Minnesota stands out in the Midwest for exempting BOTH groceries and clothing from sales tax — a combination shared by only a handful of states. Minneapolis and St. Paul hit 8.88% combined with multiple transit and special-purpose local taxes. Minnesota applies a reduced rate on prepared food and has complex candy and soda rules.
Minnesota sales tax overview
| Component | 2026 Rate |
|---|---|
| State sales tax | 6.88% |
| Avg local add-on | 1.17% |
| Avg combined | 8.05% |
| Maximum combined | 8.75% |
Note: Minnesota exempts both clothing and groceries from sales tax. Most generous exemptions in the Midwest.
Minnesota sales tax by city
Combined state + local sales tax rates for major cities in Minnesota:
| City | Combined Rate |
|---|---|
| Minneapolis | 8.88% |
| St. Paul | 8.88% |
| Rochester | 8.13% |
What's exempt in Minnesota
Groceries
Exempt from Minnesota state sales tax. Local jurisdictions may still tax.
Clothing & footwear
Exempt from Minnesota sales tax.
Prescription drugs
Exempt from sales tax (typical across most states).
How Minnesota sales tax is calculated
Sales tax in Minnesota is calculated by multiplying the pre-tax purchase price by the applicable combined rate. The formula is simple:
Sales Tax = Purchase Price × 8.05% (avg combined)
Total = Purchase Price + Sales Tax
The exact rate depends on where the purchase occurs — the state base rate (6.88%) plus any local city or county add-ons. Minnesota allows local jurisdictions to add their own taxes, so the rate varies by location.
Quick calculation examples at average rate 8.05%:
$100 item
$8.05 tax
$108.05 total
$250 item
$20.13 tax
$270.13 total
$500 item
$40.25 tax
$540.25 total
$1,000 item
$80.50 tax
$1080.50 total
Additional tax-free items in Minnesota
Beyond the standard exemptions, Minnesota also provides sales tax relief on these categories:
Exemptions may have conditions. Always verify with the Minnesota Department of Revenue for complete rules.
Minnesota sales tax in context: rates, history, and neighbors
Minnesota's 6.875% state sales tax — among the higher base rates in the US — combined with local add-ons gives an average combined rate around 8.05%. Minneapolis 8.875%, St. Paul 8.875%, Rochester 8.13%, Duluth 8.875%, Bloomington 7.78%. Minnesota stands out for exempting BOTH groceries AND clothing — a combination shared by only a few states (NJ, PA, NJ, VT). The clothing exemption is unconditional (no price cap). Minnesota taxes most digital products including streaming services. Minnesota has no major sales tax holidays. Compared to neighbors: Wisconsin (~5.44%), Iowa (~6.94%), North Dakota (~7.05%), South Dakota (~6.10%) — Minnesota's combined rate is the highest in the Upper Midwest. The clothing exemption is a significant consumer benefit despite the higher rate.
Online shopping & Minnesota sales tax
Minnesota requires remote sellers with $100,000+ or 200+ Minnesota transactions to collect Minnesota sales tax. Minnesota is a member of the Streamlined Sales Tax (SST) Agreement. Minnesota taxes many digital products — downloaded software, streaming services, digital games — at the standard 6.875% rate.
Use Tax reminder: If you purchase taxable goods online from a seller who does NOT collect Minnesota sales tax, you technically owe Use Tax — the same rate as sales tax, reportable on your Minnesota state tax return. Use Tax enforcement on consumers is rare but the obligation exists for significant purchases.
How much Minnesota sales tax on common purchases?
Using Minnesota's average combined rate of 8.05%:
| Purchase | Price | Sales Tax | Total |
|---|---|---|---|
| Grocery cart | $150 | Exempt | $150.00 |
| Clothing / shoes | $120 | Exempt | $120.00 |
| Prescription drug | $80 | Exempt | $80.00 |
| Smartphone | $999 | $80.42 | $1079.42 |
| Laptop / tablet | $1,299 | $104.57 | $1403.57 |
| New car ($35,000) | $35,000 | $2817.50 | $37817.50 |
| Home appliance | $1,500 | $120.75 | $1620.75 |
| Restaurant meal | $60 | $4.83 | $64.83 |
Based on Minnesota's average combined rate of 8.05%. Exact tax depends on city/county. Use our calculator above for specific locations and amounts.
Collecting sales tax in Minnesota: business guide
If you sell goods or taxable services to Minnesota customers, here's what you need to know:
- Registration: Register for a Minnesota sales tax permit/license through the Minnesota Department of Revenue before making your first taxable sale. Most states process registrations online within a few days.
- Economic nexus (online sellers): If you have $100,000+ in Minnesota annual sales or 200+ transactions, you must collect Minnesota sales tax even without a physical presence in the state — per South Dakota v. Wayfair (2018). You must collect both state (6.88%) and applicable local rates.
- Destination vs origin sourcing: Minnesota uses destination-based sourcing for most sales — the tax rate where the buyer receives the goods applies. Always use the customer's delivery address to determine the rate.
- Filing frequency: Frequency depends on your Minnesota sales volume — monthly for high-volume sellers, quarterly or annually for low-volume sellers. Check with the Minnesota Department of Revenue for your specific filing schedule.
- Marketplace sales: If you sell through Amazon, Etsy, eBay, or similar platforms, the marketplace is required to collect and remit Minnesota sales tax on your behalf — you don't need to collect it separately on marketplace transactions.
- Resale certificates: Businesses purchasing goods for resale can provide a Minnesota resale certificate to suppliers to avoid paying sales tax on wholesale purchases. Keep copies of all resale certificates for audits.
Streamlined Sales Tax (SST): Minnesota is a full member of the Streamlined Sales Tax (SST) Agreement, which simplifies multi-state sales tax registration and compliance through a single registration portal (streamlinedsalestax.org).
Minnesota-specific business compliance details
Minnesota businesses register with the Minnesota Department of Revenue at revenue.state.mn.us for a Minnesota Tax ID Number. Filing frequency: monthly for most businesses, quarterly for smaller, annually for very small. Out-of-state sellers with $100,000+ in Minnesota sales (or 200+ transactions) must collect Minnesota tax (economic nexus, since October 2018). Minnesota is a Streamlined Sales Tax (SST) Agreement member. Marketplace facilitators collect Minnesota tax. Minnesota uses destination-based sourcing. Minnesota's broad clothing and grocery exemptions create classification complexity — what counts as clothing vs accessories vs jewelry can be nuanced. Minnesota taxes most digital products. Penalties: 5% of unpaid tax per month, capped at 35%. The candy/food distinction (taxable vs exempt) is a common compliance challenge for retailers.
Minnesota sales tax frequently asked questions
Why does Minnesota exempt clothing from sales tax?
Minnesota has exempted clothing since its sales tax was enacted in 1967, based on the principle that clothing is a necessity of life. The exemption covers all clothing and footwear regardless of price — no upper limit like Connecticut or Massachusetts. Jewelry, watches, handbags, and costume pieces are taxable. Athletic gear worn during sporting activities is taxable; however, ordinary athletic clothing (T-shirts, shorts) worn everyday is exempt.
What is the combined sales tax rate in Minneapolis?
Minneapolis has a combined sales tax rate of 8.875% — one of the highest in the Midwest. This breaks down as: 6.875% Minnesota state + 0.5% Hennepin County + 0.75% Minneapolis city + 0.75% Metro Transit. On a $500 electronics purchase, you'd pay $44.38 in sales tax. Groceries and clothing remain exempt from all these rates — the high rate only applies to taxable goods like electronics, furniture, and appliances.
How does Minnesota handle candy and soda sales tax?
Minnesota has unusually specific rules for candy and soft drinks. Candy is taxable at the full rate, but the line between 'candy' and 'food' matters — Twix bars are taxable (candy); granola bars may be food (exempt) if they contain flour. Soft drinks (carbonated beverages) are taxable; 100% juice is exempt. These distinctions often surprise consumers and create headaches for retailers. Minnesota Revenue publishes detailed guides on the food/candy distinction.