Sales Tax in Minnesota (2025): Running a business Legally Compliant

For individuals and businesses operating in the North Star State, understanding sales tax in Minnesota (MN) is essential for financial compliance, accurate pricing, and tax planning. Whether you’re selling goods, offering services, or simply shopping as a consumer, the state’s sales tax landscape affects you more than you might think.

In this guide, we'll explain Minnesota's sales tax system. We will cover the sales tax rate, tax rates that change depending on the county, how to figure out sales tax with a calculator, and how to get the right sales tax based on zip codes.

What Is Sales Tax in Minnesota (MN)?

Sales tax in Minnesota is a state-imposed tax on the retail sale of tangible personal property and certain services. Collected at the point of sale, the tax is remitted by businesses to the Minnesota Department of Revenue (MDR).

Businesses that sell taxable goods or services must:

• Collect the applicable sales tax from customers
• File returns periodically (monthly, quarterly, or annually)
• Remit the taxes collected

Sales tax contributes a significant portion of the state's general fund and helps finance public services, infrastructure, and education.

Minnesota (MN) Sales Tax Explained

What Is the Current Minnesota Sales Tax Rate?

As of 2025, the statewide Minnesota sales tax rate is 6.875%. This is the base rate, applicable across all of Minnesota unless local taxes are added.

However, the total rate can be higher in many areas due to local option sales taxes, which vary by county or city.

Key Points:

• State base rate: 6.875%
• Local jurisdictions (cities/counties) may add additional tax
• Combined rates can exceed 8% in some areas

To understand your exact obligation, you need to look at both state and local rates, which leads us to the next section.

Minnesota Sales Tax Rates by County

Sales tax in Minnesota isn't uniform across all regions. Each county (and some cities) can levy an additional local sales tax on top of the base rate.

Examples of County-Level Sales Tax Rates:

These local taxes often fund transportation, parks, or public safety improvements. Because of this variance, understanding Minnesota sales tax rates by county is vital for accurate business invoicing and retail compliance.

Sales Tax by City and Zip Code: Navigating Local Nuances

In Minnesota, some cities have special taxing districts. That means the total rate in a given ZIP code may differ even within the same county.

This makes using a Minnesota sales tax by zip code lookup tool essential, especially for:

• E-commerce businesses shipping goods
• Contractors working across counties
• Multi-location retailers

How ZIP Code-Based Rates Help

• Offer precise calculation
• Reduce audit risk
• Enable accurate checkout pricing
• Help determine correct tax collection during mobile or remote sales

Several tools are available through the Minnesota Department of Revenue, as well as third-party software providers (covered later in the MN sales tax calculator section).

Using a Minnesota sales tax by zip code lookup tool is essential

What’s Taxable in Minnesota?

The sales tax in Minnesota applies to a wide range of goods and select services. But not everything is taxable.

Generally Taxable:

• Tangible personal property (electronics, furniture, clothing accessories)
• Prepared food and beverages
• Digital goods (ebooks, downloads)
• Hotel and lodging
• Certain services (e.g., telecommunications)

Generally Not Taxable:

• Groceries (unprepared food)
• Prescription drugs
• Clothing (most clothing is exempt from Minnesota sales tax; however, certain accessories, sportswear, and protective equipment are taxable).
• Medical devices
• Some professional services

For full compliance, consult the Minnesota Department of Revenue’s Taxability Index, especially if you’re entering a niche industry or offering bundled goods/services.

Sales Tax Permits and Nexus in Minnesota

Before collecting tax, businesses must register for a Minnesota Sales and Use Tax Permit.

You must register if:

• You have a physical presence (store, office, warehouse)
• You have economic nexus (over $100,000 in sales or 200 transactions annually in Minnesota)
• You sell taxable goods/services to Minnesota residents

This applies to:

• In-state businesses
• Remote sellers
• Marketplace facilitators (e.g., Amazon, Etsy)

Register online at the Minnesota e-Services portal.

Businesses must register for a Minnesota Sales and Use Tax Permit

Filing and Paying Sales Tax in Minnesota

Once registered, you are required to file returns either:

• Monthly (high-volume businesses)
• Quarterly
• Annually (small-volume businesses)

Returns can be filed online, and the system will calculate your tax liability based on reported sales and applicable rates. You’ll need to report:

• Total taxable sales
• Exempt sales
• Sales tax collected

Penalties apply for late filings or underpayment, so staying organized is key.

Guide to Using an MN Sales Tax Calculator

An MN sales tax calculator simplifies the process of determining the correct tax amount for any transaction. These tools are especially useful for:

• Point-of-sale systems
• E-commerce platforms
• Contractors quoting clients

How It Works:

1. Enter the total sale amount
2. Select or input the ZIP code
3. The tool calculates the correct combined rate (state + local)
4. It shows the amount of sales tax due

Recommended Tools:

• Minnesota Department of Revenue Tax Rate Lookup
• Third-party services like Avalara, TaxJar, and QuickBooks

Using a reliable MN sales tax calculator helps avoid errors and makes reporting easier at tax time.

Minnesota Sales Tax by Zip Code Lookup: Why It Matters

The Minnesota Department of Revenue provides a ZIP code-based lookup system that gives you the exact combined rate for a location.

Why it’s important:

• Sales tax rates can change frequently
• Some ZIP codes include multiple cities or counties
• Helps remote sellers apply the correct rate

To access this feature, visit the Sales Tax Rate Lookup Tool.

Pro tip: If you operate an e-commerce business, automate this step with plugins or tax APIs that integrate ZIP-based logic into your checkout process.

Minnesota Sales Tax by Zip Code Lookup

Use Tax: An Often Overlooked Obligation

Use tax applies when you purchase taxable goods without paying sales tax, and then use them in Minnesota.

Examples:

• Buying office equipment from an out-of-state vendor that didn’t collect tax
• Importing goods for internal use

The use tax rate is the same as the sales tax rate at your business location. Use tax must be reported on your sales tax return.

Sales Tax Audits in Minnesota

The Minnesota Department of Revenue conducts audits regularly to ensure compliance. Here’s how to prepare:

• Maintain complete sales and exemption records
• Keep copies of all resale or exemption certificates
• Use reliable accounting software
• Reconcile reports with MN sales tax filings

Getting audited doesn’t always mean something’s wrong, but poor records can result in costly penalties.

Stay compliant with sales tax in Minnesota: Best Practices for Businesses

To stay compliant and efficient with sales tax in Minnesota, consider the following best practices:

• Register and file on time
• Use a MN sales tax calculator or integrated POS tax system
• Stay up-to-date with local rate changes
• Perform internal audits quarterly
• Automate your compliance wherever possible

OneIBC USA: Your Partner in Sales Tax and Business Compliance

For growing businesses and startups, navigating Minnesota sales tax compliance can feel overwhelming. That’s where OneIBC USA offers a powerful advantage.

Services Include:

• Sales and use tax registration support
• Local and county-level tax advisory
• Sales tax software integration (POS, ERP, e-commerce)
• Ongoing compliance and audit protection
• Accounting and onshore business setup in Minnesota and other U.S. states

OneIBC USA can assist you with Minnesota sales tax, whether you need information on rates by zip code, automatic calculations, or help with multi-state rules. We will be your trusted partner for easy tax handling.

Final Thoughts

Figuring out sales tax in Minnesota is super important for keeping your business legit and your finances in good shape. Knowing your local tax rate and using stuff like a Minnesota sales tax calculator can really save you from making expensive errors and keep your customers happy.

So, whether you're just starting out or growing your business in Minnesota, get registered, follow the rules, and get comfortable with collecting sales tax.