Starting July 1, 2017, the only taxable foods sold through vending machines, snack boxes, or honor boxes are prepared food, soft drinks, candy, and dietary supplements. (Previously, all food sold through a vending machine was taxable.) Vending machine sales are also taxable if the vending machine is located on the property of – or operated by – a school or a tax-exempt or nonprofit organization.  

Note: Sales from powdered beverage dispensers are taxable.

Exempt or Nonprofit Organizations

Prepared food, soft drinks, candy, and dietary supplements sold from vending machines by an exempt or nonprofit organization are taxable.

The use of all coin-operated entertainment and amusement devices is taxable. Examples include:

• Batting cages
• Cranes
• Foosball and pool tables
• Fortune telling machines
• Jukeboxes
• Photo or video booths
• Rides
• Video and pinball games

Coin-operated means the device is both activated and operated by the purchaser upon providing the device with a payment or payment indicator. Examples include:

• Inserting a coin, paper currency, or token
• Swiping a card
• Entering a code
• Using an electronic payment method

Certain grooming and hygiene products sold through vending machines are taxable. Examples include:

For more information, see Grooming and Hygiene Products.

Sales made through coin-operated car washes and vacuums are taxable.

Sales of towels, chamois cloths, cleaning supplies, and deodorizers through vending machines are also taxable.

 For more information, see Towing, Cleaning, and Rustproofing Services.

Animal feed sold from a vending machine is taxable, including sales from dispensers located at parks and zoos.

Baggage cart rentals are taxable.

Vending machine sales of miscellaneous items are taxable. Examples include:

• Books
• Color crayons
• Magazines
• Notebooks
• Pencils
• Phone cards
• Sewing kits
• Shoe polish, shoeshine cloths
• Souvenirs

Photocopies are taxable whether the customer or business operates the copy machine.

All drugs for human use, including over-the-counter drugs, are exempt from sales tax even when sold through a vending machine.

To determine if an over-the-counter item is a nontaxable drug, the product label must include a “Drug Facts” panel or a list of active ingredients. For example, eye drops are taxable unless they have an active ingredient or a Drug Facts panel on the label.

 For more information, see Drugs.

Clothing sold through a vending machine is not taxable. Examples include:

• Bathing suits
• Diapers
• Stockings

Clothing accessories sold through a vending machine are taxable. Examples include:

• Ear or nose plugs
• Jewelry
• Sunglasses

For more information, see Clothing.

Sales made through coin-operated washers and dryers that are operated by the customer are not taxable.

Vending machine sales of laundry detergents, bleach, softeners, candy, and soft drinks are taxable.

For more information, see Laundry and Dry Cleaning Services.

Sales made through coin-operated machines that check blood pressure or pulse rate are not taxable.

Cigarettes are not taxable at the retail level.

Newspapers and postage stamps are not taxable.

Sales of utilities made through coin-operated showers and lights are not taxable.

Sales made through parking meters are not taxable. For more information, see Parking Service Providers.

Pull-tabs sold through dispensing devices are not subject to sales tax. For more information on taxes that apply to gambling devices, contact the Special Taxes Division of the Minnesota Department of Revenue at 651-297-1772.

Items you use to operate your business are taxable unless an exemption applies. Several services are also taxable. If you do not pay sales tax on a taxable purchase, then use tax is due. See below for specific examples.

Tokens, tickets, and prizes are taxable to operators of the machines unless an exemption applies.

Prizes for games of skill or chance conducted at events lasting less than six days, such as carnivals, festivals, and fairs, are exempt. Give your supplier a completed Form ST3, Certificate of Exemption. Use Code Other and write in prizes.

Purchases and leases of new or used vending machines or other coin-operated devices for use in Minnesota are taxable.

Example

• If a Minnesota company buys a machine for temporary use in another state and later brings the machine into Minnesota, use tax is due on the machine purchase price. If you were required to pay another state’s sales tax, but it was lower than Minnesota’s rate, use tax is due based on the difference in rates. See Use Tax section below.

Parts used to repair machines are taxable. Repair labor is not taxable if the labor is separately stated on the invoice. If labor is not separately stated, the entire amount of the invoice is taxable.

Do not pay sales or use tax on items sold in a vending machine. Instead, give your supplier a completed Form ST3, Certificate of Exemption. Specify the Resale exemption.

If you pay sales tax on the products resold in a vending machine, you may deduct the sales tax paid from the tax remitted on your sales tax return. For more information, see Reporting Sales Tax.

Purchase of certain coin-operated entertainment and amusement devices are exempt from sales tax.

This exemption applies to purchases by retailers who either:

• Sell admissions to places of amusement where coin-operated entertainment and amusement devices are provided
• Make available coin-operated entertainment devices and amusement devices

Vending machines, lottery devices, and gaming devices do not qualify for this exemption.

Note: This exemption does not include repair or replacement parts for these devices.

For a list of these devices, see the Coin-Operated Entertainment and Amusement Devices section in Taxable Sales.

Purchases of music by jukebox operators who charge customers for use of the jukebox are exempt from sales tax as long as the music is only used for the jukebox. The music may be either a digital audio work or in a tangible form, such as a record or compact disc. Previously, the purchases of music by jukebox operators were taxable.

You must calculate sales tax on total taxable receipts from vending machines and amusement devices. You cannot deduct the cost of items sold, machine rental, or space rental.

If you pay a rental fee or a percentage of sales to the owner of the machine’s location, you must calculate sales tax before deducting any fees or commissions.

If you sell both taxable and nontaxable items from vending machines, you must keep accurate records separating the sales of nontaxable items from taxable items.

If records separating taxable and nontaxable items are not kept, all sales are considered taxable.

Vending machine receipts include all applicable state and local sales tax. Because vending machine receipts include the sales tax collected, you need to subtract the sales tax from receipts before reporting your sales and use tax.

If you paid sales tax on products sold through a vending machine, you are allowed to make an adjustment for the tax paid before reporting the sales on your return. Make the adjustment on your return by:

1. Reporting the full sales amount as Gross receipts.
2. Reporting the difference between the sales price of the item and your cost of the item (not including tax) as General rate sales and on any applicable local tax line. Because you paid tax on your cost of the item, this adjustment results in reporting sales tax on the markup only.

• 297A.61, Definitions
  • subd. 3, Sale and purchase
  • subd. 34, Taxable food sold through vending machines
• 297A.67, General Exemptions
  • subd. 5, Exempt meals at schools
  • subd. 32, Cigarettes
• 297A.68, subd. 3a, Coin-operated entertainment and amusement devices

• Candy
• Clothing
• Dietary Supplements
• Drugs
• Food and Food Ingredients
• Grooming and Hygiene Products
• Laundry and Cleaning Services
• Minneapolis Special Local Taxes
• Soft Drinks and Other Beverages
• Prepared Food
• Special Local Taxes
• Use Tax for Businesses

• Local Sales and Use Tax
• Motor Vehicle
• Parking Service Providers