Minnesota Sales Tax Overview
The tax rate in Minnesota consists of 3 parts: a state tax rate – of 6.875%, local sales tax, and special sales tax. The combined rate varies from 6.875% to 9.375% maximum. The tax rate depends on the place of supply.
Exempted Goods and Services
A purchase is exempt from use tax if the purchase is made by an individual for personal use (including purchases for gifts), and the individual’s total purchases subject to use tax do not exceed $770 in the calendar year.
Sales Tax Regulations
In Minnesota, the sales tax rate is determined by the state and can vary depending on the type of goods being sold. Minnesota has a general sales tax rate of 6.875%, but certain cities and counties may have additional local taxes. This means that the total sales tax rate can be higher in some areas.
Registration and Payment
Before you can pay Minnesota sales tax, you must register an account with the Minnesota Department of Revenue. To register the account, you will need the Federal Employer ID Number (FEIN) for the business.
Exempt Items in Minnesota
Items such as baby clothing, digital goods, tampons, food, prescription medicine, gasoline, and items purchased for resale are exempt from sales tax in Minnesota.
Use Tax Information
Use tax may apply to online or out-of-state purchases if sales tax was not collected at the time of sale. The use tax rate is the same as the regular Minnesota sales tax rate. When buying taxable goods in Minnesota, sales tax is collected at the point of purchase.
History of Sales Tax in Minnesota
In the 1930s, during the Depression, Minnesota implemented sales tax due to struggling local budgets. The state agreed that it was unfair to the poor. However, by the 1960s, property taxes rose, and the need for state assistance led to the implementation of the current 6.875% sales tax rate.
Vehicle and Property Tax
A 6.5% tax is applied to the vehicle purchase price when the title is transferred. Additionally, there is a 0.33% deed tax on property value transferred, exempting amounts under $3,000.