General Sales Tax
Tax Base:
Sales price of tangible personal property and taxable services sold or used in Minnesota
Rates: *
General rate 6.5% (applicable to all taxable transactions except those listed below) Liquor and beer, both on-sale and off-sale 9.0% New Farm machinery; logging equipment 2.5% Replacement capital equipment 7/1/96 to 6/30/97 3.8% 7/1/97 to 6/30/98 2.9% 7/1/98 and after 0.0%
* Technically, 0.5% of the 6.5% was a state administered county option tax imposed in all counties from 1/1/92 to 6/30/96. Effective 7/1/96, the county tax was repealed and the state rate became 6.5%.
Major exemptions:
- sales for resale in the regular course of business
- food for consumption off premises
- clothing
- prescribed drugs and medications
- non-prescribed analgesics
- gasoline and special fuels taxes under the motor fuels excise tax
- publications issued at intervals of 3 months or less (except over-the-counter magazines)
- motor vehicles subject to the separate sales tax on motor vehicles
- materials used or consumed in agricultural or industrial production
- textbooks
- residential heating fuels and water services
- capital equipment, except for replacements, used in manufacturing, fabricating, mining, or refining tangible personal property
- used farm machinery (7/1/95 to 6/30/96)
- racehorses and breeding fees for racehorses
- materials sold to veterinarians for the care and treatment of agricultural production animals
- materials, including feed and bedding, sold to persons who raise or board horses
Additional Taxes:
An additional tax of 6.2% is imposed on the rental of a car, van, or pickup truck for less than 29 days.
Revenue Collections:
General Sales Motor Vehicle Rental
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Fiscal Year 1993 $2,378,483,000 $ 6,274,000 (at $7.50 per rental)
Fiscal Year 1994 $2,519,695,000 $ 6,553,000 (at $7.50 per rental)
Fiscal Year 1995 $2,722,381,000 $ 7,317,000 (at 6.2% of rental price)
Fiscal Year 1996 $2,873,127,000 $ 8,601,000 (at 6.2% of rental price)
Fiscal Year 1997 $3,018,193,000 $ 8,907,000 (at 6.2% of rental price)
Fiscal Year 1998 $3,255,981,000 $ 9,900,000 "
Fiscal Year 1999 $3,396,528,000 $11,075,000 "
Fiscal Year 2000 $3,715,267,000 $12,123,000 "
*Reflects a one-time sales tax rebate of $1.3 billion enacted by the 1999 Legislature.
History:
Enacted in 1967 at 3%.
This information was taken from the Minnesota Department of Revenue Tax Research Division's "Tax Handbook," 2001 edition.