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 resale. 

Sales, leases, and rentals are taxable regardless of quantity or whether the item is new or used, unless an exemption applies.

Retailer and Wholesaler Definitions

Below are the definitions and examples of each type.

Sales and rentals of tangible personal property are taxable unless an exemption applies.

Examples of taxable sales:

• Batteries
• Candy and gum
• Dietary supplements
• Equipment sales or rentals
• Jewelry and watches
• Office supplies
• Pet food

For more information, see the Sales and Use Tax Business Guide.

Business Inventory

Sales of taxable business inventory do not qualify for the isolated or occasional sale exemption. Business inventory is sold in the regular course of business.

To sell taxable inventory exempt from sales tax, you must obtain a completed Form ST3, Certificate of Exemption from the buyer.

For more information, see Isolated and Occasional Sales.

Clothing

The clothing exemption applies to clothing suitable for general use. The clothing exemption does not apply to the following, which are taxable: fur clothing, clothing accessories or equipment, sports or recreational equipment, or protective equipment.

Examples of taxable clothing accessories or equipment:

Examples of taxable sport or recreational equipment:

Examples of taxable protective equipment:

For more information, see Clothing.

Determining Sales Price

For sales tax purposes, sales price is the amount subject to sales tax. Sales price includes the following charges:

• All items required as a condition of the sale
• Delivery or handling charges
• Fabrication labor
• Installation charges
• Layaway fees
• Retail price of the product or service

• Service charges (trip charge, fuel surcharge, processing charges, etc.)
• Taxes that are the obligation of the seller

The entire amount billed to the customer is taxable, even if the charges are separately stated.

Not Included in Sales Price

Sales price does not include the following charges:

• Credit allowed for tangible personal property taken in trade (trade-in allowance)
• Discounts or coupons (see the Discounts and Coupons)
• Interest
• Finance charges
• Taxes legally imposed on the consumer, if separately stated on the invoice

Sales Tax Separately Stated

You should separately state sales tax on the customer’s invoice. If you include sales tax in the price, you must note that the item has tax included on the receipt or post a sign stating tax is included.

Returns

When a customer returns a taxable item, refund the purchase price and sales tax paid on refunded items.

Coupons, Discounts, Rewards, and Rebates

Calculating sales tax on the price of an item may be affected by:

• Coupons, rewards, and rebates
• Retailer discounts
• Daily deal website vouchers and coupons

For more information, see Coupons, Discounts, Rewards, Rebates, and Other Forms of Payment.

Local Sales Tax

There are two types of ticket sellers:

• Those who facilitate the sale
• Those who purchase tickets for resale

Ticket Sellers Who Facilitate the Sale

Ticket sellers who facilitate the sale sell admission tickets to an event or place of amusement on behalf of an event organizer. They are given tickets at no charge by the event organizer and generally return any unsold tickets to the organizer. Ticket seller facilitators include:

• convenience stores
• grocery stores
• remote sellers
• other retailers

Ticket seller facilitators sale do not purchase tickets for resale. They charge the customer for the tickets and may add additional service or delivery charges. They are responsible for collecting and remitting sales tax on the total sales price sold to the customer including any additional charges.

Ticket Sellers Who Purchase Tickets for Resale

A ticket reseller is in the business of purchasing admission tickets for resale and must be registered to collect sales tax. (Minnesota Statute 297A.68 subd. 43).

Ticket resellers must collect and remit state sales tax and all applicable local taxes on the total sales price of the admission ticket.

Ticket resellers may purchase admission tickets exempt for resale by providing their vendor with a completed Form ST3, Certificate of Exemption. If the ticket reseller did not purchase tickets exempt for resale, the ticket reseller can either:

• use Form ST11, Sales and Use Tax Refund Request for a refund of sales tax paid on the original ticket price
• pass on credit for the tax paid on the original ticket price to their customer

Credit for Tax Paid on the Original Ticket Price

If a reseller purchased the ticket from a seller that is not in the business of selling tickets, they cannot use a resale exemption certificate or file a purchaser refund claim. However, they may take the credit for the tax paid on the original ticket price when charging their customer.

The ticket reseller must keep records to document the price and tax paid when they purchase a ticket and when they resell a ticket. The credit allowed for sales tax paid can never be more than the tax paid on the original ticket or the amount of tax due on the total ticket sale.

Example: A venue will not accept an exemption certificate from a ticket reseller and therefore sells their tickets each with a charge of $5 sales tax. The ticket reseller then sells the tickets to their customers for a higher amount that would result in $7 sales tax on each ticket. The reseller either:

1. Charges and remits the entire $7 on the tax return.

The reseller would charge and remit the total $7 collected from the customer. They would then file Form ST11 directly with the department to recover the $5 sales tax they paid to the venue.

2. Charges and remits $2 on the tax return

When charging the customer, the retailer would credit the $5 they had already paid on their purchase of the original ticket and only charge $2 to the customer. When filing the return, they would report only the $2. They must keep records of the original tax paid, tax charged to their customer and the credit taken.

When is the Event Organizer Required to Collect and Remit Sales Tax?

When event organizers directly sell tickets to and collect payments from the purchaser, they are required to collect and remit sales tax on the total sales price for the ticket, including any additional charges and fees.

When is a Third Party Required to Collect and Remit Sales Tax?

When an event organizer sells tickets through a third party and the third party collects the payment, including additional charges, the third party ticket seller is responsible for collecting and remitting sales tax. However, if the event organizer collects the payment directly from the purchaser, they are responsible for collecting the sales tax.

You do not need to charge Minnesota sales tax when you:

• Ship or deliver products to customers outside of Minnesota
• Sell items that are exempt by law
• Provide nontaxable services

Receive a completed Form ST3, Certificate of Exemption from your customer.

Out-of-State Sales

Items shipped or delivered to a customer out of state are not taxable. You must keep records that show the items were shipped or delivered outside of Minnesota.

Items Exempt by Law

When you sell an exempt item, show the item separately on the invoice. You do not have to provide any other proof why no tax was charged. Common examples include:

• Clothing for general use, see Clothing
• Food (grocery items), see Food and Food Ingredients
• Prescription and over-the-counter drugs for humans, see Drugs

Note: Each of the above categories may include both taxable and nontaxable items. See the corresponding fact sheet for details.

Firearm Storage Unit Exemption

Starting July 1, 2023, secure firearm storage units are exempt from sales tax. Secure firearm storage units are fully enclosed containers that are locked by padlock, keylock, combination lock, or similar locking device that is specifically designed for safe storage of firearms or is sold for that purpose by a federally licensed firearms dealer.

Nontaxable Services

Most services are not taxable. For more information, see:

• Personal Services
• Professional Services
• Taxable Services

Form ST3, Certificate of Exemption

Sales to certain types of customers and for certain uses are not taxable. You must charge sales tax unless the customer gives you a completed Form ST3, Certificate of Exemption. You must keep the form in your records.

For the form to be complete, the customer must complete these required sections:

• Purchaser’s name and address
• Purchaser’s identification number
• Type of business
• Reason for exemption
• Signature

Note: The federal government may provide proof of government purchase and payment instead of Form ST3, Certificate of Exemption. For more information, see Government – Federal Government.

Gift Certificates and Gift Card Sales

Gift certificates and gift cards are not taxable when sold. When a gift certificate or gift card is redeemed, charge sales tax on any taxable portion of the purchase. Apply the amount of the gift certificate or card as a cash payment.

Note: Your purchase of gift card or certificate stock is taxable.

Restocking Fees

Restocking fees are not taxable.

Bag Fees

A bag fee is a charge that a retailer is required to collect from customers for carryout bags provided by the retailer to transport food or merchandise. Retailers are required to itemize the bag fee charge on the invoice or bill given to the customer.

Bag fee charges are not subject to sales tax. 

The Minnesota Department of Revenue does not administer any bag fees. For more information on a bag fee, contact the city directly.
 

Items you use to operate your business are taxable unless a specific exemption applies. Several services are also taxable.

If you do not pay sales tax on a taxable purchase, then you owe use tax.

Taxable Purchases

The following purchases are subject to sales or use tax.

Nonreturnable Packaging

You can purchase nonreturnable materials used to package products exempt from sales tax. Give your supplier a completed Form ST3, Certificate of Exemption. Specify the resale exemption.

Examples of nonreturnable packaging materials:

• Bubble wrap, shipping peanuts, tissue paper
• Cartons, containers, cans, and boxes
• Nonreturnable pallets and skids
• Plastic or paper bags
• Product identification labels
• Stuffing materials (straw, dry ice, shredded paper, etc.)
• Warranty cards, owner manuals, instruction sheets

Use Tax

Note: If you are not required to be registered for sales tax, you may register for use tax only to pay the use tax.

The legal references and resources related to the retailers and wholesalers industry are listed.

Minnesota Statutes

• 297A.61, Definitions
  • Subd. 3, Sales and purchases
  • Subd. 4, Retail sale
  • Subd. 7, Sales price
  • Subd. 9, Retailer and seller
• 297A.665, Presumption of tax, burden of proof
• 297A.68, Business exemptions
  • Subd. 2, Materials consumed in industrial production
  • Subd. 11, Advertising materials
• 297A.72, Exemption certificates

Revenue Notices

• 06-11, Sales Price Labor Charges

Fact Sheets

• Candy
• Capital Equipment
• Clothing
• Computer Software
• Coupons, Discounts, Rewards, Rebates, and Other Forms of Payment
• Delivery Charges
• Dietary Supplements
• Drugs
• Food and Food Ingredients
• Industrial Production
• Isolated and Occasional Sales
• Use Tax for Businesses

Guides

• Government – Federal Government
• Personal Services
• Professional Services
• Sales and Use Tax Business Guide