price or weight and only the portion tied to taxable items is taxed.4Minnesota Department of Revenue. Delivery Charges
Taxable Services
Services are generally not taxed in Minnesota, but the state has carved out a specific list that is. If you pay for any of these, expect sales tax on the bill:
- Building cleaning and maintenance
- Laundry, dry cleaning, and alterations
- Lawn, garden, tree, and bush care
- Lodging and related services
- Massages
- Detective, security, and alarm services
- Parking services
Telecommunications and pay television services are taxable too, regardless of who provides them.5Minnesota Department of Revenue. Sales Tax Fact Sheet 119 – Telecommunications, Pay Television, and Related Services
Digital Products and Software
Minnesota taxes most digital products transferred electronically, whether by download or streaming. That includes digital audio works like music, audiobooks, speeches, and podcasts; digital audiovisual works like movies, music videos, and news programs; digital books and e-books; online games; and digital codes that give access to any of these.6Minnesota Department of Revenue. Digital Products
Prewritten computer software is treated as tangible personal property and taxed no matter how it’s delivered, disc or download.6Minnesota Department of Revenue. Digital Products
The one meaningful carve-out is online-hosted software, often called SaaS or cloud software. When the software runs on a remote server and you never download or take possession of a copy, the subscription fees are not taxable. Maintenance and upgrade charges tied to online-hosted software are also nontaxable, even when billed separately.7Minnesota Department of Revenue. Computer Software and Digital Products
What’s Exempt
Groceries
Food and food ingredients for home consumption are exempt. The exemption does not cover candy, soft drinks, alcoholic beverages, dietary supplements, or food sold through vending machines.8Minnesota Department of Revenue. Food and Food Ingredients
Prepared food is the category that trips people up. Food becomes prepared, and therefore taxable, in three situations: the seller heats it before the sale, the seller mixes two or more ingredients into a single item, or the seller provides eating utensils with the food. A deli sandwich handed over with a fork and napkin is taxable; the same sandwich wrapped and handed to you plain may not be.9Minnesota Department of Revenue. Prepared Food
Clothing
General-use clothing is exempt. Boots, coats, hats, jackets, sweatshirts, jerseys, and everyday apparel all qualify.
Not everything you wear counts. Sports and recreational equipment, protective gear, and clothing accessories are taxable. That includes cleated or spiked athletic shoes, helmets, ski boots, skates, life vests, wet suits, sports gloves, and protective pads. Costume accessories and sewing equipment like machines, scissors, and patterns are also taxable.10Minnesota Department of Revenue. Clothing
Prescriptions and Medical Items
Prescription drugs are exempt. So are prosthetic devices that replace, correct, or support parts of the body, along with their repair and replacement parts. Prescription eyeglasses and contact lenses are exempt too. Durable medical equipment is taxable unless it’s sold for home use or covered by Medicare or Medicaid.11Minnesota Department of Revenue. Prosthetic Devices
Garage Sales
Selling personal belongings at a garage sale, moving sale, or estate sale is generally exempt as an isolated or occasional sale. Two conditions apply: you don’t hold these sales regularly, and the items weren’t purchased or collected for resale. Mix in items you bought to flip and you’re treated as being in business on those items. Flea markets, craft shows, and antique shows don’t qualify, regardless of who’s selling.12Legal Information Institute. Minnesota Rule 8130.5800 – Isolated or Occasional Sales and Sales of Personal Property Used in Trade or Business
Nonprofits
Being a 501(c)(3) under federal law does not automatically exempt a nonprofit from Minnesota sales tax. The organization has to apply separately with the Department of Revenue using Form ST16 and wait for an approval letter. Churches, museums, and private schools may qualify, but only after the Department signs off.13Minnesota Department of Revenue. Qualifying for Nonprofit Exempt Status
Business Purchases for Resale
Goods bought for resale are exempt because the eventual retail sale will be taxed. Manufacturing machinery, capital equipment, and farm machinery used directly to produce taxable goods also qualify. To claim any business exemption, the buyer gives the seller a completed Form ST3, Certificate of Exemption, which the seller keeps on file.14Minnesota Department of Revenue. Form ST3, Certificate of Exemption
Use Tax: The Backstop for Out-of-State Purchases
Use tax exists so you can’t dodge sales tax by buying from a seller that doesn’t collect Minnesota tax. It applies at the same 6.875% state rate, plus any local tax, to taxable items you bought without paying Minnesota sales tax, whether online, from a catalog, or while traveling.
Businesses track all untaxed taxable purchases and remit use tax with their regular sales tax returns.
Individuals get a $770 annual cushion. Stay at or below $770 in untaxed purchases for the calendar year and you owe nothing. Cross that line and you owe use tax on the entire amount, not just the excess. Individuals report and pay with Form UT1, due by April 15 of the following year.15Minnesota Department of Revenue. Use Tax for Individuals
If You’re Selling in Minnesota
Any business with a taxable presence in Minnesota has to register for a sales tax permit. Registration is free through the state’s e-Services portal. Physical presence creates nexus, and so do the economic thresholds below.
Remote sellers who ship directly to Minnesota customers must register once they exceed either $100,000 in sales or 200 or more transactions shipped into the state over the prior 12 months. After crossing either threshold, the seller has to start collecting no later than the first day of a calendar month within 60 days.16Minnesota Department of Revenue. Sales Tax for Remote Sellers
If you sell through a marketplace like Amazon or Etsy, the platform usually handles collection for you. A marketplace provider that both lists products and processes payments must collect Minnesota tax once its total sales into the state exceed $100,000 or 200 retail transactions over the prior 12 months. The exception is when the seller gives the marketplace a copy of their own Minnesota registration and both agree the seller will handle it.17Minnesota Department of Revenue. Sales Tax for Marketplace Providers
Filing Frequency
The Department assigns your filing frequency based on average monthly tax liability:18Minnesota Department of Revenue. Filing Information
- Monthly, if average liability runs over $500 per month. Returns due the 20th of the following month.
- Quarterly, if average liability is $100 to $500 per month. Returns due April 20, July 20, October 20, and January 20.
- Annually, if average liability is under $100 per month. Return due February 5 of the following year.
File a return every period, even a zero return. Skipping a period because nothing was owed triggers penalties.
Late Penalties and Interest
Late filing adds a 5% penalty on unpaid tax. A separate late payment penalty starts at 5% of tax not paid within 30 days of the due date, then adds another 5% for each additional 30-day period the balance stays open, up to a 15% maximum. Interest runs on unpaid tax and penalties from the past-due date until paid, at an annual rate of 7% for 2026.19Minnesota Department of Revenue. Penalties and Interest for Businesses
Fraud or intentional evasion carries a 50% penalty on the underpayment. Negligent underreporting without intent to defraud adds 10%. If the Department has told you electronic payment is required and you pay another way, each noncompliant payment carries a 5% penalty.