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Local Use Tax

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Local use tax applies when you buy items or services in a local area without paying local sales tax to the seller.

Use tax is similar to sales tax and the tax rates are the same.
Use tax is based on your purchase price of the taxable item.
Local use tax is based on where the item is used.

Here are some situations where you may owe local use tax:

You buy taxable items or services online without paying sales tax
You take an item from inventory to use (instead of selling it), donate, or give away
You buy taxable items outside of Minnesota
You buy taxable items in another Minnesota city or county with a lower or no local sales tax
You bring taxable items from one local area to use in another local area

For more information, see Use Tax for Businesses and Use Tax for Individuals.

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Variable Rate Credits [+]

Local Tax Variable Rate Credit

If you pay local sales tax in Minnesota to one locality but use the items in another area with a higher local tax rate, you are allowed a credit for the local sales tax you already paid.

If you pay a higher local tax rate at the time of purchase and use the item in a local tax jurisdiction with a lower local tax rate, no credits are allowed.

State Variable Rate Credit

If you buy items while physically in another state and bring the items back to Minnesota, you may owe use tax if the other state’s tax rate is lower than Minnesota’s. If the other state has a lower sales tax rate than where the item is used in Minnesota, you are allowed a credit for the sales tax you paid.

If the other state’s tax rate is higher than where the item is used in Minnesota, no credit is allowed.

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Local Use Tax