Local sales tax generally applies when: • The sale takes place in the local area (for example, in‑store sales); • Taxable services are performed in the local area; or • Taxable items are shipped or delivered into the local area. To calculate the total tax, add the state rate (6.875 percent) and any applicable local rate(s), then apply the combined rate to the taxable sales price. Local use tax works like local sales tax but applies when no local tax was collected, and the taxable item or service is used in the local area. Examples: • A business buys equipment in a different Minnesota city without local tax being charged, then uses it in a city with a local tax. • A business buys a taxable item from an out‑of‑state seller that does not charge local tax and uses it in a Minnesota local‑tax area. See the Department of Revenue’s Local Sales Tax Information for current local taxes and rates. EXEMPTION CERTIFICATES By default, sales of taxable items and services are presumed taxable unless a specific exemption applies. To buy qualifying items without paying sales tax, a purchaser must give the seller a completed Department of Revenue Form ST3, Certificate of Exemption. Key points : • Sellers must collect tax unless they have a properly completed exemption certificate. A tax ID number alone is not enough. • Form ST3 can be used for a single purchase or as a blanket exemption for ongoing purchases. • Sellers must keep the completed certificate in their records; they do not send it to the Department of Revenue, but it must be available for audit. Selected exemptions and exempt organizations Food, clothing, and prescription drugs • Most clothing, prescription drugs, and food for home consumption are exempt from sales and use tax. • The exemption does not apply to prepared food from restaurants, bars, delicatessens, or caterers, nor to candy, soft drinks, or many dietary supplements .
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