How Minnesota Sales Tax Works and What You Pay

Minnesota has a 6.875% state sales tax, plus local taxes that vary by city and county

Minnesota's state sales tax rate is 6.875%. This applies to most retail purchases across the state. On top of the state rate, cities and counties add their own local sales taxes, which range from 0.5% to 2.375% depending on where you shop. Your total sales tax can be anywhere from 6.875% to 9.25%, depending on your location.

The tax is calculated on the sale price at checkout. If you buy something for $100 in Minneapolis, you pay $100 plus the applicable sales tax for that city. The retailer collects the tax and sends it to the state and local governments.

Key Takeaways

• Minnesota's state sales tax is 6.875%, and local taxes add between 0.5% and 2.375% on top of that amount.
• Groceries, prescription medications, and medical devices are exempt from sales tax in Minnesota.
• Services like haircuts, repairs, and professional fees are generally not subject to sales tax.
• The tax rate you pay depends on the address where the sale happens, not where you live or where the business is located.
• Online purchases are subject to Minnesota sales tax if the seller has a physical presence in the state or meets certain sales thresholds.

What is and isn't taxed in Minnesota

Not everything you buy is subject to sales tax. Groceries and food items for home consumption are exempt. This includes bread, milk, vegetables, meat, and other items you prepare at home. However, prepared food — like restaurant meals, deli items ready to eat, and food from a food truck — is taxed.

Prescription medications and certain medical devices are also exempt from sales tax. This includes insulin, inhalers, and devices prescribed by a doctor. Over-the-counter medications like cold medicine and pain relievers are taxed.

Services are generally not taxed in Minnesota. A haircut, car repair, plumbing work, or dental cleaning does not have sales tax added. However, if you buy a product as part of that service — like a haircut plus a bottle of shampoo — the shampoo is taxed.

Clothing and shoes are taxed in Minnesota, unlike some other states. There is no clothing exemption.

Local sales tax rates by region

Minnesota allows cities and counties to set their own local sales tax rates on top of the state rate. The local rate depends entirely on where the transaction occurs.

Minneapolis has a local sales tax of 0.5%, bringing the total to 7.375%. St. Paul's local rate is also 0.5%. Hennepin County (which includes Minneapolis) has an additional 0.5% county tax in some areas. Some cities in the Twin Cities metro area have rates as high as 2.375% when you combine city and county taxes.

Smaller cities and rural areas often have lower local rates, sometimes as low as 0.5% or no local tax at all. You can find your specific local rate by entering your address on the Minnesota Department of Revenue website or asking a retailer in your area.

How sales tax is calculated at checkout

The sales tax is added to your purchase price after you pay. If an item costs $50 and the total sales tax rate where you're shopping is 7.875%, you pay $50 plus $3.94 in tax, for a total of $53.94.

The retailer is responsible for collecting the correct tax rate for their location. If you shop in different cities on the same day, each purchase is taxed at the rate for that city. A purchase in Minneapolis is taxed at Minneapolis's rate, and a purchase in a neighboring city is taxed at that city's rate.

Some retailers display the tax-included price, but most show the pre-tax price and add tax at checkout. The receipt shows the tax amount separately so you can see what was collected.

Sales tax on online and mail orders

Online retailers must collect Minnesota sales tax if they have a physical presence in Minnesota — such as a warehouse, office, or store location. Large online retailers like Amazon collect Minnesota sales tax on most items shipped to Minnesota addresses.

If an online seller does not have a physical presence in Minnesota but meets certain sales thresholds (currently $100,000 in sales to Minnesota in the past 12 months), they must also collect sales tax. This rule applies to most major retailers.

Small sellers who do not meet the threshold may not collect Minnesota sales tax. However, Minnesota residents are technically responsible for paying "use tax" on those purchases — a tax equal to the sales tax rate. In practice, use tax is rarely enforced for individual purchases, but it exists as a legal obligation.

Who collects and where the money goes

The retailer collects sales tax from you at the point of sale and holds it temporarily. They then send the collected tax to the Minnesota Department of Revenue on a regular schedule — usually monthly or quarterly, depending on the business size.

The state keeps the 6.875% state portion and distributes the local portions to the appropriate cities and counties based on where each sale occurred. Local governments use this revenue for schools, roads, public safety, and other services.

Businesses do not keep the sales tax they collect. It is a pass-through tax — the retailer collects it on behalf of the government and must remit it.

Special situations and exemptions

Resale certificates allow businesses to buy items without paying sales tax if they plan to resell those items. A clothing store, for example, does not pay sales tax when buying inventory from a wholesaler. The tax is paid by the final customer instead.

Tax-exempt organizations like nonprofits, schools, and government agencies can purchase items without paying sales tax if they provide a tax-exempt certificate. This applies only to purchases made by the organization itself, not by individuals who work there.

Trade-in credits reduce the taxable amount when you trade in an old item toward a new purchase. If you trade in a car worth $5,000 toward a $15,000 car purchase, sales tax is calculated on $10,000, not $15,000.

Frequently Asked Questions

What is the total sales tax rate in my city?

The total rate is the state rate (6.875%) plus your local city and county rates. You can find your exact rate by entering your address on the Minnesota Department of Revenue website, or you can ask a retailer in your area. Rates vary by specific address, so neighboring cities may have different totals.

Do I pay sales tax on groceries?

No. Groceries and food items you prepare at home are exempt from sales tax in Minnesota. This includes bread, produce, meat, dairy, and frozen foods. Prepared foods like restaurant meals, deli items ready to eat, and food from a food truck are taxed.

Is clothing taxed in Minnesota?

Yes. Unlike some states, Minnesota taxes clothing and shoes at the full sales tax rate. There is no clothing exemption.

Do I have to pay sales tax on online purchases?

Most online purchases are subject to Minnesota sales tax if the seller has a physical presence in Minnesota or meets sales thresholds set by state law. Large retailers like Amazon collect this tax automatically. Smaller sellers may not, but you may owe use tax on those purchases.

Why does the sales tax rate change between cities?

Each city and county in Minnesota sets its own local sales tax rate on top of the state rate. Cities use this revenue for local services like schools and roads. The rate you pay depends on where the sale happens, not where you live.