Minnesota's Sales Tax Rate and What It Covers
Minnesota charges a 6.875% sales tax on most retail purchases. This is the state rate that applies statewide, though some cities and counties add their own local sales taxes on top of it. The total you pay at checkout depends on where you are shopping — a purchase in Minneapolis may have a different total tax rate than the same purchase in a rural area.
The 6.875% state rate applies to tangible goods you can touch and take home: clothing, electronics, furniture, groceries at the checkout (though some food items have different rules), and most other retail items. Services — haircuts, car repairs, plumbing work — are generally not subject to sales tax in Minnesota, even though you pay for them.
Some items are taxed at a lower rate or not taxed at all. Prescription medications are exempt. Most groceries sold for home consumption are exempt, but prepared food and food sold in restaurants is taxed. Clothing and footwear under $100 per item are exempt from sales tax, but items over that threshold are taxed on the full purchase price.
Key Takeaways
- Minnesota's state sales tax is 6.875%, but your actual tax rate is higher if your city or county adds a local tax on top of it.
- Groceries for home use are not taxed, but restaurant meals and prepared foods are taxed at the full rate.
- Clothing and shoes under $100 per item are exempt, but items over $100 are fully taxed.
- Prescription medications and medical devices are exempt from sales tax.
- Services like haircuts, repairs, and labor are not subject to sales tax in Minnesota.
Local Sales Taxes Added to the State Rate
Many Minnesota cities and counties add their own local sales tax on top of the 6.875% state rate. These local taxes range from 0.25% to 2%, depending on where you shop. A city might add 0.5% while a neighboring county adds 1.5%, so the total tax you pay can vary significantly across the state.
The combined rate is what matters at the register. If you shop in a location with a 1% local tax, you pay 7.875% total. If you shop in a location with no local tax, you pay exactly 6.875%. Some shoppers near city or county borders notice the difference and may choose where to make larger purchases based on the total tax rate.
To find the exact tax rate for a specific address or city, you can search the Minnesota Department of Revenue website or ask the business where you are shopping. They are required to know and display the correct rate for their location.
What Is and Is Not Taxed in Minnesota
Understanding what Minnesota taxes helps you predict what you will pay. Clothing and footwear under $100 per item are not taxed — this includes shirts, pants, shoes, and coats. Once an item costs $100 or more, the entire purchase is taxed. A $99 shirt is tax-free; a $101 shirt is taxed on the full $101.
Groceries for home consumption — items you buy at the grocery store to cook at home — are not taxed. This includes meat, produce, dairy, bread, and canned goods. However, food you buy ready to eat is taxed: restaurant meals, deli prepared foods, hot foods from a grocery store hot bar, and beverages like soda and energy drinks are all taxed.
Prescription medications and certain medical devices are exempt. Over-the-counter medications like pain relievers and cold medicine are taxed. Diapers, feminine hygiene products, and other personal care items are taxed. Digital goods like e-books, music downloads, and streaming subscriptions are not taxed in Minnesota.
How Sales Tax Is Collected and Reported
Businesses collect sales tax from customers at the point of sale and send it to the Minnesota Department of Revenue. The business is responsible for calculating the correct rate for their location, collecting it from you, and remitting it to the state. If a business charges you the wrong rate, the business owes the difference to the state — you do not have to pay it twice.
Businesses file sales tax returns monthly, quarterly, or annually depending on how much tax they collect. Large retailers file monthly; smaller businesses may file quarterly or annually. The Department of Revenue uses these filings to track tax revenue and may support compliance.
If you are a business owner, you need a sales tax permit from the Minnesota Department of Revenue before you can legally collect sales tax. You can register online through the state's business registration system.
Sales Tax on Online and Out-of-State Purchases
Online retailers must collect Minnesota sales tax on purchases shipped to Minnesota addresses, regardless of where the retailer is located. This rule applies to large online sellers like Amazon and smaller retailers with a web presence. The tax rate depends on the delivery address, not where the seller is based.
If an online retailer does not collect sales tax on your purchase, you may owe use tax — a tax on items you bring into Minnesota or have delivered here. Use tax is the same rate as sales tax and applies to the same types of goods. Most individual shoppers do not report use tax on their personal tax returns, though technically they may owe it.
Purchases from other states that are shipped to you in Minnesota are subject to Minnesota sales tax if the seller has a legal obligation to collect it. Mail-order and catalog purchases follow the same rule as online purchases.
Special Sales Tax Rules for Specific Items
Motor vehicles are taxed differently than retail goods. When you buy a car in Minnesota, you pay sales tax based on the purchase price, but the tax is collected when you register the vehicle with the state, not at the dealership. The rate is still 6.875% plus any local tax for your county.
Gasoline and diesel fuel are taxed with a fuel tax, not a sales tax. Minnesota charges a state fuel tax of 28.5 cents per gallon for gasoline and 28.5 cents per gallon for diesel, plus federal fuel taxes. This is separate from sales tax and is built into the price you see at the pump.
Alcohol and tobacco products have their own excise taxes in addition to sales tax. Beer, wine, and spirits are taxed when they are sold to retailers and again when sold to consumers. Cigarettes and smokeless tobacco have a state excise tax per pack or unit.
Frequently Asked Questions
Do I pay sales tax on groceries in Minnesota?
Most groceries are not taxed. Meat, produce, dairy, bread, and canned goods for home cooking are tax-free. Hot prepared foods, restaurant meals, soda, energy drinks, and food sold ready to eat are taxed at the full rate.
What is the difference between sales tax and use tax?
Sales tax is collected when you buy something. Use tax is a tax on items you bring into Minnesota or have delivered here if sales tax was not already paid. They are the same rate, but use tax applies when the seller did not collect sales tax at the time of purchase.
Why does my total tax rate vary by location?
Minnesota's state sales tax is 6.875%, but cities and counties can add local sales taxes ranging from 0.25% to 2%. Your total rate depends on where you are shopping. A store in one city may have a different combined rate than a store in a neighboring city.
Are clothes always tax-free in Minnesota?
Clothing and shoes under $100 per item are tax-free. Items priced at $100 or more are taxed on the full purchase price. A $99 jacket is tax-free; a $101 jacket is taxed.
Do I pay sales tax when I buy something online?
Yes, if the online retailer ships to a Minnesota address, they must collect Minnesota sales tax at checkout. The tax rate depends on your delivery address and any local taxes in that area.