Is Bottled Water Taxable in MN?

Tax Treatment of Bottled Water by State

• Minnesota: Exempt from sales tax, unless sold through a vending machine or with eating utensils.
• New York: Taxable, while coffee and tea are exempted.
• Florida: Plain bottled water exempt, flavored water taxable.

Tax Exemptions and Limitations

• Unsweetened bottled water, regardless of carbonation or flavor, is exempt as a food product.
• Ontario: Single serving bottled water taxable, larger bottles exempt.
• British Columbia: Exempts sales tax on ice cubes and ice blocks.

Sales Tax Exemption Criteria

• Water, including various types like spring, sparkling, or mineral water, is generally exempt.
• Items like milk, bread, canned goods, meat, and cereal are not taxable unless sold in a restaurant or heated by the seller.

Special Exemptions

• Sellers collect sales tax on bottled water, exempt only under certain programs.
• Wisconsin: Bottled water was determined to be exempt from the state’s sales and use tax.

Noteworthy Insights:

• General: Ingredients like antimicrobial agents and carbonation do not affect tax treatment.
• In some states, sweetened bottled water loses exemption status and becomes taxable.
• Distributing charges for services are generally exempt from sales tax.

Impact on Economy

• Bottled water usage accounts for a small fraction of overall water use in the US.
• Irrigation is federally subsidized, keeping prices low in that sector.

Potential Economic Impacts

• Michigan: Imposing tax on bottled water could impose negative impacts on economy.

Taxation of Digital Goods

• Florida statute does not directly address the taxability of digital goods.

Miscellaneous Regulations

• Purchasing bottled water for thirsty dogs might still incur tax in New York.
• Grocery items in California are exempt from sales tax.