Sales Tax Guide for Minnesota

If you’re an entrepreneur or e-commerce seller doing business in Minnesota, understanding Minnesota sales tax is essential to stay compliant and avoid penalties.

Whether you sell physical goods or digital products, sales tax compliance in Minnesota should be a top priority.

In this sales tax guide for Minnesota, you’ll learn everything you need to know to collect and file sales tax correctly. We’ll cover who needs to collect Minnesota sales tax, how to register for a sales tax permit, which products are exempt, how to file returns, and tips to stay compliant and audit-ready.

Keep reading to get a clear step-by-step breakdown of Minnesota sales tax requirements.

Minnesota Sales Tax at a Glance

Sales Tax 101: The Basics of Sales Tax Guide for Minnesota

What Is Sales Tax?

Sales tax in Minnesota is a statewide 6.875% plus applicable local rates on taxable goods and certain services.

Local city and county rates will usually be added at checkout, based on the delivery address.

Your Role as a Seller

Your job is to collect the correct amount of Minnesota sales tax from customers, then remit it to the state using the Minnesota Department of Revenue.

Sales Tax vs. Use Tax

Sales tax is charged by you as the seller when a customer makes a purchase and you’re required to collect Minnesota’s sales tax. You then pay this to the state.

For example, if you’re a Minnesota-based Shopify store and your customer lives in Minneapolis, you’ll collect state and applicable local tax from them at checkout.

Use tax applies when a Minnesota buyer purchases taxable goods, but no Minnesota sales tax was collected (e.g., the seller was out-of-state without MN nexus). The buyer is then required to self-report use tax to the state.

If your Minnesota business buys inventory from a non-MN wholesaler who doesn’t charge tax, you’ll owe use tax to Minnesota directly.

Confused? doola’s experts will explain it better, schedule a demo!

Do You Need to Collect Minnesota Sales Tax?

If you’re selling to customers in Minnesota, do you actually need to collect sales tax?

Here’s how to know:

Do you have nexus in Minnesota?

If you have a physical location, Minnesota-based employees, inventory in an MN warehouse (such as Amazon FBA), or meet the economic nexus threshold ($100,000 in sales or 200+ transactions annually), you’re required to collect MN sales tax.

Marketplace sellers: Amazon or Etsy inventory in a Minnesota distribution center is nexus for you.

Are you selling taxable goods or services?

Physical products such as clothing, accessories, electronics, and most digital products are taxable. Most groceries, prescription drugs, and select services are exempt.

It pays to check what applies to your business. Not sure? Ask doola’s tax team!

Are your buyers in Minnesota? Do they owe sales tax?

If the answer is yes, and you’re not collecting it, you’re on the hook for uncollected tax, plus penalties and interest.

E-commerce example: Selling $1,000 of taxable goods to Minnesota addresses means you’re responsible for collecting the full state rate (plus local, if applicable) on those sales and sending it in.

E-Commerce Implications: What Online Sellers Should Watch Out For

• Using Amazon FBA? Inventory in a Minnesota warehouse means physical nexus, even if you’re out of state.

• Selling through Shopify? You must set up and collect Minnesota sales tax yourself.

• Selling through Amazon or Etsy? These platforms collect and remit for you under marketplace facilitator laws; but always confirm sales tax is handled in your account settings.

What Happens If You Don’t Collect It: Penalties for Non-Compliance

Miss collecting Minnesota sales tax? You’ll owe the tax plus penalties and interest, costly even for small businesses.

Late returns = financial headaches

Example: If you missed $7,000 in taxable sales, that’s $481 or more in tax due and that is before fines and interest!

Unsure about nexus? doola’s state-wise sales tax guide will help!

Minnesota Sales Tax Nexus: A Deep Dive for E-Commerce

Minnesota recognizes several types of sales tax nexus:

Physical Nexus Triggers

• MN office or business location

• Employees, contractors, or agents in Minnesota

• Inventory stored anywhere in the state (including Amazon FBA stock)

Economic Nexus

If, as a remote seller, you cross $100,000 in Minnesota retail sales OR 200+ separate transactions in MN annually, you’ve established economic nexus and must register to collect MN sales tax.

📌 doola’s Pro Tip for the Do’ers: Track your annual sales by state every month.

Marketplace Nexus

Minnesota’s marketplace facilitator law means facilitators (Amazon, Etsy, Walmart, etc.) collect and remit tax on your behalf.

But if you make direct sales outside those platforms, you’re responsible for those.

Inventory in Minnesota

Inventory stored at an MN fulfillment center (even if you never visit) gives you nexus. Check Amazon’s “Inventory Event Detail Report” for warehouse locations.

Trailing Nexus

Minnesota may require you to keep filing even after nexus-triggering activity ends.

Don’t cancel your sales tax account until you’re sure ALL nexus has ended and your final return has been filed.

Minnesota Sales Tax Rates and Sourcing for Online Sellers

Rates in Minnesota depend on both state and local taxes:

2025 Rates: State and Local

• State rate: 6.875%

• Local additions: 0%–2% (in some cities/counties)

• Combined total: 6.875%–8.875% depending on destination

You’ll need to apply the total of state plus local taxes based on your customer’s shipping address. This applies whether you ship from within or outside Minnesota.

Destination Sourcing Explained

Sales tax for online and shipped orders is generally calculated based on the delivery address in Minnesota (not where your warehouse or store is).

For example: If you’re shipping to St. Paul, apply 6.875% (state) plus local rates for St. Paul, even if your store is based in Duluth.

Marketplace Facilitator Rules

Since 2019, marketplace platforms like Amazon, Etsy, and Walmart are required to collect and remit Minnesota sales tax for you. This is for any sales made through their marketplace.

Sales made directly via your own website (Shopify, WooCommerce, etc.) remain your responsibility.

Not sure if you’re compliant? Schedule a demo with doola

What’s Taxable in Minnesota for E-Commerce Sellers?

In Minnesota, most tangible personal property is taxable. This includes:

• Physical goods: Clothing, electronics, jewelry, home goods, etc.

• Digital products: Downloaded music, videos, e-books, ringtones, software (including SaaS subscriptions).

• Certain services: Installation, telecommunications, lodging, laundry, etc.

Check the MN Department of Revenue’s guide for the most current list.

What’s Exempt in Minnesota

Common exemptions include:

• Most groceries and unprepared food

• Prescription drugs

• Clothing for everyday wear (MN is unique; most clothing is not taxed!)

• Newspapers/periodicals

💡Double-check whether digital subscriptions and software qualify for exemption or are taxable. Rules update regularly in Minnesota.

Tax-Exempt Customers You Should Know About

You don’t charge MN sales tax to:

• Non-profits (with valid exemption)

• Government agencies

• Buyers for resale (with an MN “Certificate of Exemption”)

📌 doola’s Pro Tip for the Do’ers: Always store exemption certificates securely. MN is strict about documentation during audits.

Registering for a Minnesota Seller’s Permit as an E-Commerce Seller

If you meet Minnesota’s nexus requirements and are selling taxable goods/services to Minnesota customers, you must register for a Minnesota tax ID (seller’s permit) before collecting sales tax.

Step 1: Decide if You Have Nexus

Nexus includes a Minnesota office, physical presence, employees, inventory, or passing the economic thresholds (more than $100,000 sales/year or 200+ transactions).

Step 2: Gather Your Info

• Your EIN (federal tax ID)

• Legal business name and structure (LLC, Corp, Sole Prop, etc.)

• Business address (physical or mailing address)

• General sales info (projected monthly/annual sales etc.)

Step 3: Register Online

Register using the Minnesota e-Services portal; the least stressful, fastest way.

You can also mail Form ABR (Application for Business Registration) to the state, but most online sellers use the e-Services portal.

Want help avoiding paperwork and setup headaches? Register with doola.

👉🏼 Out-of-State Sellers: Read This

If you meet economic nexus standards (>$100,000 MN sales or 200+ transactions), you still need to register to collect and remit Minnesota sales tax; even if your business is outside Minnesota and you never visit the state.

This is especially relevant for Amazon FBA and e-commerce brands with national reach!

👉🏼 Minnesota & the Streamlined Sales Tax (SST)

Minnesota is a member of the Streamlined Sales Tax (SST) Agreement, which helps sellers quickly register in multiple member states, simplifies filing, and reduces paperwork.

👉🏼 Acquiring a Minnesota Online Business?

If you take over a business already registered in Minnesota, update the MN Department of Revenue with new ownership right away.

Not doing so may result in claims against you for the previous owner’s tax debts.

Collecting Sales Tax: E-Commerce Best Practices

After registering your Minnesota seller’s permit, set up your sales tax collection on your e-commerce platforms:

Sales Tax Setup By Platform

• Marketplace facilitators (Amazon, Etsy, Walmart, eBay): They collect and remit MN sales tax for you. Make sure you check your seller reports to confirm.

• Not marketplace facilitators (Shopify, WooCommerce, Squarespace, BigCommerce): You must set up state & local MN rates and ensure tax is applied to the right customers/transactions.

📌 Miss tax at checkout? It comes out of your pocket later. Double-check settings regularly!

Automate Where It Helps

Handling 50+ states, or just want peace of mind? Let doola automate your Minnesota (and other states’) sales tax compliance with platforms like Hands Off Sales Tax.

Filing and Remitting Minnesota Sales Tax for Online Sellers

Collecting Minnesota sales tax is half the job; you must also file accurate returns and remit funds on time to avoid penalties.

Filing Process

Returns are filed via the Minnesota e-Services portal. You’ll report total sales, taxable sales, tax collected, and claim any valid exemptions/deductions. Pay by ACH, credit card, or check.

• Total gross sales (by period)

• Sales tax collected (state + local)

• Deductions/exemptions (for resale, nonprofits, interstate sales, etc.)

Missing filing deadlines means penalties/interest. Don’t risk it!

Filing Frequency

Minnesota assigns a monthly, quarterly, or annual filing schedule based on your expected sales tax collection:

• Monthly: Typically if you collect $500+/month in tax

• Quarterly: For moderate volume filers

• Annually: For businesses collecting little or no tax during the prior year

All returns are due the 20th of the month after period end.

2025 Filing Deadlines

If the due date falls on a weekend or holiday, you get until the next business day. For late filings, penalties and interest apply.

Zero Returns Are Still Required

Even if you had no sales, you must file a zero return for every assigned period (monthly, quarterly, or annual).

If You Sell or Close Your Business

Submit a final return and close out your MN sales tax account in the e-Services portal (don’t just walk away; MN will chase you for missing returns otherwise).

Stay compliant and save time. Let doola support your filings.

Special E-Commerce Considerations: Sales Tax Holidays & Shipping

Here are 2 “gotchas” for Minnesota online sellers:

Minnesota Sales Tax Holidays

Unlike some states, Minnesota does not have any sales tax holidays.

All qualifying sales (including back-to-school and Black Friday) are fully taxable. No special exemptions!

How Shipping & Handling Are Taxed in Minnesota

Shipping and handling charges are generally taxable in Minnesota if the item being shipped is taxable (not for exempt sales).

If you combine taxable and exempt items in one shipment, allocate shipping charges properly, only the part that applies to taxable goods is subject to MN sales tax.

📌 doola’s Pro Tip for the Do’ers: Separately stated handling, delivery, or shipping charges may not avoid tax if bundled with the product’s sale. Check your platform’s settings and MN’s official guidance.

Minnesota Excise Taxes for E-Commerce Sellers

Certain products are subject to Minnesota excise taxes, which are separate from regular sales tax and require additional compliance from sellers:

What Are Excise Taxes?

Excise taxes target specific products (like alcohol, tobacco, vapor devices, and motor fuel) often to regulate use or generate revenue. If your e-commerce store sells these to Minnesota buyers, special rules apply.

Minnesota Excise Tax Examples

• Tobacco Products: $3.04 per pack of cigarettes plus 95% of wholesale price for other tobacco. E-commerce tobacco sellers must register and remit these taxes directly. More info

• Motor Fuels: 28.5¢ per gallon on gasoline and diesel (2025). If shipping fuel products, confirm licensing requirements. More info

• Alcoholic Beverages: Beer ($2.40–$4.60/barrel); Wine ($0.30–$3.52/gallon); Distilled spirits ($5.03/gallon). Minnesota liquor shipments are highly regulated.

• Cannabis Products: Adult-use cannabis is taxed at 10% on gross receipts at retail, in addition to applicable sales tax, per new legislation effective 2025. More info

📌 doola’s Pro Tip for the Do’ers: If you sell vape, cannabis, fuel, or other regulated goods, check registration rules. Excise tax compliance is stricter and fines steeper than sales tax alone!

Avoiding Penalties: E-Commerce Compliance Tips

Stay compliant with these Minnesota e-commerce best practices:

• Regularly review platform tax collection settings. Even Amazon and Etsy’s automated tools may update. Confirm correct collection.

• Monitor your Minnesota sales by month. Nexus can sneak up if you grow quickly!

• Filing zero returns is mandatory. No-excuse policy; file every period the state assigns you.

• Keep copy of all exemption certificates and supporting records for 3+ years in case of MN audit.

With the right processes, Minnesota sales tax doesn’t have to be a headache.

Avoid fines with doola’s compliance tools. Sign up here.

How doola Helps E-Commerce Sellers With Minnesota Sales Tax

Navigating Minnesota sales tax laws can feel overwhelming, especially with changing rules, filing deadlines, and nexus concerns. But you do not have to handle it all on your own.

doola simplifies Minnesota sales tax compliance by helping you register for a sales tax permit, track your filing deadlines, manage tax-exempt sales, and handle complex nexus situations.

We take care of the compliance details so you can stay focused on growing your business.

Ready to make Minnesota sales tax simple and stress-free? Book a free demo with doola today.