MINNESOTA SALES TAX Minnesota has a 6.875 percent general sales tax rate. The sales tax applies to retail sales of taxable services, tangible personal property or specific digital products made in Minnesota. Businesses collect and remit the sales tax due on items and services sold at retail on behalf of the state. Most retail sales are taxable in Minnesota. A “retail sale” means any sale, lease or rental of tangible personal property for any purpose other than resale, sublease or subrent. A retail sale also includes services for any purposes other than for resale. However, some sales are specifically exempted by law from the sales and use tax. These exemptions are discussed later in this section. The Minnesota Department of Revenue has the Minnesota Sales and Use Tax Business Guide, and Sales Tax Fact Sheets and Industry Guides. The Minnesota Department of Revenue does not issue a physical sales tax permit. Upon registration, the taxpayer is given a letter confirming they have registered for sales and use tax. There is no requirement for the taxpayer to post the confirmation letter in their retail store or anywhere else. MINNESOTA USE TAX The use tax complements and is similar to the sales tax. It applies when you buy, lease or rent taxable items on services used in your business without paying sales tax to the seller. The use tax rate is the same as the sales tax rate. The rate is applied to the cost of the taxable purchases on which the sales tax is not paid. The buyer pays use tax directly to the state. Both businesses and individuals are subject to use tax. For more information review Sales and Use Tax; Sales Tax Fact Sheet 146, Use Tax for Businesses, Sales Tax Fact Sheet 156, Use Tax for Individuals. See also Local Sales and Use Tax Guide . Common examples of when use tax is due: – Items purchased outside Minnesota from retailers who do not collect Minnesota sales tax, if the items are for use, storage or consumption in Minnesota. – Items originally purchased for resale, if the items are taken out of inventory for business or personal use. When items are taken out of inventory, use tax is calculated on the purchase prices of the items. –Items originally purchased for use in agricultural or industrial production, if the items are put to a taxable use. The use tax must be paid when the item is put to taxable use. –Items and taxable services purchased from a Minnesota seller who does not collect the sales tax, if the items are put to a taxable use. – Items given away or donated to individuals or businesses, including nonprofit organizations. Businesses that have registered for sales and use tax should report their cost of the use tax items when they electronically file their sales and use tax return. Individuals must file a Form UT1, Individual
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