The state of Minnesota imposes a sales tax on the retail sale of certain goods and services. As of 2023, the state sales tax rate in Minnesota is 6.875%. This rate applies to most retail sales, including sales of tangible personal property and certain services. However, it's essential to note that local jurisdictions, such as cities and counties, may impose additional sales taxes, which can increase the overall tax rate.
For instance, in the city of Minneapolis, the total sales tax rate is 7.875%, which includes the state sales tax rate of 6.875% and a local sales tax rate of 1%. Similarly, in the city of St. Paul, the total sales tax rate is 7.875%, comprising the state sales tax rate and a local sales tax rate. These local sales taxes are used to fund various local government services and infrastructure projects.
Key Points
- The state sales tax rate in Minnesota is 6.875% as of 2023.
- Local jurisdictions may impose additional sales taxes, increasing the overall tax rate.
- Certain goods and services are exempt from sales tax, such as food and clothing.
- Businesses are required to collect and remit sales tax on taxable sales.
- The Minnesota Department of Revenue provides guidance and resources for sales tax compliance.
Sales Tax Exemptions in Minnesota
Certain goods and services are exempt from sales tax in Minnesota. For example, sales of food and clothing are exempt from sales tax, with some exceptions. Additionally, sales of prescription drugs and medical devices are also exempt. These exemptions are designed to reduce the tax burden on essential items and support public health.
However, it's crucial to note that not all food and clothing items are exempt from sales tax. For instance, sales of prepared foods, such as restaurant meals, are subject to sales tax. Similarly, sales of clothing items that are considered luxury or non-essential, such as fur coats, may be subject to sales tax.
Sales Tax on Services in Minnesota
In Minnesota, certain services are subject to sales tax. For example, sales of telecommunications services, such as phone and internet services, are subject to sales tax. Additionally, sales of recreational services, such as gym memberships and amusement park tickets, may be subject to sales tax.
However, not all services are subject to sales tax. For instance, sales of medical services, such as doctor visits and hospital stays, are exempt from sales tax. Similarly, sales of educational services, such as tuition and fees, may be exempt from sales tax.
| Category | Sales Tax Rate |
|---|---|
| State Sales Tax | 6.875% |
| Local Sales Tax (average) | 1.0% |
| Total Sales Tax (average) | 7.875% |
Sales Tax Compliance in Minnesota
Businesses that sell taxable goods and services in Minnesota are required to collect and remit sales tax. This includes registering for a sales tax permit, filing sales tax returns, and paying any due taxes. The Minnesota Department of Revenue provides guidance and resources for sales tax compliance, including online filing and payment options.
It's crucial for businesses to maintain accurate records of sales tax collections and remittances, as well as to file sales tax returns on time. Failure to comply with sales tax laws and regulations can result in penalties and fines.
Sales Tax Audits in Minnesota
The Minnesota Department of Revenue conducts sales tax audits to ensure compliance with sales tax laws and regulations. These audits may involve a review of a business’s sales tax returns, as well as an examination of the business’s records and operations.
Businesses that are subject to a sales tax audit should be prepared to provide documentation and information to support their sales tax returns. This may include records of sales, purchases, and inventory, as well as documentation of exempt sales and other relevant information.
What is the sales tax rate in Minnesota?
+The state sales tax rate in Minnesota is 6.875% as of 2023. However, local jurisdictions may impose additional sales taxes, increasing the overall tax rate.
What goods and services are exempt from sales tax in Minnesota?
+Certain goods and services are exempt from sales tax in Minnesota, including food, clothing, prescription drugs, and medical devices. However, not all food and clothing items are exempt, and some services may be subject to sales tax.
How do I register for a sales tax permit in Minnesota?
+Businesses can register for a sales tax permit in Minnesota through the Minnesota Department of Revenue’s website. This involves providing business information, such as the business name and address, as well as other relevant details.