Sales tax is imposed by the state on the gross receipts of all persons who
sell, lease, or rent tangible personal property at retail or provide taxable
services. The use tax complements the sales tax and is imposed at the same rate
on the storage, use, or consumption in Minnesota of taxable, tangible personal
property purchased from any retailer, unless the Minnesota sales tax was already paid on
these items. Since July 1, 2009, the rate has been 6.875 percent.
Major exemptions include: food consumption off premises, clothing, prescribed and nonprescribed
drugs and medications, gasoline and special fuels
taxed under the motor fuels excise tax, publications issued at intervals of
three months or less (except over-the-counter magazines), motor vehicles subject
to the 6.5 percent sales tax on motor vehicles, materials used or consumed in
agricultural or industrial production, textbooks, residential heating fuels and
water services, and industrial capital equipment.
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Tax Amount and Reporting
Calendar Year 2013 Sales/Use Tax: $5.5 billion (gross)
$5.2 billion (net after refunds)
$4.4 billion from residents and in-state sellers
A total of $5,475.4 million in state sales/use taxes was collected during
calendar year 2013. The net amount of sales/use tax after the reduction of
capital equipment refunds of $228.0 million was $5,247.4 million. (This includes refunds paid on other exempt purchases
where the tax is paid at the time of purchase and then refunded, mainly for some
specific capital projects.) Of the $5.2 billion in net sales taxes, about $866 million was collected from returns filed
by out-of-state vendors, resulting in $4.4 billion allocated to Minnesota. The amount collected from returns filed by
out-of-state sellers is not allocated to Minnesota in this data since the taxpayer's residence and/or place of business is
unknown, nor is it included in the five-year historical table below. The table shows the amount and share of taxes that were allocated
to Minnesota (paid by residents and in-state sellers) and the portion not allocated to Minnesota (paid by out-of-state sellers)
over the last ten years.
|(In thousands and after capital equipment refund)
||Allocated to Minnesota
||Not Allocated to Minnesota
Most of the amounts not allocated to Minnesota is a tax on sales made by out-of-state businesses to Minnesota
residents, which are reported on a single non-Minnesota return. The amount not allocated to Minnesota has gradually
increased from about 14 percent to over 16 percent.
The sales tax amounts contained in this report exclude any local sales taxes
that cities impose. Local sales taxes are used primarily to support specific capital
projects. As of December 2013, the cities of Albert Lea, Austin,
Baxter, Bemidji, Brainerd, Clearwater, Cloquet, Fergus Falls, Hutchinson, Lanesboro, Mankato,
Marshall, Medford, Minneapolis, New Ulm, North Mankato, Proctor, Rochester, St. Paul, Two
Harbors, Worthington, and St. Cloud-area cities imposed a 0.5 percent general sales
tax. The cities of Duluth and Hermantown, and Cook County imposed a 1 percent general sales tax; Hennepin County
imposed a 0.15 percent general sales tax; and a Transit Improvement Area
consisting of Anoka, Dakota, Hennepin, Ramsey, and Washington counties imposed a
0.25 percent general sales tax.
The amounts shown in the statewide tables are net of the capital equipment refund; the amounts shown by geographic
region in the maps are also net of the total remitted by out-of-state sellers. Because sales tax is reported in the
county where the seller is located, higher amounts tend to be reported in counties with a regional center (e.g., Twin
Cities, Duluth, Rochester, etc.).
Sales/use tax data was obtained from the Department of Revenue.
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Recent Law Changes
The tax rate was 3.0 percent in
1967 and has risen gradually over time. The most recent increase, from 6.5 percent to 6.875
percent, is a temporary increase imposed from July 1, 2009, to June 30, 2034. The extra revenue from this temporary rate
increase is constitutionally dedicated to fund clean water, parks and trails, and arts and cultural heritage.
The legislature fairly often modifies the goods and services included in the sales tax base. Some of the most
significant changes in recent years include the following: